Financial Literacy - Retirement income planning
Can this couple retire early?

In Bankrate’s Money Makeover series, we commission qualified financial experts to examine the personal finances of willing readers. In this article, Senior Financial Analyst Greg McBride talks to a married couple from New Jersey about their prospects for early retirement.


Joanne DeWald, 43, and her husband Pat Schintz, 50, of New Jersey, are seeing some rebound in their investments after the losses of 2008. Still, they wonder if early retirement is in their future. Joanne and Pat work for the same manufacturing company -- Joanne as a graphic designer for more than 20 years, and Pat as a receiver for 26 years. They have no children and completely paid off their home in 2006. In addition to early retirement, Joanne dreams of one day retiring to Vermont.

Pat and Joanne
Profile: Pat and Joanne, a middle-aged couple, would like to retire early.
The challenge: Both work at the same employer in a recession-plagued industry, and both have different types of retirement plans.
The plan: Bankrate's Greg McBride, CFA, applauds their disciplined savings efforts and suggests some tweaks to their investments.


Joanne and Pat are disciplined savers, consistently putting away a whopping 28 percent of their income. Their goal is to retire early, preferably at age 59½, though Joanne admits, "Ideally I'd like us both to retire now."

They felt they were on a good track toward their retirement goals, but then the recession hit and so were their investments. Though they're seeing a rebound now, Joanne wonders, "I don't know if I'm investing in the right things. I don't know if I'll have enough."

They've been putting the majority of their investments in tax-advantaged retirement accounts, utilizing Joanne's 401(k) plan and, in recent years, establishing Roth IRAs for Joanne and Pat. As a union member, Pat will receive a modest pension but he is not eligible for the 401(k) plan, something they're making up for with Joanne's contributions. Both will also be eligible for Social Security in retirement.

Joanne and Pat aren't the traveling types, envisioning instead a laid-back retirement. Joanne does have the retirement dream of purchasing a home in Vermont, but she has recently priced properties at $1.5 million. In addition to early retirement, Joanne wonders if buying such a home in Vermont and living out their golden years there is feasible.

They make regular investments in a taxable investment account as well, using a brokerage account to buy individual stocks. Even though they have no kids of their own, they make optional contributions each week to 529 college savings plans for a nephew and great niece.

Their home is paid off completely and their only debt is a loan for their car, purchased one year ago. They use a rewards credit card and always pay the bill in full every month. Although they have no specific plans for home improvements, they acknowledge that their older home will need things as time goes on.

While they have plenty of cash flow to save significantly every month, their emergency savings would only be enough to cover three months' worth of expenses.

Key issues:
  • Address risk of employment at same company.
  • Beef up emergency savings.
  • Consider getting additional life insurance coverage.
  • Pay attention to investment fees.
  • Tweak asset allocation in retirement accounts.

Next: The plan




Show Bankrate's community sharing policy

Connect with us