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Wish to retire in 7 yrs. and request financial advice

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  • #16
    Originally posted by Hatton View Post
    I would really start tracking your expenses down to the penny. This will help you find things you can eliminate. It also really lets you drill down on the 3% SWR calculation. Really at the retirement age you are looking at 4% would be ok if the nest egg is big enough.
    How about the funds(TIRA, taxable and emergency)and allocations that I have?

    Comment


    • #17
      Originally posted by afr View Post

      2019 our MAGI was $245,000. I max out my 401k and our IRA's. My 2019 basis was $66,000 and my wife's was $53,000. Its going to be significantly lower this yr. since we were both on UE for a few months.
      thanks for the add’l info! In a normal income year, I’d recommend setting a goal 20% of gross for your savings metrics. At this point in your career and given that you are somewhat behind, 25% - 30% would be especially beneficial. Might consider diverting the extra $500/mo mortgage pmt to savings.

      JMPO - it is nice to have a paid-off house at retirement, but it is not (generally) critical to your success. I believe this is one of those emotional decisions that is ok to make when you have plenty of flexibility. I can’t say I’d put you in that camp, at least not yet.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #18
        Originally posted by afr View Post

        How about the funds(TIRA, taxable and emergency)and allocations that I have?
        I think for planning you need to figure out your expenses now and your projected expenses in retirement. I certainly did this prior to retiring. If you know your expenses simply multiply by 25 to get the nest egg number. Most people are just guessing their expenses. You need to look at your CC statements and bank account and figure it out because you are closing in on your retirement age.

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        • #19
          Does anyone feel it would make any sense to payoff the auto loan($11,[email protected]%) from my emergency online savings account(1%)?

          Comment


          • #20
            Originally posted by Hatton View Post

            I think for planning you need to figure out your expenses now and your projected expenses in retirement. I certainly did this prior to retiring. If you know your expenses simply multiply by 25 to get the nest egg number. Most people are just guessing their expenses. You need to look at your CC statements and bank account and figure it out because you are closing in on your retirement age.
            I'm hoping to have the mortgage paid off(or close to it), no more life($1200/yr), disability($2300/yr) or malpractice($1500/yr) insurance. Auto insurance is currently $2800/yr and medical is $1340/month(though I'm assuming mine will decrease somewhat when I qualify for Medicare in 5 yrs; will have to carry my wife for a few yrs). Our property/school taxes/homeowners ins) are currently in an escrow account and paid thru our mortgage co($3200/yr) and homeowners is $768/yr. Heat/electric averages $140/month and water averages $80/month. We really don't vacation(at least not planning to in the near future) and would like to sell our townhouse(approx value $340k) in 7-8 yrs when I call it quits. We'd like to downsize to a less expensive 55 and over community in the Phoenix,AZ region(Sun City, Bullhead City may be possibilities) since one of our children lives in Scottsdale.

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            • #21
              Originally posted by afr View Post
              Does anyone feel it would make any sense to payoff the auto loan($11,[email protected]%) from my emergency online savings account(1%)?
              Unless it is causing mental stress, I would not prioritize this.
              Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #22
                Originally posted by afr View Post
                disability($2300/yr) insurance.
                What are you getting for the $2300/year? I haven't thought about disability insurance for a long time, but if I recall correctly, the disability policies I reviewed back in the day only paid until age 62, then nada.

                If you are disabled tomorrow, how many years of payouts will you receive?
                Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried (many) bags for a lovely and gracious 59 yo Cyd Charisse. (RIP) Hosted epic company parties after Friday night rehearsals.

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                • #23
                  Originally posted by CM View Post

                  What are you getting for the $2300/year? I haven't thought about disability insurance for a long time, but if I recall correctly, the disability policies I reviewed back in the day only paid until age 62, then nada.

                  If you are disabled tomorrow, how many years of payouts will you receive?
                  Benefit of $3140/mo w/30 day elimination til age 65(so 5 more yrs). Policy with Provident L&A taken out in 1988

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                  • #24
                    Thank you for all of your replies. Our current financials(on paper at least) have changed slightly. Our only debt is our mortgage with a remaining principal of 138k(based on original mortgage of [email protected]%). Couldn't convince my wife to refi, since she said we're going to sell in another 6 more years(when i retire) and didn't wish to lay out the $$$ to cover the costs. Still planning to move to AZ to a less expensive property that will not require us to take out a mortgage for.

                    Current major monthly and anticipated future expenses-
                    mortgage-$1524(includes escrow), plus we add an additional$500 principal pmt.-plan to have no mortgage in retirement

                    medical premium-$1335-I'll be 61 in May of this year, so hopefully be on Medicare(assuming its still there) in another 4 yrs. Wife is 56 yrs and will be 57 in Jan. '22. So will have my Medicare premium/supplemental and have to carry her for several yrs. on private.

                    Overall we live fairly frugally. Don't really travel other than visiting our daughter in AZ. Don't anticipate any real travel in the future. My income has dropped since I cut back(out of necessity)work to 3 days/week and anticipate my income to be 165-175k for the next 6 yrs. My wife currently works 3 days/week and her gross income is approx. 35k. We max my 401k and our IRA's and add to the taxable also.

                    Current assets-
                    Home is worth approx.(Zillow est. 417k if that means anything)
                    own 2 cars
                    My 401k-405k
                    IRA's(mainly TIRA's w/smaller Roth's)-354k
                    joint taxable acct-157k
                    online savings-43k

                    I'm anticipating my SS income to be 3k/mo(I'll be 67 yrs of age when I start collecting) until that's cut sometime in the near future. My wife's SS at 67 yrs will be $1338, unless she takes it at 62 which would be about $900/mo. We'll most likely do gradual Roth conversions in retirement since our tax bracket will be lower than what it currently is. To do it now would cost us too much due to the pro rata rule.

                    Comment


                    • #25
                      Keep up the frugal living. Your savings rate is your biggest lever to pull in order to optimize your retirement at this point. Good luck.

                      Comment


                      • #26
                        Originally posted by afr View Post
                        Thank you for all of your replies. Our current financials(on paper at least) have changed slightly. Our only debt is our mortgage with a remaining principal of 138k(based on original mortgage of [email protected]%). Couldn't convince my wife to refi, since she said we're going to sell in another 6 more years(when i retire) and didn't wish to lay out the $$$ to cover the costs. Still planning to move to AZ to a less expensive property that will not require us to take out a mortgage for.

                        Current major monthly and anticipated future expenses-
                        mortgage-$1524(includes escrow), plus we add an additional$500 principal pmt.-plan to have no mortgage in retirement

                        medical premium-$1335-I'll be 61 in May of this year, so hopefully be on Medicare(assuming its still there) in another 4 yrs. Wife is 56 yrs and will be 57 in Jan. '22. So will have my Medicare premium/supplemental and have to carry her for several yrs. on private.

                        Overall we live fairly frugally. Don't really travel other than visiting our daughter in AZ. Don't anticipate any real travel in the future. My income has dropped since I cut back(out of necessity)work to 3 days/week and anticipate my income to be 165-175k for the next 6 yrs. My wife currently works 3 days/week and her gross income is approx. 35k. We max my 401k and our IRA's and add to the taxable also.

                        Current assets-
                        Home is worth approx.(Zillow est. 417k if that means anything)
                        own 2 cars
                        My 401k-405k
                        IRA's(mainly TIRA's w/smaller Roth's)-354k
                        joint taxable acct-157k
                        online savings-43k

                        I'm anticipating my SS income to be 3k/mo(I'll be 67 yrs of age when I start collecting) until that's cut sometime in the near future. My wife's SS at 67 yrs will be $1338, unless she takes it at 62 which would be about $900/mo. We'll most likely do gradual Roth conversions in retirement since our tax bracket will be lower than what it currently is. To do it now would cost us too much due to the pro rata rule.
                        Assuming close same age; once you take SS; wife can be spouse and draw higher than her own.

                        Comment


                        • #27
                          Agree save save save.

                          Also, read some MrMoneyMustache on how to live frugally. Here's a few obvious ones over the next 6 years and it'll give a bigger buffer.
                          Like CM stated, drop that disability in 4 years (but make sure to save 100% of that extra cash flow).

                          Why are you paying for 4 phones at $250? I have 1 iphone and my monthly wireless bill is $52/mo w AT&T. Seems like you should only have 2 phones - yours and partner, which can be under $120/mo, that's $1,560 savings every year on cell phone alone. Adult children can pay for their own phones.

                          Also can you decrease cable bill? Gosh my internet is $55/mo in a big city. Nowadays with everyone paying for Netflix/Amazon/etc drop the cable for a few years watch off those subscriptions services I can easily see you saving another $2000 yearly on the cable alone.

                          Please stop counting cars as an asset paid off. Cars are not an asset they are a consumption item. If you get in an accident tomorrow and the car is totaled--you're out of a car and the payout won't match a used equivalent. I'm glad your cars are paid off, but from now on only buy a car when you have enough saved in cash to buy it outright or for 0% interest.

                          Still reconsider re-finance on house. There are some good online calculators that show where the break even point is between spending more on the close and saving. My guess a 4% refi it is still saving money during the next 6 years you're there. Also, if you want to do the lazy re-fi call your current mortgage company and ask what they'd offer you right now to refinance - esp to a 15 year which my guess would be a nearly identical payment to what you have now (with the $500 you're already paying on principal). It'll still probably save you money because the interest rate will be 3% or under and there will be no transfer of escrow. I did this and it was super easy.

                          When I was saving to pay off my med school loans mentally I turned it into a game. Going over my numbers monthly and sending every last extra dollar to loans with the goal of zero. Treating it like a game was really satisfying to send even small amounts, each $100 sent felt like a win. Think about treating your taxable the same way - it can be fun watching the progress particularly if you have let's say a count 'up' to the 1 mil goal. Good luck! Send us updates
                          Last edited by eyecandy; 04-25-2021, 04:21 PM.

                          Comment


                          • #28
                            I haven’t gone back through the whole thread, so this suggestion may already be there, but I hope you will run some projections on gradual Roth conversions of your TIRA after semi- to full retirement.

                            A Financial Checkup could be very helpful at this stage of the game, also.
                            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                            Comment


                            • #29
                              Originally posted by jfoxcpacfp View Post
                              I haven’t gone back through the whole thread, so this suggestion may already be there, but I hope you will run some projections on gradual Roth conversions of your TIRA after semi- to full retirement.

                              A Financial Checkup could be very helpful at this stage of the game, also.
                              We're in the current 24% and will be in the 12% in 6 more years.

                              Comment


                              • #30
                                Originally posted by eyecandy View Post
                                Agree save save save.

                                Also, read some MrMoneyMustache on how to live frugally. Here's a few obvious ones over the next 6 years and it'll give a bigger buffer.
                                Like CM stated, drop that disability in 4 years (but make sure to save 100% of that extra cash flow).

                                Why are you paying for 4 phones at $250? I have 1 iphone and my monthly wireless bill is $52/mo w AT&T. Seems like you should only have 2 phones - yours and partner, which can be under $120/mo, that's $1,560 savings every year on cell phone alone. Kids can pay for their own phones.

                                Also can you decrease cable bill? Gosh my internet is $55/mo in a big city. Nowadays with everyone paying for Netflix/Amazon/etc drop the cable for a few years watch off those subscriptions services I can easily see you saving another $2000 yearly on the cable alone.

                                Please stop counting cars as an asset paid off. Cars are not an asset they are a consumption item. If you get in an accident tomorrow and the car is totaled--you're out of a car and the payout won't match a used equivalent. I'm glad your cars are paid off, but from now on only buy a car when you have enough saved in cash to buy it outright or for 0% interest.

                                Still reconsider re-finance on house. There are some good online calculators that show where the break even point is between spending more on the close and saving. My guess a 4% refi it is still saving money during the next 6 years you're there. Also, if you want to do the lazy re-fi call your current mortgage company and ask they what they'd offer you right now to refinance - esp to a 15 year which my guess would be a nearly identical payment to what you have now (with the $500 you're already paying on principal). It'll still probably save you money because the interest rate will be 3% or under and there will be no transfer of escrow. I did this and it was super easy.

                                When I was saving to pay off my med school loans mentally I turned it into a game. Going over my numbers monthly and sending every last extra dollar to loans with the goal of zero. Treating it like a game was really satisfying to send even small amounts, each $100 sent felt like a win. Think about treating your taxable the same way - it can be fun watching the progress particularly if you have let's say a count 'up' to the 1 mil goal. Good luck! Send us updates
                                Our cell phone bill is $170/mo. for 4 phones, internet/streaming tv $135/mo.

                                Comment

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