Sequel to https://community-new.goactuary.com/t/2023-financial-planning/7077 and predecessor threads.
I have nearly the same.
Biggest 2024 financial decision is whether to have a two bedroom lane-house built on our property on the space where our garage is. Our son would live in it.
Have contacted the Vancouver builder who had one of his lane-homes featured in the NY Times a few years ago. We would not go with anything as fancy as it though.
My goals are largely similar
Haven’t made the call to begin a 529 without children yet. Most likely I won’t until we actually have a kid or it’s pretty imminent. I’m hoping we can max both 401ks, but bonuses aren’t the most generous this year so we might stay around the 75% max range.
I could reallocate things more wisely if we stopped overpaying our mortgage, but at this stage we’re knocking it out in anywhere from 9-14 years total (2027-2032 depending if I pay a lump-sum when the rate adjusts in 2027) and I’m motivated to just get it done with.
I see “financial planning” and I start having flashbacks to when I was told “I need you to change this file so that it results in these final numbers [given on a piece of paper] - but you CANNOT change any of the assumptions that have been made, just … fix it so these numbers show up as the final answer.” And how when I refused to do it for what should be really obvious reasons and that if that’s what someone wanted they should do it themselves, I was told my refusal would impact my performance review.
And then after a little bit Internal Audit got interested, and suddenly I didn’t have to work on financial planning ever again. And then I left and didn’t have to worry about how my performance review would get written up.
Mine are really simple this year. We elected insurance that doesn’t allow for an HSA, and are still working on the house - though we’re over the hump now with just a couple of big projects left.
Do you have financial incentives to install solar panels?
I believe there are still federal incentives, but my state (Kansas) doesn’t offer anything for solar or EVs or what have you.
I’ve been interested but haven’t been convinced it makes sense for us yet. My state capped the buyback price so the utilities can buy excess power cheaply then charge us full price if we need them.
Does your state let you sell back at market rate? That would likely change my decision.
As it stands I’m letting things get cheaper and better over time. At some point we’ll do it.
I need to double check but I think we get the same price if we sell to the grid as we pay to buy electricity. And if you want to sell energy, they cap your panel size. I forget if it’s based on kWh use or peak kW. Need to read up.
Honestly, the payback will be pretty long here, electricity is pretty cheap. It’s fine. Still have windows to do, I think by the time I’m done with this place we will have cut our carbon use by about half.
We replaced some old windows last year with more energy efficient ones but we would have done that even if there had not been financial incentives. They just needed replacing.
The incentives for installing solar panels vary by province in Canada but some provinces make it very attractive to do so. Ontario had especially generous solar incentives some years ago that enabled many folks to make a lot of money on their investment. And the current Ontario solar program enables those who went solar to continue to make a nice profit as they sell their excess power at market rates, which is above the solar cost, into the grid.
I pay about $0.14 per kWh here - that’s the marginal rate, excluding the fixed monthly charges. Now, labor is cheap here so maybe the install will cost less.
I’m going to have my windows restored, they are old but solid. Yeah, single pane. I’ll either make wooden storm windows or have some made so I’ll effectively have double panes. Considering interior storm windows (Indow is a popular choice) as maybe an option as well.
When we lived in Ontario, we had the ritual of putting on and taking off storm windows every year and taking off and putting on screens. Still haven’t got used to not having screen windows in Vancouver house (no mosquitos/few flies here) nor storm windows (seldom really cold).
If we have a lanehouse built it will have solar panels and energy efficient windows, etc. Seems to make sense to do that at the outset.
I’ll be curious to see your results @Mathman. Please do report back whenever you do it, as this is probably in our 5-10 year window for us to do.
Max out 401k/HSA/+50k in brokerage.
I looked back at a projection I created in 2015. My savings are pretty much on target with that in spite of giving away 50% at a point since then.
My latest projection puts me at nearly 5M at age 55. 5% returns, 3% COLA. Feeling pretty confident I could walk away in a little over a decade.
I feel like I don’t have a good handle on my retirement needs. I’m seeing if I retire at 62 at 90% income after 2% raises for the duration, I’ll have $358,000 in annual retirement expense, which feels quite excessive, but I am thinking of today’s money.
It says retiring at 62, I’ll run out at 83 with an initial nest egg of $6,368,000. (I suspect I’m a fair bit younger than Mr. Biden though @The_President) Social Security gets me to 88, but I’m planning for now on not having it, and retiring a couple years earlier if it exists as today would be nice.
Edit: Also not accounting for an assumed hefty inheritance particularly from in-laws. My parents are slightly skint in retirement so just not paying for their later years would be appreciated. Any inheritance will be bonuses. The in-laws are temperamental narcissists. I assume we’ll get money, but they could just as easily cut us off for being pro-LGBTQ rights or somesuch before they die.
In the spirit of keeping it simple I always think in terms of today’s dollars. So if you assume a 7% rate of return and 3% inflation, I’d just call it a 4% return and that keeps you using nominal dollars.
Also, do you need 90% of your income in retirement? If you save more than 10% now you’re already living on less than 90%, and spending generally declines with age. Link below, there are quite a few studies that show this is typical. YMMV of course.
And if you do live on <90%, you’ll likely pay less in taxes, which allows you to live on a lower gross income to hit the same net income. This is the part I haven’t thought much about. I’ve got a decent handle on the net income I will likely need/want but I don’t know how much I need to cover taxes. I plan on starting that conversation with my accountant this year. I’m sure I could do the math but I hate reading up on tax stuff and my guy doesn’t charge me a ton.
Agreed. I viewed inheritances as windfalls when they happened.
There is another element that may or may not be relevant in your situation but relevant for others. I had four children looking at buying homes in expensive cities when I retired. One of my biggest outlays in my 15 years of retirement has been gifts to them to help them buy homes. That may be a consideration for some posters in their retirement projections. Financial assistance to children doesn’t always end after they graduate from university!
the totals saved at start of retirement @Rastiln and @The_President suggest are not numbers I will ever get close to. Impressive. I will closer to a Klayman or two. which should be enough based on some of my projections of future spending (which are not tethered to my current income but built up based on current spend and some projections of what will absent).
building my future spending isn’t easy with the dependents still on the family plan. there are few things we buy that aren’t inflated now for the extras we support.
if i tried to replace 80% (or whatever) of my final annual income before retiring I might never retire.
eta - upon review of spreadsheet, i can get to 80% of “current take home income” in mid-late 60’s if I factor in SS and ignore current/projected bonus income. i think i’ll be ok
This is a good point. We put away about 20-25% of our income. Also, 90% of my existing balances are Roth and I haven’t seen a calculator that tries to estimate how that impacts things. (I’m now investing more Traditional as my salary’s increased.)
Moving my income replacement down to 75% gives me just under a $300k salary and still gets me to 88 on my own or 93 with Social Security. And I presume if I’m feeling uncomfortable with my savings I’ll be spending far under $300k even if that’s in mid-2000s money (2050,60, etc.)
Obviously “income replacement” being after years of COLAs. I’m not making $400k today.
Overall I’m hoping to retire no later than 62, ideally more like 58.
I’d consider this, just given that my wife and I will likely be in a position to do so, and housing is getting unaffordable almost everywhere. We should be able to get them through college debt-free unless they decide on a $$$ private university, and if we could help get them into a home they’d be on pretty good footing.