So. I made it. I’m still 62 for a little bit longer this year before I turn 63. I actually retired from my job about 7 years ago after 27 years or so at the same place. An international financial services firm based in Paris, with offices in NYC, where I worked.
Financing a 30 to 40 year retirement
The way I worded my employment, it might give the impression that I made a lot more money than I did. I did OK, barely breaking six figures until the last few years, helped along with some moderate bonuses, and company stock purchases. But we actually retired in debt. $350,000 in debt. But as a lot of us in IT for 25+ years were now making over $100,000, with bonuses and stock options, the company decided to replace us with fresh college graduates who would start at $45,000 to $65,000. So a lot of us “old-timers” got offered packages and severance that was worth a free year of pay.
Another incentive to take that package was that my wife had just retired a couple years earlier, with a pension that continued to pay her about 75% of her most recent salary. In addition to that, her Social Security kicked in before mine did.
But we still had all that debt back then, plus 2 out of 3 kids still in college. One in Law School and one in a liberal arts school up in “Cambridge” (as we call it to feign humility). A third had already married after graduation.
So with some college loan debt, and mortgage debt, and daughter’s wedding debt, and sundry forms of credit card debt, I embarked (or disembarked) into retirement, with a half-eaten 401k, and a pension plan I haven’t touched yet. I already ate the rest of the 401k just to tide me over until until Social Security kicked in last year.
What about all that debt?
So that’s the story. The debt needle has barely budged in 7 years, only moving from 350k to about 320k in the last few years, but that’s because we forgot to slow down our yearly travel expenses, and we continue to remodel the house, and try every new appliance. We travel about 3 times a year now instead of only 1 to 2 times in the past. Also, we paid $200k against debt in the last 7 years but most of that just covered the interest. We always planned to pay off the high interest credit cards (CC) first, but travel and remodeling and new appliances, etc. They seem to keep the credit cards replenished.
Not that it’s any of your business, but the plan is to continue to pay down about $3k/mo ($36k/yr) against CC and other debts for 10 years. In the earliest years, that knocks off $15k of principal, and $25k in later years. At an average, therefore, of $20k/yr, $200k of debt is gone in 10 years. $200k down and $120 to go. In 10 years, we should finally be able to control ourselves from buying new things constantly. By then I’ll also start my pension, so that altogether, we’ll put $5k/mo (60k/yr) into the debts and finish it all off 12 years from today. (About May 2032.)
I have my doubts based on past experience, but it looks OK on paper. In fact, with enough tweaks to this plan, we could really do the whole $320k in about 9 years. And still travel about 3 times a year.
If the plan fails, the house might still be worth about 400k by then, and we could move to something smaller, and use the 200k difference toward a speedier debt payoff.
The final backup plan, of course, is to give up travel and go back to some kind of work. Even now, I try, often successfully, to bring in another $20k/yr from one of my hobbies.
But enough about finances. Retirement means having a plan for your money, and letting that plan do it’s work, so you don’t have to fret about it -until you have to. Otherwise, it’s not really retirement. Your mind should be at rest from finances, too.
That is the necessary “start” to retirement. But it should not also end on this topic. Retirement should mostly be about other things. It should be about enjoyment. Thus, the next post:
Enjoy retirement. Don’t just plan to enjoy it. [link]