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  • #16
    Originally posted by Anne View Post
    What have you been investing in in your 401k?
    If you have been maxing out over the past 15 years in even a basic reasonable life cycle fund you should have 2-3x that.
    Something is very, very wrong with the 401(k) balance. Maximum employee contributions alone for the last 15 years, with no employer match and no growth, would be $263,000. See https://dqydj.com/historical-401k-contribution-limit/

    A typical young attending physician who completes undergrad, med school, and residency with little to no delay after high school needs to set aside at least 20% of gross salary towards retirement in order to retire at a typical age of 60 or 65. Someone who wants to retire early or has only 15 or 20 years left until retirement will need to save more than 30% of gross salary to avoid a significantly lower standard of living in retirement.

    On the good news side, you own your house free and clear and you have no student loan debt. You have $700K in your brokerage account and $280K in retirement accounts. (Any IRAs for you or your spouse? Does your spouse have a 401(k)? Any pension plans or similar expected source of income in retirement?)

    You are in far better shape than most middle class Americans and a number of doctors. You also have an above average income for a med school grad. (You don't mention if your spouse works outside the home, so we don't know combined household income.) $450K per year is a pretty big shovel if you want to be in a position where you can retire in the next 15 years or so. However, you need to sharpen your pencil and do the math for what you'll need in retirement.

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    • #17
      i think a break down of your income and expenses as they are now + what you expect them to be with the private school and new house and/or whatever your other goals are would be most helpful

      also do you know what your asset allocation is in all your retirement and/or investment accounts?

      Comment


      • #18
        Originally posted by NumberWhizMD View Post
        How much house do you NEED?
        Ditto the private schools. Is private school truly needed? If the local public schools in the area are craptastic, that's one thing - but if they are not, that money might be better saved for college tuition. Your taxes already support the public schools, so why pay extra for basic education? (And it's hard for me to believe that a million-dollar house, outside of a VERY few locations in the US, is going to be located in a craptastic public school district.)

        I agree with the others: time to start tracking your spending so you can see where your money is really going, then sit down and work out a reasonable monthly budget (which should include saving 20% of your income for retirement). THEN consider how much house you can realistically afford, and what tweaks (if any) you can make in your budget to make a more expensive house affordable.

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        • #19
          Take the comments constructively.
          Suggest you go back to ground zero in the thought planning process.
          Start now point A and plan you path to point B for retirement.
          Gross-taxes-Retirement (~20%)=spending.
          You need to know your current spend
          You need to know your retirement spend .From that you know how much you need to be saving to catch up.
          Short version is you need a plan, the retirement funds are your #1 priority (not just 401k, taxable as well).

          The rule of thumb is 25x comp.
          $450k x 25 = $11,250,000.
          There is a big gap from point A to B.
          I have no clue whether you would want to live in the more expensive house in retirement, but housing is primarily consumption.
          Start over:
          https://www.whitecoatinvestor.com/fi...nd-attendings/
          Then build your plan to get to point B:
          https://www.physicianonfire.com/tale-of-4-physicians/

          Just saying your choices for housing, private schools, college will have a big impact on your savings vs spending. With respect, it seems you have put retirement last, rather than first.

          Plan your destination, I think you will decide to tag all the investments as retirement and stay where you are.

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          • #20
            Also go onto ssa.gov and look at what your estimated SS payments are going to be at full retirement age or waiting until 70. The early retirement hopefuls here might need to essentially ignore social security but if youre planning on working until 70 it will likely be a large component of your income in retirement.

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            • #21
              Originally posted by Tim View Post
              Take the comments constructively.
              Suggest you go back to ground zero in the thought planning process.
              Start now point A and plan you path to point B for retirement.
              Gross-taxes-Retirement (~20%)=spending.
              You need to know your current spend
              You need to know your retirement spend .From that you know how much you need to be saving to catch up.
              Short version is you need a plan, the retirement funds are your #1 priority (not just 401k, taxable as well).

              The rule of thumb is 25x comp.
              $450k x 25 = $11,250,000.
              There is a big gap from point A to B.
              I have no clue whether you would want to live in the more expensive house in retirement, but housing is primarily consumption.
              Start over:
              https://www.whitecoatinvestor.com/fi...nd-attendings/
              Then build your plan to get to point B:
              https://www.physicianonfire.com/tale-of-4-physicians/

              Just saying your choices for housing, private schools, college will have a big impact on your savings vs spending. With respect, it seems you have put retirement last, rather than first.

              Plan your destination, I think you will decide to tag all the investments as retirement and stay where you are.
              there is no ROT of 25x comp. the ROT to save for retirement is 25x spending. And that’s assuming a 30 year retirement… if working until 70 probably don’t need quite that much.

              Comment


              • #22
                Originally posted by Anne View Post

                there is no ROT of 25x comp. the ROT to save for retirement is 25x spending. And that’s assuming a 30 year retirement… if working until 70 probably don’t need quite that much.
                Thanks for the correction. Starting from scratch and the savings rate needed between point A and point B is the message. OP needs a better picture how his plan will work out. $280k in retirement accounts in 15 years leaves a big gap for the starting point.

                Comment


                • #23
                  I'll take a stab at things to give you a general ballpark. Individual numbers will make a big difference though.

                  Assumptions: Current income at 450k, savings of 280k in 401k and 700k in taxable. Assume 5% real returns, and 20% savings rate (90k per year) going forward with retirement at 65 in 15 years (op said 70 but building in some buffer would be smart).

                  - Retire with 4.1MM in assets with safe withdrawal rate of 165k a year (-20% or so in taxes on those withdrawals) for about 132k in actual spending in today's dollars
                  - Assume 33% effective tax rate, 20% savings = 47% of income for spending = $211,500/yr along the way. I would then use the 28% rule ($59,220 or a bit over $4900 a month) and allocate that for home spending (leaving you with 152k for other expenses on a daily basis).
                  - It would not be unreasonable to use a mortgage with interest rates as low as they are. Carrying debt into retirement is higher risk, so assume a 15 yr mortgage meaning you are debt free at 65yo. Schwab has some excellent relationship pricing on mortgages and publishes their rates. 15 year fixed is at 2.917% today with a .25-.5% interest rate deduction depending on how much assets you hold. Currently qualify for .25% with under 1MM but getting close to larger. Let's use real rate of 2.667% since that's easy to get, you could likely shop around and do a little better. Property taxes of 2% in your area are high, plus have to include insurance etc. Using your 1MM in existing home equity as a down payment and total PITI of $59,220 per year will then get you a total purchase price of around 1.35MM with 350k mortgage and super high property taxes eating up most of your housing budget.

                  If any of that doesn't look right, ie you need to spend more than 211k per year to afford private school, you'll need to earn more money or not upgrade the house. If you want to retire on more than 4.1MM with spending of around 130k a year you'll need to downsize your home in retirement and put some of the proceeds into investments or else save more vs work until 70 instead of 65 as you are originally planning.

                  Additionally as others have mentioned your investment returns to date look like they may have been pretty poor despite the historical boom in the stock market. Make sure you are investing appropriately and not sitting too much on cash in those accounts. I would advocate at least 70% stocks and 30% bonds in this environment (if not higher equity).

                  Last edited by Hoopoe; 12-03-2021, 11:03 AM.

                  Comment


                  • #24
                    It sounds like you have spent limited time learning about personal finance and coming up with a well defined financial plan.

                    Simply maxing out a 401k might mean that you are putting away 19k a year. That is a good start but not sufficient savings for your income level to have a retirement that maintains your current standard of living. And your Ameritrust account needs to be carefully invested in the right types of funds with low fees to maximize results.

                    Generally speaking, you might want to save and invest in the range of almost 100k per year to retire well after around 25 years of saving. But it is a bit different for each family, depending on individual circumstances.

                    You have a couple of options. You could read, learn, and figure things out on your own with the help of this forum, you could take a WCI course, or you could hire a financial advisor to direct you. It isn’t difficult to learn the ropes yourself, but it does require a modest commitment of time, effort, and self discipline. It is your choice. But it clearly sounds like further knowledge about personal financial planning could be very helpful and improve future circumstances for you and your family.

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                    • #25
                      thanks everyone for their input. obviously have a lot of homework to do, my forward thinking has been lackadaisical.

                      final questions and i understand maybe i should post these in the beginners forum (is that a good place to go?): : most things that i've read in the past: is a financial advisor an absolute no-no? are 529s a slamdunk yes if your kids WILL go to college? my savings/investment strategy was basically years ago when i called td ameritrade and opened an investment account with an aggressiveness of "7" scale of 1 to10. how bad is this? again thx all.

                      Comment


                      • #26
                        Originally posted by krokill View Post
                        thanks everyone for their input. obviously have a lot of homework to do, my forward thinking has been lackadaisical.

                        final questions and i understand maybe i should post these in the beginners forum (is that a good place to go?): : most things that i've read in the past: is a financial advisor an absolute no-no? are 529s a slamdunk yes if your kids WILL go to college? my savings/investment strategy was basically years ago when i called td ameritrade and opened an investment account with an aggressiveness of "7" scale of 1 to10. how bad is this? again thx all.
                        I would not say an advisor is an absolute no-no. My opinion is most people can do better for themselves as there are lot of bad advisors out there. You don't want to just hire an advisor and assume that they will do things in your best interest. You need to be informed enough to make sure your advisor is providing good advice (and at that point you've done most of the work to self direct).

                        529 is a complex question and depends on your state and plans for paying for children's education. I would not consider 529 a slam dunk. Even on a salary of $450k paying for 4 kids education is a lot of money. As I think you've realized, you want to sit down and make a financial plan. Keep asking questions!

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                        • #27
                          Financial advisor is not an absolute no-no. Very few absolutes in life, and this isn’t one. For some, can be an excellent option. But you do have to be careful.

                          If your kids WILL go to college, 529 is a slam dunk yes. Hard to know if they will do that with certainty ahead of time though. But an excellent way to fund education.

                          Also hard to know how bad your 7/10 at TD is without more detail. Was that decision itself—to create an investment strategy using a number on a 10-point scale and a single phone call—a bad one? Yes. But your allocation and investments may be appropriate. Or not.

                          How to rectify? In your case, from what I can gather based on things you have said and asked, this could be one of those potentially excellent roles for that financial advisor mentioned above.

                          Just use a good one—i.e., fee-only and WCI-recommended.

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                          • #28
                            Financial advisor to help with whole picture including budget, housing, retirement savings now and moving forward would 100% be helpful in this situation. Would include your spouse in all of it.

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                            • #29
                              Financial advisors are great for the right people. You just need a 100% fiduciary, fee only advisor.

                              529s are usually the right answer, but paying for your kids college comes after your retirement. Your kids would rather have student loans than pay your bills.

                              Comment


                              • #30
                                I think the most important thing you need to do is get the priorities right. Not SUVs, eating out, kids schools, retirement. That’s why you have less assets than is to be expected. Retirement then everything else.

                                that may mean 529s arent the right option simply because you shouldn’t be paying for their educations.

                                but if things are close please pay for the college educations and not private school if you have to choose. At this point I would’ve been incredibly annoyed if I had to pay for college because my parents prioritized private schools before that instead

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