Hi, Tim
There are people on these boards who are qualified to give the kind of advice you are seeking; they will likely respond in a few days. You may need to see a certified financial advisor - the kind who just charges a flat fee. But wait and see what responses/advice you get here.

Congratulations on paying off your mortgage. That is terrific. What we did was live on one salary and banked the other. Most went for retirement, but some was saved for things like replacing the car (no car payments) and home improvements (new roof, etc.) Since you plan on having children, you will want to save for retirement and for college. Living below your means is always a good idea. Make sure your future wife is of the same mind-set.

I think that what you have already accomplished at your age is awesome.

Tim, also check the Household Finance forum. The Retirement forum moves pretty slowly.

"Annuities have high commissions and big management fees."

That is not true of fixed, lump sum annuities. There are no management fees. They have a role in many people's retirement portfolios because they provide the owner with a certain monthly income stream for either a fixed period of years or for an entire lifetime. But you are right about the OP -- he doesn't need that because he'll be getting both pension and SS benefits. And, yes, he and everyone else should avoid any other kind of annuity, and especially variable annuities.

Judging from the sound of this "advisor" the OP was talking to, I highly doubt the annuity being pushed was a fixed lump sum annuity!

What it might have been is an Advanced Life Deferred annuity, which does have fees and commissions. A better product, but still not a good fit for the OP.

Here at least teachers are not covered by social security. My advice is to put as much aside as possible until you reach 40 then use the amount to build upon.

If possible try to work the quarters necessary for both of you to obtain min SS. Which would cover medicare coverage. Forget about annuities for now. The more baskets you have the better your chances for a nice time after retirement. But do your research and do not listen to your friends to find the best baskets for yourself.

I wrote a couple of posts on this forum a while ago, where I made some reference to annuities.

There was another asking how safe annuities are where I had something to say, as well.

You may find some good ideas on "Household Finance" and "Money Saving Tips" as well.

ole joyful

From my experience, rental passive income is great for retirement. There was and perhaps still is an opportunity to purchase houses on the cheap in US and get positive cashflow from them. We nearly invested in that and perhaps should have but we live in Singapore so was concerned about the distance problem.

>>rental passive income is great for retirement. There was and perhaps still is an opportunity to purchase houses on the cheap in US and get positive cashflow from them.>>

It is, but the OP has a very long way to go before retiring. Unless you are a handy DIYer, investment properties can be a considerable drain on your cash flow and more importantly, your time. In the US that means having an emergency fund SPECIFICALLY FOR the rental property(ies), of 4-8 months of overhead. That can be a very sizable sum, especially with such historically low interest rates being paid on accounts.

We know a good number of people who do have or have tried to invest in rental properties. The only ones who "stick" are three types:
- DIYers who can carve out the time to do unexpected repairs (being self-employed and setting your own hours helps immensely; most corporate employers look askance on the excuse of "I can't attend this client meeting, I have to go fix the tenant's DW today".
- Those with enough money to hire a management firm
- Those who are slum landlords or one small step above them, where rents are maximized and overhead is minimized (deferred maintenance, "gray labor" repairs without permits, etc.).

There is no free ride to financial security. RE in most areas appreciates, on average, 3%/yr or less, except for 'investor bubbles'. Believe me, ole joyful, me, and many others on this board have done a lot better than that with market investments over a 20-yr period.

We have a new neighbor moving in next door. They bought the largest home in the neighborhood for a bargain price after it went into foreclosure. They also inherited a crapload full of problems, including the theft of all appliances and rip-out of all copper plumbing within 24 hrs of the previous tenants moving out. Totally pro jobs (separately done by different burglars, we think).

They have owned this house for almost two years and are still not moved in. It has been undergoing repairs continually ever since they bought it. Pace has been slow because they're being frugal and paying cash, doing most but not all the work themselves.

No matter what a good deal they got, they are paying a $288K mortgage plus $3K/yr property taxes for a home they're not living in yet. It'll be worth a lot more money someday soon - this is a super-expensive area and we're one of the last "bargains" around - but in time and energy, as well as $$$, this very nice couple is definitely 'paying their dues.'

Hi again Tim,

You're fortunate - and wise - to have put together a substantial asset at your age.

As it is, you may well marry at just under 40, and are looking forward to children that will be in their teens when you're crowding 60 ... and perhaps attending probably costly, barring heavy scholarships, college after that.

I remember several years ago of an old(?) fellow in his 60s, living somewhere in Central America, quite inexpensively, with a possibly fairly recently-acquired wife, and a small child, telling how great life was. And I was thinking ... "Oh, Lord: to have to cope with a teen ... at age approaching 80??"!

Have you noticed how our perspectives vary as we move from age to age?

Also our definition of "middle aged"?

ole joyful

Hello ... curious 2077 ...

... are you here ... there ...

... somewhere?

(Did s/he not like something that we said)??

ole joyful

Since the OP was in 2012 the decisions have already been made. However since I will soon have to draw from my 401/IRA etc. I would advise anyone to put as much money as possible in a Roth acct. Having saved all my life but most in accounts that are taxable when withdrawn. I never thought I would have enough to worry about taxes. Boy was I wrong.

To add about ROTH IRA tax advantages. Fund one every year for you and your spouse. I have also been converting a small amount each year from Traditional IRA to ROTH to reduce taxes in retirement.

I'm a teacher too, and I can give you some advice on some of these topics. I am 100% sure we're not in the same state because you make more money than I do (though I have 24 years experience).

- First, you sound like you're doing very well for your age. You should pat yourself on the back for realizing the importance of saving and thinking about retirement well before most people your age.

- I'll second the point about talking to your potential fiancée about finances ahead of time. Do not just assume it'll all work out.

- Buying a house is a sound investment. I assume you'll sell your current paid-for house, so you'll have about 120K to put down on a new one -- excellent. Even if she brings little to the table for this project, the two of you should be able to knock out the borrowed 100K within five years (even if you have a baby soon). With no mortgage, you'll be amazed at how much easier it is to live comfortably and still save!

- Do you have a savings account for a new car? Since yours is paid for, I suggest you begin paying a car payment into a savings account. Once you get yourself "a car ahead" (meaning that you're ready to buy a new car when you need it, so that you're not wasting money on interest), it's easy to STAY "a car ahead".

- I have the impression she's a teacher too? If the two of you work at the same school, consider becoming a one-car family. We did it for several years (until I started teaching, and our schedules were completely incompatible), and it was a MONUMENTAL money saver for us. It was the single biggest thing that allowed us to get off to a good financial start in our 20s.

- If you hate your job (I do at times, really, I do) but want to stay in the pension system, could you do something else within the school system? Could you be the tech guy? the athletic director? could you do something different as a state employee -- a possibility, if your pension systems are linked?

- I don't think you need to think about life insurance at this moment. Not to be crass, but if you died today, would anyone be worse off financially? With no wife or children, probably not. Once you're married, you probably won't need it yet. If you were to die, your wife could use your pension pay-out and your other investments to pay off the modest house payment you anticipate taking out, and she'd still have her job to sustain her.

You WILL need life insurance once you have a child. If you were to die and leave your wife with a toddler, she'd have years ahead of her in which she'd be a single parent, and although her salary would be enough to put food on the table and clothes on their backs, your life insurance would be there to educate the child in the future. The life insurance would also assure you that your wife would be able to take some time off work, and that she'd be able to put aside a good chunk for retirement. Remember, she too will need life insurance. If she left you with the toddler, you'd need the same help.

- The two of you probably need disability insurance more than you need life insurance. Statistically, you are more likely to be disabled than to die young. And becoming disabled is the real nightmare scenario (from a financial standpoint). Consider: You're in an accident or you become sick. You cannot work, so your household income's slashed in half. Yet your medical bills are sky-high. Your wife is still working, but she's also doing ALL the housework and ALL the childcare AND is trying to help you with your physical therapy. She's burning through her sick days taking you to the doctor. THIS is the nightmare scenario: She's overworked, AND she can't take advantage of your life insurance. Avoid it by signing on for disability insurance.

- Another thing you should do after you marry is to write wills. As a teacher, you probably have access to your an employee's credit union? They probably offer such services for a low price.

- About your pension: Do you know the details for the pension in your state? In my state you're fully vested at 10 years (so, yeah, you'd be a fool to leave at 9.5 years), and you can collect a full pension at any age once you've put in 30 years. You can collect a reduced pension at 20 or 25 years, though the dollar amount is reduced, and you can't begin collecting until 65 (65?) if you don't put in the full 30 years. Once you find out the details for your own state, you can "run the numbers" and see when it makes sense for you to leave teaching. It might be sensible for you to aim for 20 years, then do something else -- but you have to get the facts, then do your homework.

- How secure is your state's pension? This is public knowledge, so look into it. You do not want to put all your eggs into the "staying in teaching" basket, if your state's weak in the pension department. As the people in Detroit!

- In my state the pension program (defined benefit program) is being exchanged for a defined contribution program. This has its pros and cons, but overall it means that the new, younger teachers aren't going to get a pension. Why does this matter to you? Because if you ever leave, then return to teaching, you'll come in under those new rules!

- An above poster mentioned Social Security. In my state, teachers DO pay into SS, so I will collect an SS check one day. You seem rather financially savvy, so I assume you know whether you've been paying into this or not.

- I disagree with the above poster who says you're essentially screwed if you choose to have children AND want to retire at a reasonable age. The key is that you have to choose to live FRUGALLY. My husband and I are 48 and 51, and we have two college students. When we married, we had between us $200, college degrees and jobs, one car, and a brand-new mortgage. We chose to be frugal from the very beginning: We maxed out our 401Ks, even though it meant we couldn't afford vacations. We built an emergency fund, then started a savings account, putting away 1/4 of our after-taxes paychecks, even thought it meant we rarely ate out or bought new clothes. When our savings account grew, we started investing, even though it meant we had to remain a one-car family. Today we live in a house that's paid for, have significant investments, and are easily able to pay for our two college students' expenses -- they will graduate debt-free. My same-aged friends who wail that they can't afford their kids' college tuition don't like to hear that we buy used clothing, drive an 8-year old car, etc. The key is knowing the difference between needs and wants -- and being self-disciplined enough to stick to a budget.

- Finally, I think you're off to a good start. If you and your wife are both about 10 years into teaching, then 20 years from now the two of you can expect the following:

1. You'll be about 55 years old, and as a person who can "see 55 from where she's standing", it's not "old" -- at 48, my knees hurt sometimes, but I can still hike all day and can pretty much still do whatever I want.

2. You'll live in a house that's paid for.

3. You'll have two teacher pensions.

4. You'll have teacher health insurance in retirement.

5. You'll have two Social Security checks.

6. You'll have the investments you've already begun.

7. If you have a child soon after your marriage, that child will be finishing college (and beginning to support himself) about the time you retire.

1. You'll be able to have all these benefits AND you can work part-time (or seasonally) so you can avoid dipping into your investments too early.

Though you're not earning big bucks now (or ever), you'll be well prepared for retirement. If the two of you put in a total of 60 years of teaching to earn these benefits, you'll have WORKED for every penny, but you'll have a comfortable retirement.

Just a point on life insurance. Of course the planner wants you to buy it, that's how he makes money. Life insurance is for income replacement. To be a little blunt: If you're single and you die, no one will be depending on your income, so it's a bad investment.

I have LS, but I'm married with one kid still needing to get through college. Once he is through, I'll drop the amount. As out retirement saving grow, I'll drop the amount. Once I'm done working (just a few more years), I'll get rid of it - making sure my wife has plenty of assets to live on if I die.

LS is a tool. If you don't need income replacement if you die suddenly, don't buy it. If you have a family, buy plenty to take care of them.