My husband and I are in our early thirties and we have not started a

retirement plan yet. I have been very worried about what position we are
going to be in when we are ready to retire. Im assuming we wont be able to
retire at 65, but I have no idea how long we will need to work. For this
reason, I have chosen to look into a retirement plan for my final project. I
hope to learn at what age I think we will be able to retire comfortably, how
much we need to start putting into a retirement plan (Im assuming it will be
more than the usual so we can make up for lost time), and how much money
we can expect to have by the time we retire. At this point, my hypothesis is
that we will retire late and will not have enough to be worry free by the time
we retire; hopefully by planning we can change that.
In order to find this information, I plan to develop a retirement plan
that is realistic for us. In order to utilize this retirement plan I want to work
out a monthly budget according to the needs we have now as well as what I
predict we will need in the future (clothing, food, schooling, and recreational
activities for the kids). By working out this monthly budget I will be able to
get a realistic estimate as to how much we can put into a retirement plan
now. I also want to calculate the budget using different income levels as my
husband is just in the beginning of his career and I am currently unemployed.
I would like to see how much we can put into retirement once I start working
and how much we will be able to do while Im not working (which will
hopefully be until our kids are all in school). Next, I want to work out a
retirement budget to get an idea of what our monthly costs will be. I also

want to look at how a mortgage payment will affect us into retirement, we

have not purchased a home yet and will likely need a 30 year loan. I read
that one rule of thumb is that youll need 70% of your annual pre-retirement
income to live comfortably (CNN Money). However, thats if your mortgage
is paid off and you are in excellent health, I am worried that we wont have
either of those as my husband is already in poor health and we havent
purchased a home yet. One thing that might work in our favor, however, is
that if we retire later we will likely be eligible for Medicare at the time of
retirement which would help a great deal with our medical needs once
insurance is not provided by employers.
My first step in this process is to figure out our monthly budget. I did
this by estimating our financial needs if we had two kids, one in daycare and
one old enough to be in school all day. A lot of the bills I filled in with what
we are paying now; this would include cell phone, gas, electric, water, sewer,
health insurance, dental insurance, car and home insurance and so forth. I
retrieved an estimate of what property taxes and life insurance might be off
of valuepenguin.com. After filling out this budget (please see attachment 1)
I obtained an estimated monthly budget equaling a total of $3,521.32.
Then I proceeded to estimate about how much we might need during
retirement. To do this I first looked up some homes that would fit our needs
and would fit into our budget. From what I saw, I think it would be safe to
assume that our monthly mortgage payment will be around $950 to $1,200 a
month; hopefully well only have to make this payment 5 to 7 years into

retirement. Then I found a retirement budget worksheet and filled it out

(Please see attachment 2). To predict the monthly expenses on this budget
worksheet I reviewed the costs with some elderly couples I know from
church. I did this in large part to learn about expenses I may not be aware of
that come with aging. For example, I learned that it would be wise to
anticipate helping my adult children financially, also that I may have parents
move in with us at some point. I was also told to look into whether or not
prescriptions are covered by my health insurance.
For medical insurance I anticipate going with Medicare. According to
Medicare.gov, Part A (which is hospital insurance) does not have a monthly
premium; Part B (medical insurance) costs, on average for the year 2014,
$104.90 a month. To ensure that we would have prescription drug coverage
we would also need to sign up for Part D, which would allow us to get most
prescriptions with a $10.00 copay; because we will likely make less than
$85,000 a year we will not be required to pay an additional premium for Part
D.
I again retrieved home owners insurance from valuepenguin.com and
an estimate of property taxes from the Iron County Assessors website. The
rest of the budget was filled out with a considerable amount of estimation. It
is difficult to predict traveling expenses when I dont know if I will have
children that live out-of-state, if I will pick up an expensive hobby, what kind
of house and automobile repairs I will need, and how many family members I
will have to buy gifts for. To try and compensate for that, I included a

monthly contribution to each of these categories that will have to be

readdressed and adjusted once I have a better idea of our situation at the
time of retirement. With this rough estimation for the retirement budget I
can at least have an idea of what our expenses will look like; it came to a
total of $4,189.46 per month.
I am basing these two budgets on two different annual incomes.
According to the Bureau of Labor Statistics, a Funeral Director (which is my
husbands occupation) will earn a mean annual wage of $52,000. I worked
off of the national mean annual wage because I do not know yet which state
we will end up in. The second annual income I used is my husbands income
as well as my own if I were to start working now. The Bureau of Labor
Statistics lists the mean annual income for Human Resources (my chosen
profession) as $36,600. However, in an effort to be more realistic, I am going
with an annual income of $25,000 (which is closer to the jobs I qualify for
here in Utah).
With these salaries in mind, I was able to use a 401k retirement
calculator from bankrate.com to get an idea of how much we could have in
our 401k at the time of our retirement. If we are going off of just my
husbands salary, assuming he would contribute 10% and his employer
would contribute 6% (which they currently offer); we would have
$724,047.00 at the time of retirement. If we were to combine my salary with
his, again assuming our 10% contribution and our employers 6%, we would
have $1,068,241 by the time we retire.

To get an idea of what we can both expect to receive from Social

Security at the time of our retirement, I used a benefit quick calculator from
the Social Security website. This calculation shows by the time he retires,
my husband can expect about $1,634.00 a month if he retires at 65. If he
were to work until he was 70 he would receive about $2,339.00. According
to this same calculation, I would receive $1,273 at age 65 and $1,825.00 at
age 70. This would mean that we would receive a total of $2,907 if we retire
at 65; or $4,164 if we work five more years.
Ultimately, I was able to combine all of this information into some
semblance of a retirement plan. As mentioned before, a rule of thumb for
retirement plans is to plan on about 70% of your current income. According
to StateFarm, if we base our retirement predictions on my husbands salary
alone, we would need to have about $1,224,900 if we lived to the age of 90.
If we base it on our combined salary, we would need $1,752,200 to live
comfortably for our last 25 year. However, according to my monthly
retirement budget I only need $1,256,838, which boils down to $4,189.46 a
month. If I combine my husbands 401k ($724,047.00) with his expected
social security ($1,634 x 12 x 25) we would have $1,214,247 for our
retirement. If I combine our 401k ($1,068,241) and our social security
(($1,634 x 12 x 25) + ($1,273 x 12 x 25) = $872,100) we would have
$1,940,341 for our retirement. With my husbands salary alone we would
have ($1,214,247/25/12) $4,047.49 to spend per month; which is $141.97
short of our predicted budget. With our combined salaries we would have

($1,940,341/25/12) $6,467.80 to spend per month; which is $2,278.34 more

than we need for our predicted budget.
This is a very rough draft with a lot of values that could likely be
increased or decreased depending on occupational opportunities and state of
residence. If we continue to reside in Utah my husband will not be making
$52,000 a year which is a huge factor to consider; also these estimates were
made with the assumption that this retirement plan would start this year.
However, we are not prepared to do that just yet which means that, if we
retire at 65, we will have less than 31 years to complete our plan.
Though its a rough draft, preparing this retirement plan has given me
the opportunity to break down budgets to get a realistic idea of what our cost
of living is and will be. I also have a general idea of what our contributions to
a 401k could turn out to be, especially if we were willing to make the
sacrifice of putting 10% of our income into it. Finally, I can see that it is not
too late to plan and be quite prepared for our retirement; although the time
to start our plan is now.

References:
401k Retirement Calculator. (2015, March 16). Retrieved December 8, 2015, from
http://www.bankrate.com/calculators/retirement/401-k-retirement-calculator.aspx
Financial decisions are complicated. (n.d.). Retrieved November 21, 2015, from
http://www.valuepenguin.com/
Overview of BLS Wage Data by Area and Occupation. (2013, December 16).
Retrieved December 8, 2015, from http://www.bls.gov/bls/blswage.htm
Personal Property - Iron County Government. (n.d.). Retrieved November 21, 2015, from
https://www.ironcounty.net/department/assessor/personal-property/

Retirement Illustrated. (n.d.). Retrieved December 8, 2015, from

https://learningcenter.statefarm.com/calculators/retirement/index.html
RETIREMENT PLANNING: How much to save for retirement. (n.d.). Retrieved
December 8, 2015, from http://money.cnn.com/pf/money-essentials-retirement-howmuch/
Social Security Quick Calculator. (2014, May 27). Retrieved December 8, 2015, from
https://www.ssa.gov/oact/quickcalc/