Larry wonders if his efforts to save for both him and his wife, Ava, are enough to assure a secure retirement and whether early retirement is in the cards. The retirement lifestyle Larry envisions isn't much different than his lifestyle today. He expects to stay in the same house and have fewer bills. He does hope to vacation three weeks each year, frequenting a time share they own in Florida. They also have an RV that will get greater use during the retirement years.
Ava works part-time and doesn't have a retirement plan at work. They each have a traditional IRA, though they haven't funded it in several years and the modest account balances reflect this.
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Larry
is financially well organized
and is money-wise. All
credit cards are paid
in full every month. In
addition to the RV, they
have two cars. But only
one has a car payment
and carries an ultralow
interest rate of 4 percent.
Larry and Ava are on target to be mortgage-free in retirement. They have a 5.25 percent fixed-rate mortgage and they pay an additional $42 per month toward the principal. They have not itemized their tax deductions in recent years, so the mortgage interest deduction is not applicable. They will own the home outright in six years, which will result in a notable reduction in their expenses once retired.
Larry
has been contributing
10 percent of his pay
to a Thrift Savings Plan
at work since the day
he became eligible to
participate 12 years ago.
He does have an outstanding
loan through his Thrift
Savings Plan that will
take another 3½ years
to repay.
Although their IRA balances are low, Larry has accumulated six figures between his Thrift Savings Plan and a variable annuity purchased three years ago.
They do not expect to incur any tuition costs for either of their children, as their son and daughter each have a separate trust account that can be accessed for financial needs.
The Andersons'
emergency savings cushion
is a little low. They
have roughly three months'
expenses spread between
a savings account, CDs
and some surplus funds
in a checking account.
But some of those CDs
don't mature until 2008
or 2009, so a large unplanned
expense could result in
an early withdrawal penalty.
The only life insurance coverage he currently has is provided through his employer, and would provide one to two times his salary in the event of his death. None of his pensions have a death benefit. He has, and can maintain, health insurance through the military due to his previous service. |
