Thanks to their aggressive savings, Frank and Sherry Rutherford of Renton have accumulated a tidy sum and have no debt — all this while working in public education. For this baby-boomer couple, their retirement dreams are within reach.
“The kids” may be all right, after all, if Frank and Sherry Rutherford are any example.
The baby boomers celebrated in that famous Who song are now the source of much worry and debate: Have they saved enough, and can America afford their retirement costs? Yet at ages 58 and 57, respectively, Frank and Sherry have accumulated a tidy nest egg and have no debt — all this and they work in public education, not the latest venture-capital darling.
On the other hand, they haven’t exactly lived a life of rock ‘n’ roll profligacy, either. The couple have lived in the same house in Renton for 32 years. Married for 35 years, they raised two children who are now grown.
“We’ve always pretty much been savers as a rule,” Frank said. “The house is paid for. … We pay off our credit cards every month.”
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Frank is a teaching aide — also called a paraeducator — working with high-school special-education students. This is his second career, after spending 20 years with an independent Pepsi bottler, working in information technology. Sherry is a veteran teacher, currently wrangling first-graders. Both work for the Renton School District.
Neither Sherry nor Frank plans to retire soon — although, Frank quips, “some days Sherry is ready to retire tomorrow.” And their retirement dreams are hardly extravagant: maintain their current lifestyle, take some cruises, travel more and enjoy vacations with relatives. Yet even the best-prepared saver can have some anxieties.
They have one other goal: contributing $10,000 a year for the next five years to their daughter, Ronda, age 22, who is entering graduate school.
“My wife and I have saved all of our lives in preparation for retirement, but now that we are almost there, I am not comfortable with how to spend down during retirement,” Frank said. “I know that there are lots of models and ideas, but I do not have a clear road map from here.”
They worked out a road map with certified-financial planner Steve Kessler, director of research at S.R. Schill & Associates and a member of the Financial Planning Association — Puget Sound Chapter.
Together, the Rutherfords make about $86,000 a year. Their direct living expenses are $27,000. And thanks to their aggressive savings, they have about $965,000 invested, mostly in stocks and mutual funds. Of that amount, $148,000 is in cash or equivalents, while $570,000 of the total is in retirement accounts.
In addition, Frank’s pension will provide him with $840 monthly at age 65, while Sherry’s pension will bring in about $3,000 a month (assuming she works to 65).
Kessler was concerned that the Rutherfords’ portfolios were at three brokerage firms and six banks. Also, several stocks were being held as certificates, with the dividends being reinvested in acquiring more shares. It can be a lot to keep track of, including various fees that different institutions might charge.
For starters, Kessler recommended that the couple transfer their stocks to one brokerage and keep their bank accounts in no more than two banks.
He also wants to work out capital-gains exposure from some stocks and reduce the couple’s large cash cushion — which can be vulnerable to inflation and make better returns in international fixed income or real-estate investment trusts. This can also offset the concentration in U.S. growth stocks.
Still, Kessler was impressed. “Overall, Frank has structured a reasonably diversified portfolio with limited downside risk,” he said.
The couple, he said, are “a good example that it is still possible to work hard, even with modest incomes, save and invest diligently and accumulate enough for a comfortable retirement.”