How many jobs will you have in your life? If you are an average baby boomer, you’ll work 12.3 jobs from age 18 to age 52, according to the U.S. Bureau of Labor Statistics.

Teri Allen does not fit this mold. She’s a baby boomer who has worked for one employer since she was 19 years old.

Now, at 58, after nearly four decades of cleaning buses, changing the oil of buses and working her way up to scheduling the maintenance of buses, she is ready to never consider what’s under the hood again.

“I’ve been at my job since Feb. 16, 1982,” Allen says. “I’m ready to go now!”

She’s ready to leave her job, but not Seattle, where her roots run deep. Allen grew up in Rainier Beach and still hangs out with some of her childhood chums. “My best friend, well, we have been friends since South Shore Elementary School,” she says.

In 1987, Allen bought a house in the Hillman City neighborhood for $50,000. The three-bedroom bungalow is due for some renovation, specifically a remodel of the kitchen and bathroom, Allen says. That’s part of what she wants to do when she retires. The other thing is travel.

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“I’ve been all around Mexico. I loved Jamaica, Antigua, Hawaii. You could see the curvature of the Earth in Hawaii!”

Can she afford tropical sunsets and new kitchen counters without a paycheck? Will she have enough money to retire before 65, the age the public transit agency that she works for considers full retirement?  

Those questions prompted Allen to apply for a Money Makeover, and our partner, the Financial Planning Association of Puget Sound, put out a call for a planner willing to lend a hand. Bellevue certified financial planner Lee Martin answered the call.

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Martin began by asking for lots of documents — and was impressed with how organized Allen is. 

As a dispatcher for a transit agency, Allen makes $76,000 a year. That is below the median household income for Seattle, which is $102,000 according to the U.S. Census Bureau. But, as Martin was about to find out, Allen can stretch a dime to save a dollar. And eventually, she might hit that $102,000 mark. How could she do that in retirement? Stay tuned.

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“I’m pretty frugal,” Allen says. “I learned that from my dad when we had our little talks. Put money away for a rainy day.”

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Or a sunny day of leisure. Allen and her planner decided they would look at age 63 as a possible retirement target. One of the first things Martin did was to make Allen aware of the costs of retiring early. 

Starting with health care: “When you retire before Medicare kicks in you have to pay for your own health insurance. This is a common problem for anyone who retires before age 65.”

Martin says Allen will need to pay for her own insurance either under COBRA — which would allow Allen to stay with her current plan for a time — or by buying a plan via Washington Healthplanfinder. Both options have been known to produce a temporary spike in blood pressure known as “sticker shock.”

Martin estimates that Allen would pay at least $1,200 a month, or $15,000 a year, for coverage that won’t be as gold-plated as what she has now.

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Another development that would add to Allen’s retirement expenses is remodeling her house. She owes about $20,000 on her mortgage. “What I did was roll an additional $75,000 into the mortgage,” Martin says. “I recalculated that her new payment after a refinance would be $1,000 a month. Now she’s paying $611 a month.”

The planner believes Allen can swing the remodel. But Allen says she’s on the fence now with the refi, because without it she is tantalizingly close to owning her home debt-free.

Travel is nonnegotiable. In retirement, Allen wants to take at least one big trip a year in the winter. “Somewhere nice and hot where you can sit on the beach or go down to the pool and have the waiter bring you a drink. Maybe Jamaica. I’d like to explore it some more.”

Martin earmarked $6,000 for travel in Allen’s retirement plan every year for 10 years. “I want to travel as long as I’m healthy,” Allen says.

The next planning task was to examine Allen’s retirement savings. A surprisingly satisfying task, as it turned out. Remember, Allen is a public employee who has been putting money into the Public Employees’ Retirement System (PERS 2) since she was 19. In addition, she stashes pretax cash in a deferred-compensation plan.

“Here’s an example of how much Teri puts away,” Martin says, looking at a recent pay stub. “In January, she put $541 in the PERS 2 plan and her employer put in $890. Deferred comp is separate. She put $270 into her deferred comp. I’ve rarely seen someone put as much into retirement savings as she does.”

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No big deal, Allen says. “It just comes out before I even see it. You learn to live on what your paycheck is. I’m single. No kids. There is just me to take care of. I’m not eating rice and beans.”

Are caviar and champagne in her future? Given what she’s put into the PERS 2 Plan, which is a pension, she would make nearly $7,000 a month if she worked until age 65. She’d be penalized a bit for retiring at 63, and would receive around $5,900 a month for the rest of her life.

When she is 67 years old, Allen will be eligible for her full Social Security benefit of $31,500 a year. Even though she won’t be working, she’ll hit Seattle’s current median household income of $102,000 a year.

In addition, she’s accumulated $212,000 in her deferred comp plan. She has another $54,000 in two Roth IRAs. Because she’s close to retirement, Martin advises Allen to reduce the stock exposure in her investment funds from 64% to 54%.

After running different scenarios through planning software, the road map for Allen’s retirement shows a 99% probability of success.

“Teri’s main question when she applied for the makeover was, ‘Am I on track?’ The answer is yes,” Martin says.

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Allen had no idea she was doing so well. “I don’t know a lot about crunching numbers and making them look toward the future.” 

After the makeover, she’s confident that her decades of hard work will ensure future freedom. “I won’t have to work for anybody anymore!”

“I’ve rarely seen someone put as much into retirement savings as she does,” Bellevue certified financial planner Lee Martin said after conferring with Teri Allen for her Money Makeover. (Courtesy of Lee Martin)
“I’ve rarely seen someone put as much into retirement savings as she does,” Bellevue certified financial planner Lee Martin said after conferring with Teri Allen for her Money Makeover. (Courtesy of Lee Martin)

Will you spend less in retirement?

The oft-quoted 80% rule says people in retirement spend about 80% a year of what they made while working.

This month’s planner, Lee Martin, doesn’t buy it. In his experience, retirement is more about the individual.

“People who plan for the future rarely go crazy,” he says. On the other hand, people who have a habit of spending too much will continue to do so in retirement.

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To avoid overspending, Martin advises pricing out your leisure dreams.

For example, Teri Allen, this month’s makeover subject, dreams of remodeling her kitchen and bath. She guesstimates it will cost about $75,000. But a recent report said a Seattle kitchen remodel averages $150,000.

Martin says retirees can count on their health care costs going up. Fidelity estimates that over 20 years, a couple will spend about $295,000 on health care, even with Medicare.

A number of retirees plan to sell their house to generate cash. Once again, Martin is skeptical. “People say they are going to downsize. Then they sell a $2.5 million house and move into a $2 million condo. The place got smaller but the numbers didn’t.”

Why so negative? Martin says it’s good for you. “I make retirement look less rosy than it probably is. Build assumptions into your plan: high inflation, lower returns. That way you’ll be ready for anything.”