In a nutshell, here are our assets. No mortgage or other debt. Age upper 30s to mid 40s.
401k spouse1: 470k
401k spouse2: 350k
rIRA spouse1: 30k
rIRA spouse2: 180k
taxable: 350k
emergency/slush (liquid): 200k
529/education: 150k
house: 1.3m
We went from two high incomes to now one income. We won't be able to save as much as we used to. Planning to remain a one-income family over the next several years while the kids are young. (Or forever, if numbers work out!) My questions are 1-if we want to retire in 14 years with a spendable (net) income of 150k in today's dollars, how much do we need to save annually? Keep in mind that the last 3 items in the list above are not part of our investment portfolio. 2- how are we doing? While the drop in income was semi planned for (by accumulating as much as possible beforehand), it feels almost irresponsible and I wonder how soon we should go back to two incomes. But we are really enjoying having a SAHP. Decisions, decisions...
You will get better responses if you post your information using the suggested format as a guideline.
viewtopic.php?t=6212
You might also want to edit your post to give a total of all the investment. I did not add it up but it looks like it is around $1.5 million so with the home equity your net worth is in the Ballpark of $3 million dollars.
1-if we want to retire in 14 years with a spendable (net) income of 150k in today's dollars, how much do we need to save annually?
That would mean that you would need something like $200K gross income before taxes.
With a paid off house once the kids are out of the house that would be a pretty high end lifestyle. Probably not at the top 1% wealth level but I would think that it would easily be in the top 5% wealth level. If "high end" does not fit how you would describe your lifestyle then you may be overestimating your expected retirement income need.
You can do a more detailed model but if you retire at 50 then you might want to have a 3% withdrawal rate so you would need about $6 million( not factoring in inflation) in 14 years. 3% of $6 million is about $200K
That is very conservative but even if you would be comfortable with $4 or $5 million that will still be hard to achieve in 14 years.
The good news is that if you would be willing to move to a lower cost of living are then you might be able to retire in maybe five years or so. Moving to a lower cost area would not only free up some home equity but your needed income might also be a lot lower.
One nice thing about living in a lower cost of living area is that when your kids grow up they may be able to afford to live near you. Years ago I lived in the Bay Area which has always been expensive and some of my older coworkers had grown up kids that were still living with them. The problem was that the kids did not have high paying jobs and could not even afford an apartment with roommates. In contrast I ended up retiring in the suburbs of Atlanta and my son was able to afford to buy a nice house about ten minutes from us. This is especially nice since he has kids so we frequently get to see our grandkids. Virtually all of his high school and college classmates who stayed in the area were able to afford to buy homes when they were in their 20s, especially when interest rates were lower.
Statistics: Posted by Watty — Fri Dec 22, 2023 12:32 am — Replies 1 — Views 159