Gas station without pumps

2018 February 19

Retirement planning

Filed under: Uncategorized — gasstationwithoutpumps @ 09:45
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One of the academic blogs I read recently posted a question about long-term money goals, listing their 6 main goals:

  1. Make sure that we’re ok if DH loses his job.
  2. Continue maxing out our retirement.
  3. Be ready to replace one or both of our cars. [Update:  better be just one!]
  4. Be ready for smaller emergencies and expected home maintenance.
  5. Pay 100% for the kids’ colleges.
  6. (MAYBE):  Save up enough money to move to Paradise permanently(?)

Of the 6 goals listed, I’m not interested in #3 (I have no car), and I’ve already made the other five:

  1. We have enough in savings that we would not have financial worries even if neither of us worked.
  2. I’ve been maxing out retirement savings for decades, so I could retire on my savings even if I didn’t have a defined-benefit retirement plan.
  3. I could replace my bike out of my current checking account—bikes are much cheaper than cars.
  4. I have enough non-retirement savings for replacing all the appliances in the house and for doing small remodeling projects. We’ve been doing major maintenance all along, so the only big thing coming up is replacing the water heater sometime in the next 5 years.
  5. My son will finish his BS this year and his MS in another year, and we’ll still have money in his 529 plan despite paying full tuition—I need to think about what to do about that. He’s the youngest of his generation on both sides of the family, and all of his cousins have had about as much college education as they can stand. I have too many great-nephews and great-nieces for it to make sense to make any of them beneficiaries. I could save the money for eventual grandchildren, but I fear it will be a long wait.
  6. Not only is my house in one of the most desirable neighborhoods in one of the most desirable cities in the country, but I paid off the mortgage years ago.

Retirement is not far off—I’m committed for another year of teaching, and I’ll probably do one more after that.  My most recent plan (see Sabbaticals until retirement) had me working until June 2021, and I considered working until the group health insurance would no longer cover my son (2024), but the 30-hour grading weekends are very hard for me to deal with this year, and I don’t see them getting easier. I could use up my sabbatical credit a year earlier and retire in June 2020.  I’m afraid that my Applied Electronics course would simply disappear at that point, though, and I really would like for there to be at least the seed of a market for my book.

I plan this year to make an estimate of how much our family spends each year, so I can see whether we’ll be living on just the defined-benefit pension or will have to dip into retirement savings when I retire. Since my pension will be 2.5% * years of service * highest-3-year-average-gross-pay *85.7%(for 100% survivor benefit), I’ll be getting about 70% of my current gross pay. Because I won’t be putting any of that into retirement savings or the defined-benefit plan, the taxable pay will be about 80% of the current, and so the take-home should be also. I think that comes to about what we spend in a year, but I’m not sure—when you are consistently spending less than take-home pay, even after maxing out retirement savings, there is not much incentive to keep track.

I also need to figure out whether it makes financial sense to “buy back” the service credit for the times I took sabbatical at 2/3 pay instead of full pay. The computation gets complicated, because it trades off cash now for an annuity in the future, and annuity pricing is pretty murky, being based on weird assumptions about the future of investments and the chance of dying. My wife and I will also need to decide whether to opt for 100% survivor benefit or get more per month with a reduced survivor benefit—she’s convinced I’ll outlive her (based on parent and grandparent ages at death), and we do have enough savings that even the minimum 25% survivor benefit would not put her in financial difficulty.

My wife has suggested a few things to do with our retirement savings:

  • Give more to charity (especially local theater and music groups, but also increasing our charitable giving to Planned Parenthood, 2nd Harvest Foodbank, Southern Poverty Law Center, ACLU, …). I need to figure out whether a donor-advised fund is the best way to do this, as I’ll no longer have payroll deduction as an automatic mechanism.  Some of the donations are also not tax-deductible, so I need a mechanism for keeping track of that also.
  • Travel more. We have done very little travel for the past couple of decades, in part because of work demands, in part because we have very different tastes in travel.  I think that we can resolve the differences in taste (I mainly have to give up on some of my frugality), and we can arrange some separate trips (I’ve not done a bike tour in decades, and she’ll want an opera tour).
  • Go to more theater and concerts.  We go to almost all the local theater, so this would mean long public transit trips, or travel to theater festivals.  I think I can convince her to make the long trip to Ashland for the Oregon Shakespeare Festival, particularly if we go with the Santa Cruz Shakespeare bus group—we can’t do that group trip this year, because it is scheduled when both of us have job commitments.  I have no interest in concerts, being not very musical to begin with and going deaf on top of that, but I’d be glad to subsidize some of her concert and opera excursions.
  • Replace our furniture, most of which is either grad-student specials (futon sofas with worn-out covers) or cherrywood antiques that I bought 34 years ago.  My wife prefers light modern furniture (1950s styles), which I don’t care for, so we’ve rarely agreed on a furniture purchase. I think that our custom-built armoire for storing towels is the last piece of furniture we both really liked—maybe we need to commission more new pieces, rather than trying to find stuff that already exists.  Custom furniture can burn through money fast!
  • Take community college courses and do volunteer work (those are more ways of using time than of using money).

I’m also thinking that I should get the house remodeled for ADA compliance before I retire. With any luck, we’ll never need ramps and grab bars, but it is better to put them in without needing them than to need them and have to wait months for construction work without them.

Other things we’ve thought about but not to the point of having even vague plans:

  • eat out more. I’d like to, but my wife finds once a week about right for her—that may change when she retires and needs more incentive to leave the house.
  • remodel the kitchen.  The laminate countertops are wearing out (they’re 40–50 years old) and my wife would prefer lighter colors for the cabinetry, but there is not a lot we can do about the shape of the kitchen, which is long and narrow, so a corridor kitchen layout is all that is possible.
  • sell off a lot of our books, to make room for new ones—we ran out of bookshelf space years ago, and the boxes and piles of books are beginning to make it hard to move around.  There are a few more walls we could add shelves to, but retirement would be a good time to start weeding the collection (particularly since I have another 40 shelf feet or so of books that would come home from my office).  Selling books is harder now that the great used bookstore Logos has closed (on the flip side, we’re also buying fewer books without their stock to browse).
  • exercise more deliberately. Right now we both rely entirely on our human-powered transportation for exercise, but if we stop going to work our exercise levels will plummet.  I’ve been thinking that I’d like to run a marathon sometime in my life, which would mean soon after I retire.  It’d probably take me about 3 years of training to build up the fitness—I’ve never run more than 15k in my life, and that was when I was 16.  I haven’t done any running (other than when I’m late for class or a meeting) in decades.

One of my biggest retirement planning concerns is figuring out how to keep myself physically, mentally, and socially active.  Almost all my activity revolves around my job in one way or another, and I don’t see any of the hobbies I’ve had in the past 3 decades growing to fill that space.  My summer and fall will be spent, in part, on looking for activities that will hold my interest for the next five years.

2 Comments »

  1. Perhaps a strange question, but is there a reasonable way to pay someone to do your grading? If you truly enjoy teaching the course, and since you’re pretty secure financially, could you personally hire someone to take care of the aspects of your teaching that you don’t enjoy? If I could financially afford it (and thought it was good teaching policy), I would definitely do that. I already outsource my multiple choice grading, but thankfully it’s to an app that costs me all of $7 a year.

    The Ashland Shakespeare Festival is superb and completely worth going to. I’ve just been once but really enjoyed it. I went on the closing night of the show once, and they ended the show with candles and song in the aisles (I think that’s just for closing night, but I’m not sure).

    Comment by Leah — 2018 February 19 @ 17:58 | Reply

    • The feedback that the students get on their writing is an important part of the course, I think, and I would feel guilty outsourcing it to someone less able to provide the feedback. I have outsourced the grading of homework and the prelabs (first draft of the reports) to a TA, though I had to take some of that back when she started exceeding her 20 hours a week. TAs are expensive (about $6000 for the quarter, plus benefits, I think). I could try to get an undergrad for the homework, which would be cheaper, if I could find one who was competent and diligent—I think I may have used up the pool of good students willing to work for me when I hired the 4 group tutors for the lab.

      I’ve been to Ashland twice—both times on group trips in the spring with my son, but my wife has not been able to go yet.

      Comment by gasstationwithoutpumps — 2018 February 19 @ 22:31 | Reply


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