I hope I'm heading right direction...

[Objn]

First post.

44yo ObGyn, wife is stay at home mom/chauffeur for 3 kids, 15 (hsa33K), 12(hsa22k) and 10yo(hsa15K)
W2 employed physician, gross income ~400,000, been here 14 years/feels very stable
Retirement goal 62(?)

Assets
403a 480,000 BlackRock LIfeplan 2040
HSA 69,000 Schwab S&P 500
My Roth IRA 37,000 VFIAX
Wife's Roth IRA 12,000 VFIAX
Taxable Brokerage Account 7,000 VTSAX
Efund 20,000
Boat worth 25,000 (I own it and use it)

Debts
Home valued at 800,000, still owe 500,000 at 3.125% interest
pool loan 50,000 at 6% interest (wow, I know)
her car is leased 665 per month
my car 70,000 at 2%, 1000 per month
student loans 75,000 at 3% (should qualify for PSLF, just sent in application)
credit card debt 0

Monthly estimates
Utilities/internet/cell ~1000-1500 (it's hot in Texas)
home 3855
cars 1665
pool 500
3m life 250
disability 250
monthly credit card bill ~10,000

I know there is some obvious problems but I hope I'm heading in right direction.

Thanks for any advice.

[CordMcNally]

Just some initial observations:

1.) You're behind on retirement.
2.) You probably spend too much.

How much are you currently saving per year?

How much do you need to live on in retirement?

The good news is that you can still meet all your goals in the long term.

[Bellescamp]

How much are you saving a year?

[jhwkr542]

1. You're probably underinsured.
2. I assume you mean 529s for the kids.
3. Because of your spending habits, I'd say you're in a typical physician's situation. Not crushing it, but not fully leveraged. Retiring at 62 seems a little ambitious without cutting back on spending, which might happen if kids get off the payroll and you knock out the car loans.
4. If the wife's lease is up soon, that might be a good time to buy the car since you probably have equity in it.
5. Do you only have 1x month's spending on hand?

[mamaham]

The thing that immediately jumps out at me is lack of emergency coverage. I am a stay at home mom. I could not sleep with only one months expenses in cash/readily available. Do you have enough disability insurance? own-occupation?

Since I have no income, I have a plan in place in case anything happens to the income earner - death and disability. I am more conservative side (6 months expenses) so that I can sleep at night and not worry when my husband is doing projects with (AHHHH) power tools. I have a degree, so I can go back to work but it would not be immediate. I might have to do some training/school before I could actually get a job. With three kids, I do not want to be left impoverished when we had a great income and could have been prepared. just some things to think about.

Also, seems like you have some items to clean up. With your income, there is really no reason for pool loan and car leases, etc. I would get that cleaned up (and student loans) so that you can save more towards retirement.

[Objn]

Thanks everyone for your quick responses.

-yes, 529s for kids (not hsa)
-We save around 45,000 per year (working towards the 20% recommendation always seen on this site)
-Spending has always been our biggest issue. We have a hard time meeting in the middle (ie, we bicker/argue. Any advice for this?)
-I suppose I've been fooling myself with 20K efund. I guess I incorrectly considered Roth contributions as a possible type of efund.
-Am hoping to need <150,000 per year in retirement.
-is my portfolio too aggressive? I'm at least 18 yrs from retirement.

I've followed WCI for years, just now got up the nerve to post my financial picture. Somewhat embarrassed, somewhat nervous (anonymous forum?)
I feel like I know the answers, it's just a matter of making it happen.

[auggie1983]

Surprised that there haven't been harsher responses. 600K in assets, likely at least 150K/yr in discretionary spending. x25, x (1.02^20 for 2% inflation for 20years to retirement) means you need ~5.625mil to retire. Need to be saving about 7K/month at 7% compound returns to get there.

[CordMcNally]

-Spending has always been our biggest issue. We have a hard time meeting in the middle (ie, we bicker/argue. Any advice for this?)

I'm assuming your current spending isn't the meeting in the middle number. See a marriage counselor. You should be able to discuss finances without it turning into an argument. Finances are probably one of the top reasons why marriages don't end up working. Seeing a marriage counselor doesn't mean your marriage isn't strong. It just means you're seeking outside advice on ways to improve your marriage and to continue a strong marriage.

[Anne]

Thanks everyone for your quick responses.

-yes, 529s for kids (not hsa)
-We save around 45,000 per year (working towards the 20% recommendation always seen on this site)
-Spending has always been our biggest issue. We have a hard time meeting in the middle (ie, we bicker/argue. Any advice for this?)
-I suppose I've been fooling myself with 20K efund. I guess I incorrectly considered Roth contributions as a possible type of efund.
-Am hoping to need <150,000 per year in retirement.
-is my portfolio too aggressive? I'm at least 18 yrs from retirement.

I've followed WCI for years, just now got up the nerve to post my financial picture. Somewhat embarrassed, somewhat nervous (anonymous forum?)
I feel like I know the answers, it's just a matter of making it happen.

I think you are more like the average doc so don’t be embarrassed.

if you bicker about spending I’m guessing your spouse is the one who doesn’t want to cut back? Or do you not see eye to eye with priorities (e.g. you want her to cut back while not seeing an issue driving a 70k car in your situation/having a boat).

Maybe sit down with your spouse and show her some projections of what retirement will look like if you continue like this? E.g. in firecalc, if you take your current portfolio, want to assume potential of living to 95 or so, and save 45k/year til age 62 and want to spend 150k/yr in retirement, it only gives you a success rate of about 64%. If you increase saving to 80-85k/year, you get to 100%. Seeing those projections may help you both get more on the same page (also agree with the marriage counseling advice).

Are you on the same page about how much you are willing to spend on your kids’ education?

[Lordosis]

I would get your financial house in order before continuing to fund 529s.

Don't assume you will spend much less in retirement than you spend now. It will be on different things but it will probably be similar.

[Tim]

I think you know what the problems may be and probably some solutions.
1) Comp - taxes - 20% retirement = spending. Rule of thumb no. 1 broken. You are behind for age 65 retirement. Max every tax advantaged account possible. Hint, $12k backdoor roth is your friend each year.

2) Get your "annual budget" (Gross comp all the way to zero). Just put down reasonable estimates
3) Run retirement planners (Vanguard, Fidelity, Chase Bank or a couple of the others). See what path you will be at by age 65.
The reality is your wife needs to be part of this process. You need to have agreement to fix the path.

Get on an agreed cut in spending and determine when you want to catch up for the past. You can put numbers together, her and your amount to spend in retirement is a "family decision". Sounds as easy as 1-2-3. It is tremendously difficult. The most your savings rate will increase without significant pain is an additional 10%.

My guess is you already knew the path and the difficulty. Just trying to confirm what you already knew. Very fixable, but it takes two.

[zlandar]

You need to save more. Spend less. You are almost at the halfway point of your career and you have ~$750k in net assets.

It's time for Dave Ramsey.

[Random1]

You are way behind on savings. You have 75000 in school loans and are quickly approaching 12 years of college costs for your kids , along with high ongoing monthly expenses. Unless your kids are rock stars , the cash flows and savings will significantly decrease then unless you are disciplined. You may be able is to change your discretionary spending, and car expenses to increase savings rates

[nephron]

Pay off the car and the pool this year. You should auto-deduct that amount and a little bit more into your taxable account once you are done. You can't be purchasing things on credit and expecting to make any financial progress. You should sit down with your wife after you run some numbers to show her how far behind you are. I like to calculate look at a net worth projection once a year and estimate a rate of return to figure out how much we will have at different ages. You guys need to be on a budget. I agree with pausing the kids college funds until you get your house cleaned up. You can always go back and help them pay off their loans if you determine you are back on track. I would probably even skip a year of vacations until you get your car and pool paid off. You should do a retrospective budget to see where your money is going as well. If you are using the same credit card for everything, you maybe able to pull this up just by going to your credit card page.

[wideopenspaces]

In your shoes I would strongly consider selling the car and buying something reasonable and used, for cash. Same for your wife when her lease is up. That pool loan needs to be paid off within 2 years because you have a poop ton of college expenses coming up that you're going to have to cash flow given your kids ages and 529 amounts. I'm not sure if you realize it but they will be very limited in the loans they can take out for college because of your income. They can get 5.5k/ year. I know college is still pretty cheap in TX ( I myself did college and med school there) and perhaps you are living in a college town and they can live at home? But it's going to be very tough to even continue your current low rate of retirement funding when you are paying for college and have expensive car and pool loans. I think your situation is worse than you and your wife realize. If you cannot sit down together and figure this out, I third the suggestion for couples counseling. If the bickering is bad now, imagine how it will be when you are even more financially stressed in a few years. I'm glad you posted now, you definitely have time to turn things around if you start working together now. The other thing to consider is that you're spending like 250k/ year now, I have a hard time imagining you will be able to live on 60% of that in retirement. And last of all, would your wife consider going back to work now? I suppose if you can't slow down the spending, increasing income is the other option.