Ah, Retirement! The day is coming sooner then later for most people. I’m 36 1/2 now, but I starting planning for this day when I was 24. I was broke, but I was putting $120 a month away in a Roth IRA, and starting paying into my teacher pension from my paycheck each month. I began reading books and formulating a plan over the last 12 years, and I think I have a winner for a great retirement. I even got a plan to get full benefits and retire early. My plan has multiple income streams for my young golden years, and as I age my income increases, just incase my health or something else goes up. So lets look at some of the ideas I have in motion.
Teacher Pension (age 52, or sooner, based on my buyback of sick days)
I am grandfathered into a generous teacher pension in Texas. We lovingly call it the “rule of 80.” It’s where your age and years of teaching have to equal 80 years together, then you can retire with a percentage of your top five years of earned income for the rest of your life. This means that I’ll be 52 years old, with 28 years of teaching, to get the pay out for life. I looked on the retirement calculator, and it said based on my current incomes I will get $2,813.34 a month. Of course my income goes up each year I teach (2%), and I have been hacking my income up through extra duties, so I’m sure it will be closer to $3,500 a month in the next few years due to me doing this hacking strategy late in the game. This, $3,500 a month, should be all I ever need to live a great life. My current bills for a family of five are under $3,000 a month, and once I get three kids off the payroll I should be able to live for $2,000 or under (another plan in place to keep bills low). Once my mortgage is gone, that free’s up $950 from our $3,000, but it is replaced by teenage years and teen driving increases. So, raising functioning adult children is a key to retirement for me too. Also, from age 52 to 85, I estimate 1.3-1.4 million will be paid to me in my pension, making me a pension millionaire! However, the system has changed for new teachers, and now you must teach or not receive your payment until you are 65 no matter what. I’m still good grandfathered in to the old deal. I just hope that no more changes happen and my being grandfathered in maintains.
Roth IRA’s (age 59 1/2)
My Roth IRA is my first backup plan if my teacher pension goes to crap like many other pensions around the world. In Dallas our firefighters pension was mishandled and went to crap, so I have to plan for the real world. I began this at age 24 with the $120 a month, and now I have been maxing it out for years to get the full benefits. My account has been looking great in this bull market, but who knows what the next 24 years hold, but I bet it goes up. I hope to start withdrawing only when I need to, or if the rules change, have to withdraw. But just in case I need the money, I can start taking the money out at 59 1/2 years old. You can keep adding your money to it past age 70 as well to allow it to grow for major issues later. I really hope to never use this money, unless I want to plan an around the world trip or something fun. This is be my kids inheritance one day if it goes unused, or I can just live it up with monthly withdraws. If I have $500,000 in there, which is a real estimate, then I could withdraw 4%, for $20,000 a year or $1,666.66 a month. That’s enough to pay the bills if I live frugally, but it’s not living it up alone. Maybe this will just be my fun money, and stop being so frugal. Who knows what old age will bring me, so for now its a safety net.
403b (age 59 1/2)
This is my money dumping account for now. Once, I pay the bills, max the Roth IRA, and pay extra mortgage payments, I dump the rest into my 403b. As a teacher this is our 401k account. My 403b options at work are complete garbage, and I am using an account away from them. But, I need to put my leftover money someplace, so this is it for now. I think about closing this account all the time and just rolling it over into my Roth IRA, for larger compounding power. Because since my wife is working her first “real job” (9-5 job or 8-4) at age 35 we can begin to max out her Roth IRA with the extra money. I can’t roll this account over until January 3rd, so we will see how this works out. Right now it is estimated that I will have about $500-$700 a month in retirement from this extra account, which will help if my pension goes away or falls apart. Also, maxing my wife’s Roth might make up for this account if I roll it over to my Roth.
Rentals (After Mortgage Payoff, 4-5 years)
Landlording, now this is my second career after teaching ( I think). After I am done with my mortgage getting paid off, we will have the $950 mortgage payment that will be absorbed by teenagers, but my wife’s check has been adding $2,000- $2,500 a month extra to the payment. Now that the extra money is freed up, we will begin to save it to buy a few rentals (I’m thinking 3 is good). I have written about this before, but here is the plan. We will buy some houses, town homes, whatever, and look to make about $500 profit on each, each month. Rent for about $800-$1,500 a month. Not sure if I want to go with section 8 housing, or if I want a management company to look after them, but I got time to research these things more, and find a mentor to help me decide. Also, maybe vacation condos that I could also use myself are an option at the beach or in a ski town. In 2008 I saw $30,000 condos in Red River, NM at the base of the ski slopes, with a heated pool right outside. I was broke, and the $800 HOA fee every month scared me, but today I would look at the numbers and maybe it would be different. So, the extra $1,500 a month, for 3 rentals, would be helpful in retirement, and they would be paid off, so if I got into real trouble later I could sell and get a quick payday. If the experiment of the three is enjoyable then it could expand into more rentals. Who knows I may hate rentals, but its the idea for now.
Hobbies/ Blogging Money (Experimenting Now)
I love business and the art of making money. I love that in America you can make money doing anything! I like to experiment with different ways to make money. I have flipped campers, sold garage sale junk, I craigslist furniture, blogged for Demand Media, do online surveys for money, tried light farm work, and now I’m blogging here in hopes to one day turn a little profit. I would like to one day make $500 a month from this website instead of pennies a month. That would be awesome to make an extra $6,000 a year!! This site already cost me about $300 this year in random upgrades, domain stuff, and in upgrading some equipment (phone camera). I’m not greedy, and I do this because it’s fun, not for a big payday. However, if it become a burden I would like the option to sell it one day, instead of it just shutting down and disappearing. When you create something, you like to know it will be around for a while. I will keep experimenting in the hobby department, and maybe I will find something else that makes a little money, such as handmade soaps, which I joke with my wife about learning to make. Or maybe you could send some online traffic my way or shop on my affiliate link. Spread the word, I hope to be around writing on here for many years, so you can follow my journey for lots of years!
Wife’s Teacher Pension (age 65)
Now here is the kicker for my retirement plan, my wife was a secretary for a principal in 2004, and was put into the teacher retirement system, but only worked a few months. She officially started teaching in 2016, and has one year under her belt, so she may be grandfathered in to the “rule of 80” or she may be part of the work more newer terrible plans. Either way all she needs is 5 years of teaching to qualify for the pension, and she can get it at age 65. This could bring in an extra $2,500 a month at age 65 for life, or more, depending on her best five years of salaries. We don’t get social security, and this plan is a better deal for us, based on our years working and salaries. So, the plan is she needs to work for 5 years minimum to qualify and help pay off the house, then if she loves it, which she does, she can work to fund those rental properties faster, and boost her retirement pension numbers hacking her salary higher!! She could bring in $3,500 a month too from age 65 to 85 that’s $840,000 total. Combined with mine, we are pension multi millionaires!! But, that is totally up to her and I let her decide based on her happiness. She loves to personal train people too, so who knows what will happen.
So by the time I’m 66 and my wife is 65 my retirement income could be pretty sweet. Lets look at the numbers from above for a month based on conservative numbers:
$3,500 for my teacher pension
$1,666.66 for my Roth IRA
$700 for my wife’s Roth IRA (don’t start late)
$500 for the 403b (unless I roll it over to the Roth, which makes the Roth more)
$1,500 for the rentals (if all goes to plan)
$500 from hobbies and blogging (could be more, spread the word)
$2,500 or more from my wife’s teacher pension (or more!!)
10,866.66 a month total, or $130,399.92 a year after age 66. 2.6 million if I can make it to age 86 and more if I live longer. The money doesn’t stop on some of those income streams above. You don’t need a million in the bank to retire; just a plan to get millions to keep coming in after retirement.
As you can see from the estimates from above that having multiple streams of income not only is great in your working years, but it is even better in your retirement years. You can’t live off social security alone, without a struggle, and pensions are going away at an alarming rate. My numbers are based on estimates, but I feel they aren’t the worst or best case scenarios either. The markets could crash hard, and that would bring the numbers down, or they could continue to go up, and the numbers could go up. My wife could learn to hate teaching, and that means the rentals might not work out, and I would need a new plan. No matter what happens, the idea of planning for retirement with multiple income streams is a must. So look at what you got going already, and begin planning your income streams today. The earlier the better, and you have to plan if you ever want to retire.