Can I Retire Comfortably at 65 After Spending $180K on My Kids' College Education?

By age 50, you should aim to have approximately six times your annual household income set aside in savings.

However, imagine reaching that significant age marker with far less accumulated in your retirement fund. Although you initially crafted a robust financial strategy early in your career, unexpected events occurred. A costly divorce hindered your progress, followed by the necessity to assist both your children with their college expenses—amounting to $180,000 altogether.

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Currently, with an income of $60,000, you should You have $360,000 invested instead of having only $100,000 at your disposal. This means you're somewhat lagging behind your required amount.

Therefore, the main query remains: Is it possible to achieve a comfortable retirement at 65 and sustain your present way of living—especially when you might not have saved as much as needed for this stage in your life? Below is guidance on how to assess this situation.

Ways to ensure a safe retirement even if you lag in investments

If you aim to retire at 65 and you're currently 50 years old, there’s still time for you to get back on track. The first step would be determining the amount you should invest to ensure you accumulate sufficient funds before retiring at your desired age.

Ultimately, you should aim for a savings fund totaling about tenfold your last paycheck. Assuming an income of $60,000 currently and factoring in approximately a 2% yearly rise in wages leading up to retirement, your earnings at retirement might reach roughly $80,752.10. Consequently, you'd want to target having saved around $807,521.

If you begin with $100,000 and achieve an average yearly return of 8%, you'd have to invest approximately $1,504.81 each month to reach your objective. Contributing $18,057.72 annually equates to almost 30% of your earnings. This is quite substantial. Despite potential tax incentives and company matches (assuming they are provided), this could still prove challenging. To put it another way, although you may secure a decent retirement, it will likely require going through a rather stringent financial period lasting around 15 years.

If you're not prepared to make significant compromises, delaying your retirement by a few years might be beneficial. This is particularly relevant because retiring at 65 would signify ending your career. before Your complete retirement age for Social Security, set at 67 due to your birth year, leads to a decreased benefit if you retire earlier.

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If you decided to delay your retirement until 70 rather than retiring at 65, you would gain an additional five years for investing. Furthermore, you might also be able to avoid shrinking Your Social Security check might be higher than expected because you can boost it by earning delayed retirement credits. If you wait until age 70 to start claiming benefits when your full retirement age (FRA) is 67, this decision will result in a 24% enhancement to what would otherwise be your regular benefit amount.

That extra five years could make all the difference. While your savings goal would increase to $891,568 to account for five more years of salary growth, you’d be able to hit that target with an investment of just $774.79 per month, or $9,297 per year — a much more reasonable 15% of your income.

Additional time enables compounded growth to work in your favor, making retirement achievable. The increased Social Security benefits along with shorter reliance on personal savings can significantly simplify your financial situation.

When planning financially for the future, prioritizing investments towards retirement should come before numerous other monetary objectives.

Delaying retirement until your late 60s might feel disappointing, yet the truth is that aiming to exit the job market around that age typically requires making various compromises. For instance, you could probably achieve your financial goals sooner had you not needed to extend your working life. if you had not covered the cost of your children's college education.

Many parents want To cover schooling costs for their children so they won’t be weighed down by student debt. This works well if you’ve set money aside over their entire lives. also If that isn’t your situation, then focusing on this monetary objective instead of saving for retirement could leave you in a difficult position.

Although numerous parents cite saving for college as their primary objective, the truth is that retirement ought to take precedence since students can obtain loans for education and spend their whole careers repaying these debts, whereas there are no equivalent options available when securing a comfortable retirement. Mothers and fathers failing to allocate sufficient resources might eventually become more of an economic strain on their children compared to those same offspring taking out student loans.

Certainly, as you’ve already invested in your education by paying for college, the option has been selected. The sole choice remaining is whether to extend your working period, make significant sacrifices to invest more and aim to retire punctually, or delay your retirement by several years until you manage to boost your savings enough to ensure the financial stability you rightfully deserve.

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