Getting It Right the Second Time Around


Another big motivator for retiring right is that the Kings also seek to generate multigenerational wealth, aspiring to leave an inheritance to their children, Ashley, Jeremy, and Danitra, and their grandkids.

The Advice

Black Enterprise and Lee Baker, a certified financial planner with Apex Financial Services in Tucker, Georgia, assessed the Kings’ readiness for retirement.

Do the math. While in retirement, Don will have “guaranteed” income from pensions, military income, and Social Security of at least $4,000 a month, says Baker. He says the Kings need to figure out how much income they will actually need in retirement. There are numerous calculators online such as  AARP.org, FINRA, and ChoosetoSave.org, where they can get started.

Patricia will continue working for at least the first decade of Don’s retirement and she will have a pension when she retires. Age does matter, says Baker, particularly when it comes time for Don to choose his pension payout option. Because Patricia is 13 years younger than Don, he should strongly consider the benefit of a joint and survivor option. Upon his death it continues to pay income to his beneficiary.

Patricia should continue contributing the maximum to her 401(k) and stay committed to saving in the IRA and other accounts. She is contributing 10% at work and there is a 6% match in addition to this. Most of this is in the U.S. government’s “G” fund. Assuming that it performs as expected, the fund will outpace inflation. Baker suggests that any additional funds be invested in a non-retirement account. “As crazy as it sounds, they only need to do what they are currently doing. Even when they are both retired, they will have more than enough ‘guaranteed’ income. “If you add up both pensions, Social Security benefits, and military benefits, they will have close to $7,000 in monthly income,” Baker says. According to Patricia, this will be more than enough for their living expenses of $4,000 a month.

Eliminate debt. They are smartly paying extra monthly on their mortgage and car loan. Baker recommends they apply the $2,000 contest winnings toward credit card debt to bring it down to $9,000 and in turn pay it off over the next 12 months.

“It’s important that they stay committed to their pledge to be debt free. “The biggest thing that could blow up their plans is to return to the old habits that got them into a trouble a decade ago,” Baker says.

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