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Retirement Planning – 457 Plan

Q: I am 40 years old and my wife is 38 years old. I am the sole provider for the family with an annual income of $78k of which I put $17,500 pre-tax into a 457 plan. I currently have $235000 in my 457. I have a pension that should pay me around $8700 yearly starting at age 55. I also have a pension that will pay me 45% of my last 5 when I retire but I can’t receive it until age 65. I don’t want to work until then. I just read your book and my concern is that all of my retirement is in my 457. Should I consider doing something else? 

 

A: Thanks for reaching out and for reading “You Can Retire Sooner Than You Think”!

 

First of all, I want to commend you for saving over 22% of your income, that’s fantastic and puts you amongst the top savers in the country…so well done.

 

Next, it seems as if your concern over retirement is the lack of “diversification” of accounts, given the large 457 balance. Based on the information provided, the fact that you have two pensions coming your way is very rare and something to feel confident about.

 

Will you also be eligible for Social Security? I’m asking from an employment standpoint, not political (whether or not anyone will have it). Assuming so, that’s a 3rd income stream not related to your retirement assets. So conceivably, you’ll have 4 income streams (including your 457 assets) in retirement which is above the average for retirees.

 

If you’d like to discuss further, I’m more than happy to help paint a better picture of what retirement may look like based on more specific numbers.

 

Hope this helps with your savings thought process and keep up the good work!


 

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