Thanks for the suggestion. Actually I am an Accountant for a private company. Very hands on as the company isn’t huge, but their finances dwarf my personal finances. I can and have been monitoring my outflow of funds for a long long time. These days mostly an expense is reduced or is gone sometimes.
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I paid for both kids private schools from K to college. I also went through a divorce which took 50% of my assets. There were times when I have thought about how much more I would have had if I didn’t pay for private educations, but 50% of it would have gone to their dad. I rather it went to the kids. Haha.
I am lucky that it worked out. I was able to stay in a career that paid fairly well and allowed me to re-build my savings for retirement. It could have easily gone south for me. I also think my investment in my children have paid off. They are both at a fairly high paying job, happily married with kids. I don’t have any regrets and I think I would pay for their private schools all over again. D1 is paying for her daughter’s private school in NyC. I am still a big believer of good education.
My projection of my spend after retirement is 100% of my current spend. I think it may even be more because I probably would do even more traveling (I take 3 major oversea trips now).
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My DW and I were saddled with college loans when we attended a Top 20 school back in the day. It made life in our 20s not nearly as fun as it should have been given our income.
I never wanted my two kids to have to take out loans. We had a 529 for them and a set amount we would cashflow each year. DD1 was thinking med school when she started, so we made sure she attended a school good enough to make that happen. It was a state school out of state. Scholarships dealt with almost all tuition. We were able to handle the R&B. DD2 wants to be a teacher, so prestige is not important. She went out and got herself a full ride for all the COA. So her 529 will pay for her Masters at some point. Most all teachers get one eventually. Or she will roll anything left from her 529 into a Roth IRA. Not huge $$$ but if she leaves it be until 60 it should grow nicely.
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About a year after graduation, son asked why he didn’t have student loans. It had never crossed his mind, I guess! I told him because we started saving when he was born, he got some scholarships, and his grandmother contributed. And he had internships every summer to earn spending money.
Some of the savings were when I cashed in my retirement fund from my Federal job, which I left when he was born. I was grandfathered into that system rather than SSA and had the option to cash it in instead of waiting another 20 years of more to start drawing retirement benefits, which would have been fixed at that current rate and no COL increases. So I put the money into state college bonds, and 18 years later drew them out tax free.
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We didn’t spend on boats, vacations, or second homes either. But then…most of our friends did not either.
I understand what you are saying…and sometimes I do wonder what I would do with the probably close to $500,000 we spent on college costs for our two kids (we helped with living expenses for grad school).
But we are content with what we have, and feel fortunate that we were able to do what we did.
One piece of free advice we didn’t do. My husband got a bonus for work just about every year, and some were sizable ones. In retrospect, I wish we had banked those bonuses. We instead used them for things like replacing cars, getting our driveway paved, etc. If we had saved all of DHs bonus money, we would have easily fully funded kids college costs out of just that.
Luckily we live in a very nice and grounded neighborhood where everyone sort of has similar values financially. As do the members of both of our families, and the vast majority of our friends.
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I think this is a good rough & dirty/back-of-the-envelope approach. I would suggest adding in an amount for lumpy expenses–say a new car purchase if one does not have a car payment in current expenses, or any deferred home maintenance, assuming one has been deferring maintenance. I can go years with very little home spending but I have over $100K looming (roof, HVAC, driveway & exterior painting).
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You should also account for pull-backs which is where FA modeling is helpful. In figuring out how large a nest egg we needed, our annual (re)modeling accounted for a 20% pull-back every ten years, unlikely but provided the comfort factor we required to provide a measure of calm during guaranteed future market volatility.
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On retirement planning, I have taken over the finances (both bill-paying and investments for my 93 yo MIL). She is still mentally alert but was never good at financial / economic decisions. She was left a substantial amount of money from her parents and then more from her husband. When her husband became ill, I tried to get them to sell his company and indeed brought in probably the best buyer in the country. For reasons unrelated to her, the deal did not happen, but thereafter, she would turn down deals because they weren’t as high as the deal she turned down the year before. It probably cost her between $5 MM to $10 MM CAD. Even so, she has had money to fund three residences and some nice trips with grandkids for the 25 years since her husband died.
When I took over, I asked the FA to do a financial plan for her that enables her to fund her lifestyle. She now realizes that she has substantially less money than she thought she did. She is planning to give a gift to each grandchild and we could see that her choices mean she will not bequeath that much to her 4 kids, except a magnificent piece of real estate that she has encumbered for 5 years after her death, which will be too late to be of major value to her kids (well might be meaningful for the youngest). Indeed if she were to need live-in 24 hour care for a couple of years, she would refuse to go into assisted living so the costs (estimated by the FA) would eat up much of what she would leave her kids.
I think doing the planning was eye-opening for her and she was a little disappointed she was not going to be leaving more for her kids.
We did all of our planning expecting no inheritance. That’s fortunate, because if we get anything meaningful, it would probably be when we are in our late 70s or even 80. But, her two youngest kids are less well off and, for at least one, much of her retirement planning was probably inheritance.
She could have made decisions to cut costs. I suggested to her 10 years or so ago that she really should trim from 3 residences to 2, but she bristled at the suggestion.
I’m a proponent of doing the financial plan and then redoing it periodically. We are doing so with one of our FAs.
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Really like the reflective post, and those that are younger/pre-retirement by some years can perhaps also consider having more of a buildup of resources ‘for a rainy day’ - unexpected things, that if they happen will not lessen greatly the retirement experience.
Both our DDs went to sleep-away state schools. They had great scholarships there, and due to our other planned resources, both came out of college with no debt – they graduated on time, kept their scholarships throughout. We had a local state school (20 minutes from our home) that they also would have had scholarships at, but they would not have had the immense opportunities they have had. For DD1, it really changed her career trajectory and earnings because she was able to hire into the VA Hospital as a new BSN in her city due to a special ‘hook’ program the VA had with a program she was in as a college student. She rose to nurse management and was able to transfer her job to another state when she followed her husband’s job. Our state doesn’t have high enough pay for nurses, and her new state had a 25% pay increase (her VA Hospital pay in our state was far higher than other nursing jobs too). For DD2, she was able to complete a double major in her field instead of just civil engineering degree offered at our local college (she majored in civil and architectural engineering with three extra upper division courses). DD2 has moved into job with more design/architectural engineering, which was her desire. Both had other significant opportunities during the college years. Since we had saved, the costs of room and board did not deter us.
I always intended to work in my career, but with DH’s job morphing to extensive national and international travel, chose to be SAHM and had a later sunset career at lower pay. Also survived aggressive cancer, not much you can do about that bit of bad health but be lucky to survive. Earlier savings in retirement funds was a help (we had children later in marriage), we were settled in our ‘forever’ home in this area, and the growth of our stocks in 401k due to good management was important for buildup of our nest egg. Now we also have FA and 5 annuities with good cash flow (non-penalty monthly withdrawals from annuities) along with our SS monthly funds.
There is a new paradigm which is shaking people up - but one can examine the past, adjust in the present, and plan for the future.
‘Bad things happen to good people’ - just like the opposite, and good and good and bad and bad variables. For some/many/most of us who have journeyed through struggles growing up or in adult life - and those struggles can be in many ways that affect QOL, can do the best we can for today and for preparing for the future. Some of it is also with having a positive attitude especially through hard times. I would keep alert to what is happening that affects your family and you while adjusting when things change which affects family.
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Thanks for sharing this lesson with your experience with your MIL.
I like to remind people to review their estate plan (including wills, trusts, POAs, etc.) every 5 years.
My 97 year old father’s documents list his 93 year old wife as his medical decision maker. And, the adult child who is next in line defers to the 93 year old as having enough wisdom to deal with the details. I think his documents are from the early 2000s.
Whenever I have an audience, I’ll suggest making sure that the people you named years ago are still the most appropriate choices.
Transitioning the discussion to how much do you need to retire:
We have a family meeting with the social worker next Tuesday to get a full view of his care. His rehab is not seeming to be successful. Eldest sibiling wants to pay $20k/month for under the table, round the clock aides, while Father is in a nursing home. Other sibling doesn’t want to pay for anything that might not be needed. (We don’t yet know what the nursing home price will be after Medicare drops off). Guess $12K? And then there’s the AL price for SMom at $6000-$6500/month. She’s wheelchair bound. $38k/month!
It’s complex and the best gift we can give our kids is to plan well and be as organized as possible.
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This! And if you move to a new state, review again!
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This! We just put in 3 brand new HVAC units and know I will need a new roof before too long. My two youngest sons are not married and still just rent but keep telling them that no matter how much you save up for a house, you need to budget out the cost of regular upkeep maintenance and major repair. They have no idea how expensive all that is and you can’t put some of it off.
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We moved to a new state and completely redid our estate plan. We also had some other changes.
Our lawyer likes a review/ possible revision every 3 years.
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It is the cost of the review that deters me from regular review/update, but I am also long overdue for that.
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It’s a small price to pay, IMHO.
My parents had a terrible estate plan. Badly written and not updated. It led to thousands in attorney costs, a 5 year legal battle and a sibling split. I will not do that to my children.
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Oh, there’s a will and estate plan, and it is solid as is, but I am now thinking about future spouses and future grandchildren and want to tighten things up a bit. Now that the children are out of college, I need to change the executor I named when they were still in HS & college.
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Thank you, and others, for being so honest in your reflections on your kids’ college decisions and how they look in hindsight, especially financially. I think this should be its own thread – might be helpful to parents in the process now.
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Agree. Also sending thanks to @deb922 for helping to jumpstart a detailed conversation between DH and I about potential wedding costs for our children in the future.
We’d casually had conversations about what we might be willing to do but nailed down philosophy last night over dinner. We’ve agreed to give lump sum in the event that any of the children get engaged, and that lump sum can be used in any way the couple wants (wedding, down payment, etc) but it will be the sum total of our contribution. Actual $$$ tbd.
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Part of my retirement planning and funding was the cost of DDs wedding which happened after I retired. Of course, DH contributed too and he was still working. I’m also knew I could pick up short term leave positions, and that helped with my “planning” also.
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Re: Weddings. So glad we had a boy. 
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