John Bogen, 56, of Bremerton, Wash., retired last year after a 30-year career in police work. He now collects a pension and teaches criminal justice at a local technical skills center. In five years, he would like to be completely retired.
But thereâ€™s a catch. He has fallen in love with a woman who is further from retirement than he is. He and Iva Dlouhy, 46, will marry at the end of the year. Ms. Dlouhy, an assistant superintendent in the local school district, isnâ€™t sure when she wants toâ€”or can afford toâ€”retire. But once the couple do retire, theyâ€™d like to travelâ€”perhaps even spend half the year in Thailand volunteering with community groups.
She has 18 years with the district and her salary will be roughly $180,000 at the end of the year. When she retires, her annual pension will be 1% of her highest average salary during any five consecutive years, times the number of years served. She has the option to contribute to a retirement account but canâ€™t collect her full retirement benefits until she is 65.
Mr. Bogen has three children in college, whom he helps with 529 college-savings accounts. Ms. Dlouhy has a 12-year-old daughter with a fully funded 529, as well.
Mr. Bogen makes about $60,000 a year teaching and collecting rent on several properties he owns, in addition to a $5,647-a-month pension, which is taxable. If he opts for the survivor benefit after he and Ms. Dlouhy marry, his monthly pension will drop to $4,468 but will last as long as one of them lives.
A year ago, the couple put $125,000 down on a $705,000 home in Bremerton. Their house payment is $4,000, but they pay $4,500. Monthly expenses include: about $700 on utilities and phones, $100 on gas, $500 on groceries, $100 to $150 for eating out, and $300 for Ms. Dlouhyâ€™s Subaru. Mr. Bogen also spends a few thousand dollars a year on property management, maintenance, taxes and insurance for his investment properties.
He owns a house in Arizona, valued around $175,000, and gets roughly $1,100 a month in rent. He owns a duplex in Bremerton valued at around $160,000 that brings between $1,400 and $1,500. He recently took a â€śgambleâ€ť on a $16,000 home in Detroit that fetches around $450.
He has $100,000 in a deferred compensation account and $50,000 in savings. Ms. Dlouhy has little savings to speak of.
Advice from a pro: Joe Wride, a certified financial planner at Seattleâ€™s Crafted Finance, says the coupleâ€™s position is strong. Their net worth is a bit low, he says, but their pensions more than make up for it. The challenge, he says, is to â€śbuild a bridge of incomeâ€ť until pensions and Social Security are fully available.
â€śItâ€™s the task of retiring early that causes the uncertainty,â€ť he says. â€śIf he wanted to work till 65 and she could make it until her late 50s, this would be a slam dunk.â€ť
That said, early retirement isnâ€™t off the table, particularly for Mr. Bogen. To start, Mr. Wride says, Mr. Bogen should apply for a whole-life or universal-life insurance policy. If he can get a roughly $1.1 million policy for less than $1,200 a monthâ€”the difference between what he currently draws on his pension and the survivor benefitâ€”it would make sense for him to keep the current benefit and buy the insurance instead.
He says they should also get a clearer idea of what they want retirement to look like and how much money theyâ€™ll need. If itâ€™s more than theyâ€™re making now, theyâ€™ll both need to work a little longer, particularly Ms. Dlouhy.
While still working, they should save as much as they can in retirement accounts offered at their jobs, such as the deferred-compensation plan offered by the school district, which Mr. Wride says Ms. Dlouhy can contribute up to $18,500 a year until sheâ€™s 50. He also would like to see them put as much as they can into IRAs at the end of each year and immediately convert them to Roth IRAs.
Mr. Wride recommends the couple get an estate plan in place that specifically states what each spouse will inherit and what, if anything, will pass directly to their children.
As for when they can both be retired, Mr. Wride says that if they max out the aforementioned retirement accounts and spend just $20,000 more per year in retirement than they say they spend now, Ms. Dlouhy probably would be able to join Mr. Bogen in retirement, should she choose to, in six years. But working a couple more years would make it even easier.
Mr. Kornelis is a writer in Seattle. Email him at email@example.com.