quasiretirement

We owe about $180,000 at 2.5% on our home, but we make bi-weekly payments and it should be paid off in about 8.5 years. My wife plans on taking her Social Security at age 62. We also have $100,000 in an annuity. Do we have enough income to live a comfortable lifestyle? Maybe one or two trips a year?

See: I’m 71 and can’t decide if I should pay off my mortgage or get a joint annuity that’s cheaper — what should I do?

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

Dear Reader, 

Only you and your wife could really decide if you have enough income to live a comfortable lifestyle. It sounds like you’re in a good spot, but there are a few exercises you can do to help you both find the answer. 

First, add up all of the sources of income you have now, and what you anticipate in the foreseeable future. You can count on your pension, Social Security Disability and her income. How will that fluctuate over time? For example, when SSDI stops, when do you get your Social Security retirement benefit instead? When will your wife tap into her retirement account, or when will her annuity begin?

Then calculate your expenses. Get extremely granular. Start with the necessities: your mortgage, taxes, utilities, home maintenance and upkeep, healthcare (doctor visits and medications) and groceries. Now add in the extras — dinners out, those vacations you’d like to take, any extra entertainment and, of course, money set aside for emergencies.

A note about emergencies: An emergency savings account should have a year’s worth of expenses (if not more) to be on the safe side. That money should be in liquid assets, and easily reachable. It should not be touched for anything but emergencies. And if you have extra income in retirement, it doesn’t hurt to throw more money into your savings — for the short and long term. You never know when it could come in handy.

Now, review your assets. Check your wife’s 401(k) plan and how it is invested, to make sure that it is allocated appropriately. For example, you don’t want it to be too aggressive, but at your age, it helps to have some risk so it can continue to grow. A trustworthy and qualified financial planner could help you get specific on your asset allocation. Look at your annuity, and understand the terms and stipulations, including when it starts, what to expect from it, and if there are any tax consequences. 

Also see: My husband says we’ll be ‘homeless’ if we keep renting. We’re 68 and 74 — do we buy a home instead?

Set up accounts on the Social Security Administration’s website, if you haven’t already, so you know what to expect from your benefits and to confirm all the information the agency has for you and your wife is correct. That site can also help you estimate how much you could expect from her benefits at age 62, versus her full retirement age, or later, so that you can make informed decisions about claiming. You might decide that she can wait to claim at her full retirement age, or even postpone it until age 70, so that her benefits can grow. 

Finally, any and all of these factors could change. It is important to have back-up plans, so that in case of a serious event, you don’t feel lost or panicked. When you’re poring over the numbers, talk to your wife about what could change, and what you would do in that instance, such as if you decided to move, one of you got sick, the roof needed to be replaced or one of your income sources disappeared. It’s always best to be prepared. 

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Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com