Did I save too much for retirement...?

Well, I guess the answer is 'well, it depends.'

I started thinking about it a lot after I realized I saved too much for my oldest to go to college. I saved $90K in his 529 by putting in $200 bucks a month for 14 years (he is now 18), he ended up with a full tuition scholarship, also he joined the National Guard and gets those benefits to include the Reserve GI Bill, Army Tuition assistance and additional state funding. My daughter is three years younger than him and has $60K in her 529. I know, I will make the best use of the new rules on converting 529 funds into a beneficiaries IRA (the first $7K goes into his Fidelty IRA this year).

I retired from the military with 26 years active service and get a little in VA benefits, so my annual net from that is $96K. I also work at a sweet gig that pays me $115K annually (with zero stress), and my wife also works bringing in another $45K. We have no bills, no mortgage and have a net worth of $3M, half of which is in retirement savings (TSP, IRAs and 401K), $1M in our home, and the rest in CDs, bonds and S&P 500 index funds.

My intent is to stop working when my daughter graduates HS, sell our home, and travel once we know that she gets into the college routine.

With that being said, I'm sure that many in this forum are in the same boat. I would love to hear your thoughts and perspective on how you tackled your very first world problem of having too much. My wife and I are not into 'stuff', but rather experiences. We travel to Europe once or twice a year, and we love to take the kids skiing out to Tahoe where my sister lives in the winter, so it is not like we stay home and watch the paint dry.

I guess I should mention that I'm 53 and my better half is 50.

Thanks for your thoughts. V/r, BW in Florida.

Welcome to the forum! Looks like you have done very well. Congratulations.
If you retire in your 50's as you think, you may very well have another 40+ years to fund.
Have you answered the "Can I retire Yet?" questions in the Early Retirement FAQ forum?
Do you know your budget now and what your retirement budget plan will be?
With a military pension, savings, and future SS, you have the proverbial "3 legged stool"--a nice place to be.

The biggest question is "What is your expected spending in retirement?" All else flows from that.

I don't worry whether I saved too much. I currently have/do everything I need or want to have/do in retirement. I will probably leave a large estate, but that doesn't bother me.

Our experience.....this is a good challenge to have. Much better than the alternative!

other than the 529s I don't see where you have "saved too much".
3M - half in retirement accounts - 1m tied up in the house = 500k in spendable savings until age 59.5.
You have an awesome, enviable pension and current income and your COL might be low. But I don't see enough there for me to retire at 53.

Spock said:

You have an awesome, enviable pension and current income and your COL might be low. But I don't see enough there for me to retire at 53.

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$96k pension, especially if cola'd, + having healthcare covered, would be enough for most any of us here. Add the $2m in investments and I'd be booking my retirement trip today.

Spock said:

other than the 529s I don't see where you have "saved too much".
3M - half in retirement accounts - 1m tied up in the house = 500k in spendable savings until age 59.5.
You have an awesome, enviable pension and current income and your COL might be low. But I don't see enough there for me to retire at 53.

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How do you know if the expected retirement expenses haven't been listed yet?

By my standard, you have not saved too much for retirement. More like it should be enough, depending on your expenses. $96K in pension is sweet. The question is what are your expenses in retirement? We spend before tax about $250K to $300K a year and would not have been able to retire in our 50s with $2M in investable assets.

You mention your pension, but you didn't mentions expenses or whether your better half will get any pension income should you shuffle off this mortal coil early. I have seen two men on my block with good pensions die, and their widows left unable to afford to keep us their lifestyle when the husband's pension and one SS disappeared.

I don't see having "too much" as being a problem.

I don't have that 'problem' but a few of my daughter's paternal relatives do. Her grandfather gave her a healthy chunk of money, originally intended for college but then she didn't need it for that because her paternal aunt/uncle paid all her college expenses.
I don't know all of what they do with their extra money, but I know they've invited nieces and nephews along on trips to China, Africa, etc. And their name is on a building at a university, so I guess they might have paid for that.
So perhaps you could set aside money for potential future grandchildren if you don't have any current needy nieces/nephews.

Gumby said:

The biggest question is "What is your expected spending in retirement?" All else flows from that.

I don't worry whether I saved too much. I currently have/do everything I need or want to have/do in retirement. I will probably leave a large estate, but that doesn't bother me.

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Thanks Gumby,
What are your thoughts on estate planning? I would like to squirrel some of my lifes savings into some kind of trust to protect it. A couple of years ago my wife was in a fender bender and there was only a scratch on the other other car, they ended up trying to sue us for $1M, I ws totally blind sided by it (of course that is how injury lawyers role, but it still spooked me to no end). Our insurance company settled the issue for $4K, but that really got me thinking about it. What are your thoughts?

MarieIG said:

You mention your pension, but you didn't mentions expenses or whether your better half will get any pension income should you shuffle off this mortal coil early. I have seen two men on my block with good pensions die, and their widows left unable to afford to keep us their lifestyle when the husband's pension and one SS disappeared.

I don't see having "too much" as being a problem.

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You are right Mariel, I thought about that in my 30s, and I have a couple of life insurance policies (whole life), and everything is in a joint ownership. So, if I kick off to the big space ship in the sky early, my dear half is going to be just fine. We are both very simple people, in all honestly, my wife would pick up and move back with her parent in Sweden (yes she is Swedish, from Stockholm) and be just fine. The kids will be ok as well. Trust me, I thought and prepared for that at an early age!

retbjwsjfl said:

Thanks Gumby,
What are your thoughts on estate planning? I would like to squirrel some of my lifes savings into some kind of trust to protect it. A couple of years ago my wife was in a fender bender and there was only a scratch on the other other car, they ended up trying to sue us for $1M, I ws totally blind sided by it (of course that is how injury lawyers role, but it still spooked me to no end). Our insurance company settled the issue for $4K, but that really got me thinking about it. What are your thoughts?

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Not Gumby, but why not consider an Umbrella policy. In most states you can secure a 2m policy for a premium somewhere in the $500 range yearly cost.

pacergal said:

Welcome to the forum! Looks like you have done very well. Congratulations.
If you retire in your 50's as you think, you may very well have another 40+ years to fund.
Have you answered the "Can I retire Yet?" questions in the Early Retirement FAQ forum?
Do you know your budget now and what your retirement budget plan will be?
With a military pension, savings, and future SS, you have the proverbial "3 legged stool"--a nice place to be.

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I appreciate it.

Dtail said:

Not Gumby, but why not consider an Umbrella policy. In most states you can secure a 2m policy for a premium somewhere in the $500 range yearly cost.

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I did! I had a $1M umbrella, that is why Morgan and Morgan went after it! Here in FL, you have to report all of your insurance coverage, and they went for it all!

Dtail said:

How do you know if the expected retirement expenses haven't been listed yet?

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Great thought. Expected retirement expenses. My healthcare is provided by the VA, and my wife and kids have TRICARE at ~$700 per year premium. Granted, it is 'budget government healthcare' but we have never had any issues, and we get annual blood work and checks up's and if anything comes up they deal with it immediatley. Dental is a different story, my current employer covers that, so I will have to cover that cost when I depart my work. I have been leary about signing up for long term care insurance, so I'm not ready to jump on that grenade just yet, so I'm basically looking a $2K in rent, insurance, food, utilities ~$3K, and my monthly take home is $8K, so I think I will be ok. And that does not touch my savings. However, my goal is to spend $8K a month ( which will be hard for me), and then I need to figure out how much and at what frequency to widdle down my retirement. That is the best picture I can draw, 3 years out from retiring from this current and last job.

retbjwsjfl said:

You are right Mariel, I thought about that in my 30s, and I have a couple of life insurance policies (whole life), and everything is in a joint ownership. So, if I kick off to the big space ship in the sky early, my dear half is going to be just fine. We are both very simple people, in all honestly, my wife would pick up and move back with her parent in Sweden (yes she is Swedish, from Stockholm) and be just fine. The kids will be ok as well. Trust me, I thought and prepared for that at an early age!

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I am glad to see that you are taking DW into consideration in your plans.

Spock said:

other than the 529s I don't see where you have "saved too much".
3M - half in retirement accounts - 1m tied up in the house = 500k in spendable savings until age 59.5.
You have an awesome, enviable pension and current income and your COL might be low. But I don't see enough there for me to retire at 53.

Click to expand...

I still have 3 more years working, I have to get my daughter out of the house and into college. So, I hope that $3M will grow a little more, plus our expenses are $4K per month, so I save the rest, my savings should be a little larger by then.

RetiredHappy said:

By my standard, you have not saved too much for retirement. More like it should be enough, depending on your expenses. $96K in pension is sweet. The question is what are your expenses in retirement? We spend before tax about $250K to $300K a year and would not have been able to retire in our 50s with $2M in investible assets.

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RetiredHappy, wow! That is awesome. My standard is lower than yours, I'm used to sleeping on cots and being eaten by bugs and if I got a hot cup of coffee in the morning life was grand! I'm happy for you.

retbjwsjfl said:

I did! I had a $1M umbrella, that is why Morgan and Morgan went after it! Here in FL, you have to report all of your insurance coverage, and they went for it all!

Click to expand...

Which is why you have good sized umbrella policy in the first place. It gives the insurance company a strong incentive to defend you. Settling for $4k was a nuisance value settlement by the insurance company. If the plaintiff had any case at all, they wouldn't have settled for $4k.

With respect to asset protection trusts, generally, your IRAs, 401k etc. are protected in bankruptcy anyway. And in Florida, I think you probably have an unlimited homestead exemption (you should check on this), so right now, the maximum assets you have that can be seized to satisfy a judgment are those in regular accounts, which you say are currently about $500k. You have to decide how much you want to pay to protect that money. My own plan is just to be really well insured and avoid doing foolish things.

retbjwsjfl said:

Great thought. Expected retirement expenses. My healthcare is provided by the VA, and my wife and kids have TRICARE at ~$700 per year premium. Granted, it is 'budget government healthcare' but we have never had any issues, and we get annual blood work and checks up's and if anything comes up they deal with it immediatley. Dental is a different story, my current employer covers that, so I will have to cover that cost when I depart my work. I have been leary about signing up for long term care insurance, so I'm not ready to jump on that grenade just yet, so I'm basically looking a $2K in rent, insurance, food, utilities ~$3K, and my monthly take home is $8K, so I think I will be ok. And that does not touch my savings. However, my goal is to spend $8K a month ( which will be hard for me), and then I need to figure out how much and at what frequency to widdle down my retirement. That is the best picture I can draw, 3 years out from retiring from this current and last job.

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Is your 96k pension cola'd? Assuming the taxes are in the 86k spending, even with a non cola pension, you should be good to go.

Gumby said:

Which is why you have good sized umbrella policy in the first place. It gives the insurance company a strong incentive to defend you. Settling for $4k was a nuisance value settlement by the insurance company. If the plaintiff had any case at all, they wouldn't have settled for $4k.

With respect to asset protection trusts, generally, your IRAs, 401k etc. are protected in bankruptcy anyway. And in Florida, I think you probably have an unlimited homestead exemption (you should check on this), so right now, the maximum assets you have that can be seized to satisfy a judgment are those in regular accounts, which you say are currently about $500k. You have to decide how much you want to pay to protect that money. My own plan is just to be really well insured and avoid doing foolish things.

Click to expand...

Thanks for the advice, I didn't think of the perspective you provided about the nuisance settlement. Gotcha on your other comments, well recieved. I appreciate it.

You're probably in good shape, as others have said, your desired income and spending in retirement is what matters, not necessarily your expenses while still working.

Perhaps browse the

Dtail said:

Is your 96k pension cola'd? Assuming the taxes are in the 86k spending, even with a non cola pension, you should be good to go.

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Yep, military retirement and VA compensation are tied to the annual social security COLA adjustments. Thanks for piping in.

Oops.
Perhaps browse the 2024 Travel Plans thread to get an idea what retired folks with money are doing this year. An extra $50k beyond basic expenses is helpful for some of them...