I had an ex-boyfriend who was a computer science major and I remember asking him if he could build me a computer. When he said he wasn’t able to do that, I gave him a lot of flak. “How is it that a computer science major can’t build a computer from scratch? That’s like me being an English major and saying I can’t write a book.”
Oh the irony. Even though I have an MBA, I don’t know googly squat about managing money. Sure I’ve socked a lot away, but that isn’t a retirement strategy. Do I have enough? Hell if I know. When can I retire? Your guess is as good as mine.
Now that I have a baby, I’ve suddenly become hyper-responsible. I’ve retained a lawyer to create a trust for our family. I scheduled an appointment with a financial advisor I found highly-recommended through San Francisco’s Golden Gate Mothers Group. She gathered all my financial data and recently walked me through my plan. It was really informative and she advised the following:
1) Continue to max out our 401ks (no brainer).
2) Keep an emergency fund of 6 months living expenses in cash (already done).
3) Save at least $12k/year (duh).
4) Save an additional $12k/year to be able to pay private school tuition for Franco from K-12 (not a problem).
5) Rebalance my stock portfolio because having half my investments in Berkshire Hathaway isn’t smart (must rebalance ASAP, bad Catherine).
6) Supplement with life insurance for me and Dean.
All really great points that I will be acting on, especially life insurance. If you are young and healthy, life insurance is a no brainer. I should have gotten life insurance years ago! For a nominal monthly fee, I can ensure that all our debts (i.e., mortgage) are paid off and my family is provided for in case I get killed by a wayward Amazon Prime drone. Now if you’re old (i.e., in your 40s) then you’re screwed because life insurance premiums are exorbitant.
Now here’s the part that was really empowering. After decades of scrimping, eating Cup O’Noodle and maxing out my 401k from the time I was 22 when I absolutely hated my first full-time job after college, I am on track to retire when I’m 57 years old, which is when Franco turns 18. Happy dance! At that point, I can withdraw $10k/month until I die at 92 years old. How insane is that? First of all, I don’t even need half that amount to live comfortably every month. Secondly, there is no way with my genetics that I am living to 92 years old. No one in my family has lived that long.
Put this on your to-do list: schedule an appointment with a financial advisor. All of the above was free advice!
Thumbnail image courtesy of ddpavumba at FreeDigitalPhotos.net
Great advice Catherine and I am with you on trying to save as much as possible and also maxing out what is contributed to your 401K. And yes, we also thankfully have a great financial advisor. My parents use him, too and he came highly recommended. So, it helps to have some one investing our money that we have confidence in.
Oh it’s on my to-do list for next year since their fees aren’t cheap. 🙂 Plus, I want to have some income to invest elsewhere. I am really pumped to plan my retirement and get all that stuff settled! My family on both sides live long, esp on the father’s side – well past their 90’s soooo that will have to be well thought out. Lol. Glad you are on track Catherine! Have a great weekend -Iva
My future doesn’t look so bright right now. My husband makes a pretty ok salary but isn’t happy. I make an inconsistent salary but I’m so happy with what I do. We need to figure out the happiness and MONEY ratios. And just up them both. For our future. For our kids’ futures.
I am in ok shape. I have a defined pension that will pay me 2.5% of my salary per year I work. At 55, I will get 70% of my salary. Plus, I have my own 401/457k which started 16 years ago and an annuity I started three years ago.
I will be able to sub in a school district after my official “retirement”, so I will be working a little. That has been part of plan all along.
We’re in good shape, I think. We meet with a financial planner annually, and it’s amazing to see him track our income and expenses for the next 50 years. My husband would love to retire at 55, but definitely by 60. And if I happen to suddenly find a well paying job, it may be even sooner!
That’s awesome that you are on track and it’s not something that you will have to worry about. I’ll probably be working until I’m 70 years old. Sad face. I’m doing what I can on my salary but I still don’t think it’s enough. I’ve been on the fence about life insurance for a long time. We don’t have kids and we each have a policy through our jobs. BUT-it would be nice to have assurance outside of that because although we don’t plan on switching jobs who knows what could happen.
Where were you when I was in my twenties?! We’re not in horrible shape, but I wouldn’t say we’re in great shape either. Right now we live paycheck to paycheck. Not a great way to be, but the only other option is to earn more (which I am working on) or to move. Easier said than done when you have 3 kids who are teenagers who have lived in the same house for their whole life. It will work out, but this economy has been tough for many of us who own our own businesses.