I actually was surprised to get letters from 2 former employers when I turned 55. I had vested with both (7 yrs with each of them) and had modest 401k accts, so I thought that was all there was. We were recovering from a personal bankruptcy so I had never been able to save much in personal contributions. However, both employers purchase annuities for employees that are vested. Now, annuities by definition mean that you are dependent on the life insurance company holding that annuity to stay in business! My FIL, for example, worked for Mead Paper Corp. for decades, and lost his entire pension when Mead was purchased and the insurance company subsequently went bankrupt. So I'm not counting absolutely on them, but it's a nice little "boost" if it comes to me. My husband is a state employee and his pension is pretty safe. The agency agreed, at the last union contract, to start funding the pension obligations at a rate double what they were doing before. This will put them as one of the few public agencies to be on a sound basis, actuarially speaking, for their retired workers. His 401k is with PERS, the largest pension fund in the US. An extremely well managed, influential, and progressive pension fund, it is also one of the very few government funds at any level to completely forbid any financial contributions of any sort being accepted by the treasury managers. If you want to know why that's important, you can see the current issue of Forbes magazine for a very enlightening article on how North Carolina's pension manager pays high fund fees, receives substantial contributions from fund companies, yet produces extremely poor investment results for the state employees.

Bill, In order to take advantge of IRS Rule 72(t), which does permit early, penalty-free withdrawals, you will be required to take regularly scheduled distributions from the 401K for at least 5 years. If you retire at 55, that would mean until you are 60. There are three permitted ways of determining how large each distribution must be, the specifics of which are too complicated to go into here. However, Bankrate.com does have a calculator which you can use to figure out how much you would receive annually using each of the three methods. Plugging in your numbers as best I could, I calculated that your minimum annual distribution would be about $32,000 and your maximum about $44,500. That corresponds to a minimum monthly income of about $2670 and a max of about $3790. Note that you need to input the "applicable Federal midterm rate," which is 2.44% for March, 2011. Obviously, it will probably be different during the month your plan is implemented, should you go that route. So any results you get using the calculator will be somewhat rough, but at least will get you in the ballpark. The biggest red flag that hovers over 72Ts is that these early distributions, especially if you take the maximums, may result in you depleting your account during your lifetime. If I were doing this, I'd stick with the minimums. If you have any intention of doing this, you MUST find a professional tax advisor who is very experienced in setting up these plans. It's very easy to screw things up and leave you stuck with paying big tax penalties. Here is a link that might be useful: 72(t) distribution rates

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. 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.

Jen, sometimes things change when you least expect them, and thank goodness for a retirement plan! DH and I started getting things pulled together a bit later than most couples, he was 62, and *talked* about retiring at 70, and I was 61~that was 14 years ago. DH was forced into retirement at 69, when it was discovered he had bile duct cancer, with a very poor survival rate. He passed away 7 months after the diagnosis. Being an auditor/accountant he was quite a planner and had a pension plan already in place, and had started taking SS when he got the diagnosis. I had started taking mine at 62, when the business I was working at went bellyup. We also put together a porfolio since he had many stock options with his company, as well as stocks gifted by his grandmother. We added bonds and a few other options, as well as a 401K, which is now part of an IRA. When he passed away he had several life insurance policies, and I decided to purchase 3 annuities which are 'adding up quickly' as I only started taking RMD's last year. Considering your relatively young age, an annuity might work for you. In all honesty, my 'lifestyle', which I don't consider high end, the SS/pension is quite enough, and the RMD's go into a separate savings account. I never understood DH when he talked about 'saving for retirement', but thank goodness he was a *thinking* man! I get way too many emails with re:to retirement/savings, and thought this might be of interest to you. You're a very smart young woman for thinking of what could be *your* future. Best of luck, Jen! http://www.frugalrules.com/betterment-review-investing-option/