Can I semi-retire (or retire?)

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sickman
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Can I semi-retire (or retire?)

Post by sickman » Tue Aug 23, 2016 2:24 pm

Just started reading this forum heavily in last week and learned so much (switched just about everything to 3 fund portfolio in last few days) so was hoping you smart experienced folks can critique my situation:

I am 45 years old, wife is 43 yrs old and we have 3 children ages 8 to 12, living in Los Angeles with no debt aside from mortgage (which rental income just about covers). Wife has full time job with excellent benefits so would work +15 more years, and I am self-employed but my home business has dropped off considerably this year. Still, we continue to max our 401(k)'s and roth IRAs (going forward I could work enough just to cover 401k). Annual expenses are lets say $50k (2015 was $45k). We have $1.7m in assets (not including primary home & kids education accounts) which are listed below:

TAXABLE:

Vanguard 3 fund portfolio (65/35 AA): $630,000
Misc brokerage accounts: $50,000 mostly in SVSPX
529 college education accounts: $300,000 in educational target funds ($100K for each kid from grandparents inheritance)

RETIREMENT:

Her 401(k): $475,000 in company plan:
20% in Vanguard Total Intl Stock Index Instl - VTSNX (.10% ER)
50% in SSgA S&P 500(R) Index NL Ser N - SVSPX (.16%)
30% in PIMCO Total Return Instl- PTTRX (.46%)
(T Rowe target fund with +.70 ER which would be next best option it looks like)

Her Roth IRA: $80,000 in Vanguard LifeStrategy Growth Fund - VASGX

Her pension: $2,200/month if she works at company until 60 (in 2033), $1,100/month if she leaves before

My 401(k): $290,000 with Fidelity's version of 3 fund portfolio with 65/35 AA

My Roth IRA: $80,000 in Vanguard LifeStrategy Growth Fund - VASGX

Misc IRA's: $35,000 in individual stocks

REAL ESTATE:

$400,000 in investment property (zillow shows $500K but don't think that's accurate) - no mortgage, paid off. $1,450 monthly rental income.

$340,000 mortgage @ 3.375% in primary home (worth $600,000). $1,630 monthly payment.

QUESTIONS:

1) Would above be good enough for me to semi-retire, or retire? I am/will continue to take care of the kids during the day (pickup from school, dr/orth appts, soccer/volleyball, homework, etc...) - important I note this here!

2) AA is now 60-65% stocks/35 - 40% bonds (we were almost always 95/5 until last week!). Is current AA OK considering our net worth?

3) There was a recent thread here asking about taking out 4% 10 yr equity loan to invest which people thought was a horrible idea. My situation is similar but better (3.375% 30 yr loan - $300K cash out amount with 27 yrs left). I was always heavily into equities and thought I could cover +3.375% easy, but after reading here, sounds like I need to be way more conservative, so am now considering just paying off the entire $340K mortgage. Though am also considering getting another investment property and using part of that $ as down, so will see.

Any comments on any of above will be appreciated. Many thanks!
Last edited by sickman on Fri Aug 26, 2016 3:08 pm, edited 10 times in total.

Runner01
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by Runner01 » Tue Aug 23, 2016 2:29 pm

Does the investment property produce net income?

What are your annual expenses?

joebh
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by joebh » Tue Aug 23, 2016 3:14 pm

You are only 45 years old.

You will need to plan on funding a 50-year retirement if you duck out now. Plus future expenses related to the kids. And you have a long wait until Social Security.

To do a real analysis, you need to list your wife's income, any other income streams, your current expenses, and how much you expect to live on once she retires.

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 3:17 pm

Thanks for reply.

Included this info above now:

1) We're pretty good with our spending so have no budget, but assume we spend $40K to $50K year I'd guesstimate. Basically wife's salary ($80K plus benefits) & my income ($30k to $50K now) cover our expenses and misc. spending, plus the $50K annual retirement contributions at this time.

2) Rental income is $1450/month which just about covers our mortgage of $1630.
Last edited by sickman on Tue Aug 23, 2016 3:20 pm, edited 1 time in total.

livesoft
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by livesoft » Tue Aug 23, 2016 3:20 pm

Did you tell us that your wife makes $400,000 a year in her job?
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sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 3:22 pm

livesoft wrote:Did you tell us that your wife makes $400,000 a year in her job?


No, thats not me - must be another very very fortunate poster! She brings home 'only' $80K plus her firm has some great employee benefits.

livesoft
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by livesoft » Tue Aug 23, 2016 3:25 pm

sickman wrote:
livesoft wrote:Did you tell us that your wife makes $400,000 a year in her job?


No, thats not me - must be another very very fortunate poster! She brings home 'only' $80K plus her firm has some great employee benefits.

OK, my spouse brings home way less and I am retired. So you can tell your spouse that you can retire. But maybe she wants to tell you that she is retiring?
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sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 3:31 pm

joebh wrote:You are only 45 years old.

You will need to plan on funding a 50-year retirement if you duck out now. Plus future expenses related to the kids. And you have a long wait until Social Security.

To do a real analysis, you need to list your wife's income, any other income streams, your current expenses, and how much you expect to live on once she retires.



Thanks for reply. My parents died early (father was 53, mother was 69) so I don't plan on making it past 80 (I'll take 75 if I don't have to suffer at the end). Wife & I are pretty good with spending so 3% withdrawel rate ($50K) would be more than enough once she retires in next 15 or 20 years. Then if we are close to running out in our 80's or 90's, equity in home could always be tapped.

Engineer250
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by Engineer250 » Tue Aug 23, 2016 3:32 pm

I mean...

If your expenses are ~$50k a year and your wife makes $80k a year, then yes you can afford to stop working. Could you retire? Maybe? I'd say with "only" ~$1.6mil in investments, a long retirement is pretty risky. There's a high probability of you having to return to work at some point. If you were 15 years older I'd say go for it, but that's a lot of high spending years to cover between now and then.

I'm a teeny bit concerned you are thinking about buying another investment property and trying to swing early retirement. I'd almost suggest you sell your rental property and use it to pay off your current mortgage. I realize you are netting even right now because rental income is covering your mortgage, but that's always a risky strategy if you didn't have enough income to cover various circumstances. How long have you been a landlord? Do you like it?

Maybe you just don't like your "home business" anymore, maybe taking a break is fair but that doesn't necessarily have to mean retirement. Is there something else you might like to do or try? What does your wife think of all this? Is she going to be resentful you get to retire and she has to keep working?

Could you be more specific about how much you're saving? You mention $50 in retirement savings each year ($18kx2 + $5.5kx2 = $47k) but your taxable account is pretty sizeable too. Are you continuing to put anything in there or is that from some past event?
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by bloom2708 » Tue Aug 23, 2016 3:39 pm

It may be semantics, but I don't think "retired" is the correct term when your spouse is still working.

Is she on board with you being a full time "stay at home parent"? Currently this may seem like a good idea, but 15 more years of your wife working while you are not could lead to some unintended consequences.

If your wife "loves her job" and "can't ever see herself not working", well then you might be on track. Good luck.
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TOJ
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by TOJ » Tue Aug 23, 2016 3:44 pm

Yes, could be awkward if your retirement now delays her own by several years. Not sure that'd fly in my family, lol.

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celia
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by celia » Tue Aug 23, 2016 3:54 pm

I'd like to hear how that conversation goes.

HE: Hey honey! Since my at-home business has slowed down, why don't we just say I "retired". Of course we need money to live on, so I think it would be safe if you just kept working...until you get enough Social Security for us to live off of.

SHE: Honey, why do you continue to talk non-sense? First, we have that rental property that's a money pit. We have to supplement the rent we get with $200 a month of my pay check just to pay the mortgage. Then we have to pay property tax, insurance and repairs. And you don't keep up the landscape over there like you were going to. Second, there's a matter of vacations. You got to see <named of deceased> several times last year while I stayed home with the kids. Third, if I'm the only one working, we will live off my income and nothing will be added to our retirement accounts. Lastly, it is time for us to change rolls. You go find a job while I stay home with the kids.

(Am I close?)

Just because you got an inheritance, you still need to keep saving as if you didn't get one. Let the kids enjoy it by doing well in college.
Last edited by celia on Tue Aug 23, 2016 4:11 pm, edited 1 time in total.
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sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 4:01 pm

Engineer250 wrote:I mean...


I'm a teeny bit concerned you are thinking about buying another investment property and trying to swing early retirement. I'd almost suggest you sell your rental property and use it to pay off your current mortgage. I realize you are netting even right now because rental income is covering your mortgage, but that's always a risky strategy if you didn't have enough income to cover various circumstances. How long have you been a landlord? Do you like it?

Been a landlord since I bought the property back in 1993 (23 years ago). Don't think anyone likes being a landlord but always been careful screening so never had any problems - until last month. Tenants are paying rent but causing hassles for me so need to do my first eviction now which is really annoying.

Maybe you just don't like your "home business" anymore, maybe taking a break is fair but that doesn't necessarily have to mean retirement. Is there something else you might like to do or try? What does your wife think of all this? Is she going to be resentful you get to retire and she has to keep working?

Wife is going to be somewhat resentful but if you guys show that this will be OK, she can't blame me, right? :) My home business was doing quite well for 15 years, but just in last year or two, the industry completely changed and small mom & pop operators like mine are fast closing up shop. So I will need to do something else, probably next year. Considering getting a realtor's license to purchase investment properties to either flip or rent depending.

Could you be more specific about how much you're saving? You mention $50 in retirement savings each year ($18kx2 + $5.5kx2 = $47k) but your taxable account is pretty sizeable too. Are you continuing to put anything in there or is that from some past event?


Aside from the $50k annual retirement savings we've always done (and continue to), not saving anything else at the moment until my business picks up (unlikely) or I get a 'real' job. Aside from the kids educational accounts, rest of our assets were from my wife & I just working and saving for last 15 years.

Would you suggest I pay off my $340k mortgage from the $630k in our Vanguard account? Rate is 'only' 3.375%.

printer86
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by printer86 » Tue Aug 23, 2016 4:07 pm

I think the answer that everyone is trying to tell you is that if your home business is slipping you'll need to go out and get a job. Do that for about 10 years and then reassess.

furnace
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by furnace » Tue Aug 23, 2016 4:17 pm

Your rental house is worth 400k but the rent on it, is not even $1500. Unless you have some reason to hold that property -- believing in LA's forever appreciation -- you may consider dumping that rental property or raising the rent drastically.

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 4:18 pm

celia wrote:I'd like to hear how that conversation goes.

HE: Hey honey! Since my at-home business has slowed down, why don't we just say I "retired". Of course we need money to live on, so I think it would be safe if you just kept working...until you get enough Social Security for us to live off of.

SHE: Honey, why do you continue to talk non-sense? First, we have that rental property that's a money pit. We have to supplement the rent we get with $200 a month of my pay check just to pay the mortgage. Then we have to pay property tax and repairs. And you don't keep up the lanscape over there like you were going to. Second, there's a matter of vacations. You got to see <named of deceased> several times last year while I stayed home with the kids. Third, if I'm the only one working, we will live off my income and nothing will be added to our retirement accounts. Lastly, it is time for us to change rolls. You go find a job while I stay home with the kids.

(Am I close?)


Wife knows she can't retire soon, her company's benefits (excellent health, eye, dental, plus legal plan, 401k, family life insurance, 4 weeks vacation) are just too good! So I can't be blamed for that, right? She doesn't love the job but is OK with it - strict 9 to 5, commute is only 25 minutes to downtown LA and she has some good friends there - it's not too bad.

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 4:21 pm

celia wrote:
Just because you got an inheritance, you still need to keep saving as if you didn't get one. Let the kids enjoy it by doing well in college.


Inheritance was $300k and is in kid's funds so we're not even counting that in our $1.7m which we got from working and saving on our own.

Engineer250
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by Engineer250 » Tue Aug 23, 2016 4:27 pm

sickman wrote:
Wife is going to be somewhat resentful but if you guys show that this will be OK, she can't blame me, right? :) My home business was doing quite well for 15 years, but just in last year or two, the industry completely changed and small mom & pop operators like mine are fast closing up shop. So I will need to do something else, probably next year. Considering getting a realtor's license to purchase investment properties to either flip or rent depending.


Based on above and your wife potentially being resentful, I would say definitely not.

Why is it fair you get to retire and she doesn't? Just because she has a "good" job? Looks like she's actually saved more for retirement than you have :wink: . I've only been the sole earner in my household for a few years, and it's temporary (only about 1.5 years left! whoo!) but let me tell you, it is exhausting. I used to make decisions about my career that were my own decisions. Now I need to factor in what's "safe" for the household. It feels like I'm pulling a dog sled in the snow all by myself. Every bit of debt, every bit of savings, is all on my shoulders. Every time I questioned the boss at my last job I had to wonder if I shouldn't because it puts my job at risk. There are so many mental factors. If this wasn't temporary, if I didn't have a deadline close by, I'd go crazy. Don't put that burden on your wife.

sickman wrote:
Aside from the $50k annual retirement savings we've always done (and continue to), not saving anything else at the moment until my business picks up (unlikely) or I get a 'real' job. Aside from the kids educational accounts, rest of our assets were from my wife & I just working and saving for last 15 years.

Would you suggest I pay off my $340k mortgage from the $630k in our Vanguard account? Rate is 'only' 3.375%.


I'd actually suggest you sell your rental to pay off your mortgage. Definitely don't suggest you wipe out 1/3rd of your not-sufficient retirement savings. Leave that money as-is.

I really think maybe this home business thing just isn't something you love anymore. I would encourage you to seek a job / career / gig that you might get new enjoyment out of, even if the income is small. Yes with your wife's income you could just stop working. But the math doesn't necessarily say you could retire, just that her income is possibly adequate to cover both of you. So you put yourself in the position of having to tap savings sooner that you really need once your wife retires if she loses her job and watch your standard of living plummet as you get older.

Also, maxing out retirement accounts is fantastic (I am not there yet, so no room to talk) but most people who achieve early retirement and early financial independence are saving significant amounts towards after tax accounts which you don't appear to be, so I'm not sure you've adequately prepared for this. Maybe at aged 50 or 55 you will be there.
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sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 4:33 pm

furnace wrote:Your rental house is worth 400k but the rent on it, is not even $1500. Unless you have some reason to hold that property -- believing in LA's forever appreciation -- you may consider dumping that rental property or raising the rent drastically.


Yep, will be bumping up rent quite a bit once I get current tenants out. The house is horribly close (maybe 25 feet) to some freight train tracks which the government is now in process of building below ground so am sure some appreciation will come about from that. At least it will stop the wall shaking and horn blowing everytime a freight train comes by! Yes, this is what you get for $1500/month in LA.

ParkersPaPa
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by ParkersPaPa » Tue Aug 23, 2016 4:52 pm

sickman wrote:
joebh wrote:... (I'll take 75 if I don't have to suffer at the end).


I assume you're talking about the nitrogen bag?

SuzBanyan
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by SuzBanyan » Tue Aug 23, 2016 5:10 pm

I would reframe the question: do we have enough for me to be a stay at home parent to our 3 kids, ages 8 to 12?

Right now, I believe you have only "guesstimated" your current expenses. Before you can answer this, you need a better handle on your current expenses, as well as your future expenses if you close up your business.

But if your wife's income can support your family and you family still contributes to savings each year, you'll probably be fine.

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 5:27 pm

Engineer250 wrote:Based on above and your wife potentially being resentful, I would say definitely not.


Thanks for your thorough reply, Engineer250. This would probably be the main reason I could not, but I'd figure with our assets, she might have been OK. Guess I better make sure she never sees this thread!

bayview
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by bayview » Tue Aug 23, 2016 5:28 pm

sickman wrote:
celia wrote:I'd like to hear how that conversation goes.

HE: Hey honey! Since my at-home business has slowed down, why don't we just say I "retired". Of course we need money to live on, so I think it would be safe if you just kept working...until you get enough Social Security for us to live off of.

SHE: Honey, why do you continue to talk non-sense? First, we have that rental property that's a money pit. We have to supplement the rent we get with $200 a month of my pay check just to pay the mortgage. Then we have to pay property tax and repairs. And you don't keep up the lanscape over there like you were going to. Second, there's a matter of vacations. You got to see <named of deceased> several times last year while I stayed home with the kids. Third, if I'm the only one working, we will live off my income and nothing will be added to our retirement accounts. Lastly, it is time for us to change rolls. You go find a job while I stay home with the kids.

(Am I close?)


Wife knows she can't retire soon, her company's benefits (excellent health, eye, dental, plus legal plan, 401k, family life insurance, 4 weeks vacation) are just too good! So I can't be blamed for that, right? She doesn't love the job but is OK with it - strict 9 to 5, commute is only 25 minutes to downtown LA and she has some good friends there - it's not too bad.


I'm speechless. Almost.

Since it sounds so fantastic, why don't you go get a job just like it?

More seriously, I am still employed full-time while DH is retired (will be 67 in January.) I am perfectly happy with this arrangement, but I can't help being a bit envious - I wanna be retired too! But I will be retired in not quite 5 years (knock wood), so I grit my teeth and do my thing. I'm not miserable by any means, but hey, I'd rather be home messing in the garden. And you're expecting her to work another 15-20 years so you don't have to?

With your current assets, I could definitely see scaling back if both of you were older, but you're putting all the emotional and everyday burden on her. Just as it wouldn't be fair for her to do this to you, you shouldn't do it to her.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 5:35 pm

ParkersPaPa wrote:
sickman wrote:
joebh wrote:... (I'll take 75 if I don't have to suffer at the end).


I assume you're talking about the nitrogen bag?


Don't care what it is, just want it to end with as little pain as possible even if I have to go at a 'young' 75! My 69 year old mother had a terrible muscle disease similar to Lou Gehrig's it seemed, and in her last year of life, she was in alot of pain, even just breathing with her weak lungs was tough.

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 5:45 pm

bayview wrote:
More seriously, I am still employed full-time while DH is retired (will be 67 in January.) I am perfectly happy with this arrangement, but I can't help being a bit envious - I wanna be retired too! But I will be retired in not quite 5 years (knock wood), so I grit my teeth and do my thing. I'm not miserable by any means, but hey, I'd rather be home messing in the garden. And you're expecting her to work another 15-20 years so you don't have to?

With your current assets, I could definitely see scaling back if both of you were older, but you're putting all the emotional and everyday burden on her. Just as it wouldn't be fair for her to do this to you, you shouldn't do it to her.


Thanks for your feedback.

Yep, getting the sense I better stop entertaining this idea for now. Hopefully I'll be able to post this again in 5 to 10 years.

This is the first time I ever felt I rather be in my 50's than 40's!

randomguy
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by randomguy » Tue Aug 23, 2016 5:55 pm

sickman wrote:
Wife knows she can't retire soon, her company's benefits (excellent health, eye, dental, plus legal plan, 401k, family life insurance, 4 weeks vacation) are just too good! So I can't be blamed for that, right? She doesn't love the job but is OK with it - strict 9 to 5, commute is only 25 minutes to downtown LA and she has some good friends there - it's not too bad.


Those benefits aren't worth much (say 10-20k and that is all health care. I mean do you know how many weeks of vacation a retire gets?;)). Tell me she has a huge pension (nothing now, 80% of her salary in 15 years) and we can talk about something you can't walk away from. Seriously ask the wife if she would rather you work 8 more years and you both retire or she works 15 while you stay home with the kids. Odds are she is a bigger fan of the 8 year plan.

I have no clue if that real estate is a good deal or not (I assume you are getting appreciating and writing off depreciation so it isn't the big money loser it looks like. Sounds like you might have taken cash out of it). Up to you to figure it out. Taking money out to invest is borderline (Odds are you will get the 4% or so nominal you need to break even if you shove it in stocks over 20 years if you can stay the course). Investing in real estate versus stocks is all about if you want passive income (stocks ) or active (managing real estate).

You obviously have enough money for only one of you to work. Maybe you wife is ok with it. Maybe she want you to get a real job (i.e. you have been fired from your current one. ). That has nothing to do with finances. That is all about what both of you want.

And while a ton of people are somewhat incredulous, I know a ton of people that have done exactly what you want to do with far less resources. They are called stay at home moms. They drop out of 6 figure jobs in their early 30s and 10+ years later, they haven't gone back to work full time. Some get "vanity" jobs (10-20 hrs/week at a fraction of their previous compensation). Most of their partners seem ok with it. Maybe your wife would be the same. Maybe never having to do laundry, cook, clean, grocery shop, take the kids to doctor appointments, and so on would be enough for her to overlook the fact you aren't bringing home any income. It is something you would have to talk to her about.

bayview
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by bayview » Tue Aug 23, 2016 5:59 pm

sickman wrote:
bayview wrote:
More seriously, I am still employed full-time while DH is retired (will be 67 in January.) I am perfectly happy with this arrangement, but I can't help being a bit envious - I wanna be retired too! But I will be retired in not quite 5 years (knock wood), so I grit my teeth and do my thing. I'm not miserable by any means, but hey, I'd rather be home messing in the garden. And you're expecting her to work another 15-20 years so you don't have to?

With your current assets, I could definitely see scaling back if both of you were older, but you're putting all the emotional and everyday burden on her. Just as it wouldn't be fair for her to do this to you, you shouldn't do it to her.


Thanks for your feedback.

Yep, getting the sense I better stop entertaining this idea for now. Hopefully I'll be able to post this again in 5 to 10 years.

This is the first time I ever felt I rather be in my 50's than 40's!

My apologies if I went a bit over the top. :beer Like I said, I'm envious of those with some semblance of freedom and control over their days. But I know that we will have this once we hit the "number." Good luck!
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

sickman
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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 6:17 pm

randomguy wrote:
Those benefits aren't worth much (say 10-20k and that is all health care. I mean do you know how many weeks of vacation a retire gets?;)). Tell me she has a huge pension (nothing now, 80% of her salary in 15 years) and we can talk about something you can't walk away from. Seriously ask the wife if she would rather you work 8 more years and you both retire or she works 15 while you stay home with the kids. Odds are she is a bigger fan of the 8 year plan.

I have no clue if that real estate is a good deal or not (I assume you are getting appreciating and writing off depreciation so it isn't the big money loser it looks like. Sounds like you might have taken cash out of it). Up to you to figure it out. Taking money out to invest is borderline (Odds are you will get the 4% or so nominal you need to break even if you shove it in stocks over 20 years if you can stay the course). Investing in real estate versus stocks is all about if you want passive income (stocks ) or active (managing real estate).

You obviously have enough money for only one of you to work. Maybe you wife is ok with it. Maybe she want you to get a real job (i.e. you have been fired from your current one. ). That has nothing to do with finances. That is all about what both of you want.



Looks like I was fortunate to post this question here before even bringing it up to the wife - which I won't be doing for years now, so no worries on that!

But it is good to see the reason I should not consider semi-retiring now is mainly because of potential issues with wife - and not a financial one - since I think that is easier for us to work out.

Rental property was purchased for $95,000 back in 1993 - paid off the mortgage many years ago (never cashed out) and just waiting for city to finish their work on the train tracks next door so it can appreciate (hopefully!). Though if/when I sell this, definitely will do a 1031 exchange due to all the depreciation I wrote off.

Forgot wife has a pension too - Don't recall what she gets, but it's not huge so I never think about it.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by joebh » Tue Aug 23, 2016 6:38 pm

sickman wrote:My parents died early (father was 53, mother was 69) so I don't plan on making it past 80 (I'll take 75 if I don't have to suffer at the end).


In general, that's not a great plan. Unless you know something specific that you genetically inherited, or have health issues now, somewhere around 50% of people your current age will live past 80. Medical advances are keeping people alive longer every year. And more illnesses and causes of death are being cured each year.

And wouldn't you rather plan on living a long time where if you are unlucky you'll be leaving money on the table, than plan on not making it past 80 where if you are unlucky you'll be old but poor?

There's a joke that goes something like this:
Well, my Dad died when he was 50, so I don't expect to live to an old age.
I'm sorry to hear that. So how did he die?
He was hit by a truck.
Last edited by joebh on Tue Aug 23, 2016 6:48 pm, edited 1 time in total.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by joebh » Tue Aug 23, 2016 6:46 pm

sickman wrote:Looks like I was fortunate to post this question here before even bringing it up to the wife - which I won't be doing for years now, so no worries on that!


I think you should talk to your wife about this now!

Tune up your estimates a bit, with her help. Project your income and expenses. Then make an informed family decision.

You might find that being a stay-at-home-dad would be great for you, and great for her as well!

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by randomguy » Tue Aug 23, 2016 6:51 pm

sickman wrote:
Looks like I was fortunate to post this question here before even bringing it up to the wife - which I won't be doing for years now, so no worries on that!

But it is good to see the reason I should not consider semi-retiring now is mainly because of potential issues with wife - and not a financial one - since I think that is easier for us to work out.

Rental property was purchased for $95,000 back in 1993 - paid off the mortgage many years ago (never cashed out) and just waiting for city to finish their work on the train tracks next door so it can appreciate (hopefully!). Though if/when I sell this, definitely will do a 1031 exchange due to all the depreciation I wrote off.

Forgot wife has a pension too - Don't recall what she gets, but it's not huge so I never think about it.


I (and I am guessing others) are confused by
$400,000 in investment property (zillow shows $500K but don't think that's accurate) paid off. $1,450 monthly income which covers almost all of my $1,630 mortgage.


is this a different property? Otherwise I don't understand why you are paying a mortgage on a paid off property.

Basic financial math. You live off her paycheck for 15 years. You have ~1.5 million + real estate. In 15 years have 3 million (real) stock+real estate is pretty reasonable. That is more than you need to retire by about a million bucks. Heck both of you could probably retire tomorrow if your expenses are only 50k if you are both willing to go back to work in 5-10 years if we have a bad run starting right after retirement.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by BHUser27 » Tue Aug 23, 2016 7:01 pm

sickman wrote:We're pretty good with our spending so have no budget, but assume we spend $40K to $50K year I'd guesstimate.

OP - with all due respect, this response is a bit of a red-flag to me. If you are *seriously* considering retiring then you should know exactly how much you spend each month and exactly what you spend it on. Posting on BH does not count as "planning for retirement" - you really need to crunch some numbers. (in my opinion).

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 7:04 pm

randomguy wrote:
I (and I am guessing others) are confused by
$400,000 in investment property (zillow shows $500K but don't think that's accurate) paid off. $1,450 monthly income which covers almost all of my $1,630 mortgage.


is this a different property? Otherwise I don't understand why you are paying a mortgage on a paid off property.



Sorry for confusion, corrected now - $400k investment property is paid off and $1,450 monthly rental income currently covers almost all of the $1,630 monthly payment for my primary house's mortgage. In a few months, will get new tenants and the rental income will cover all of the mortgage plus.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Tue Aug 23, 2016 7:16 pm

BHUser27 wrote:
sickman wrote:We're pretty good with our spending so have no budget, but assume we spend $40K to $50K year I'd guesstimate.

OP - with all due respect, this response is a bit of a red-flag to me. If you are *seriously* considering retiring then you should know exactly how much you spend each month and exactly what you spend it on. Posting on BH does not count as "planning for retirement" - you really need to crunch some numbers. (in my opinion).


I WAS seriously considering it but after posting here, think I'll hold off for +5 years due to potential issues with wife.

I know we don't spend more than $50k/year but you are definitely spot-on, I do need to crunch the numbers to see where it is all going.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by J295 » Tue Aug 23, 2016 7:54 pm

sickman wrote:
Looks like I was fortunate to post this question here before even bringing it up to the wife - which I won't be doing for years now, so no worries on that!


OP .... you have posters (myself included) who have no real perspective on your life goals and marriage relationship; and in light of that I would filter all responses on how your wife may react..... in our situation, there was no problem at all with me working outside of our home for 30 years while my spouse stayed at home raising our family and then remaining there after they were grown (leaving a great high paying job in the late 1980s), I wasn't resentful in the least, but instead was very happy that I could provide her and our children with the life set up that we desired (not stating it is for everyone, but it was for us). I (mostly) retired at age 53 a few years ago, and now she has gotten back into the work force (by her choice)..... We discussed our lifestyles and my desire to retire early many times and planned for it together, just as we discussed and planned for her to not work outside of our home after the children began arriving. Just my 2 cent. Good luck.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by Hawaiishrimp » Wed Aug 24, 2016 12:13 am

IMO, you can take it easy and don't work yourself to death, but probably not enough to retire yet... I'd say you need 2 times in taxable account for me to feel comfortable consider retiring... Like another BH said, if you retire at 45, you have roughly 50 years ahead of you, so you may run out of money sooner than you think. Personally I won't feel comfortable until I have 2.5m saved. That's just my personal objective.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by randomguy » Wed Aug 24, 2016 12:31 am

Hawaiishrimp wrote:IMO, you can take it easy and don't work yourself to death, but probably not enough to retire yet... I'd say you need 2 times in taxable account for me to feel comfortable consider retiring... Like another BH said, if you retire at 45, you have roughly 50 years ahead of you, so you may run out of money sooner than you think. Personally I won't feel comfortable until I have 2.5m saved. That's just my personal objective.


With the corrections, we are talking ~2 million in assets plus a house with another 300k and 50-60k of expenses. I am guessing the expense are low (i.e. assuming employer health care) but you are looking at a portfolio that could conservatively pump out 60k/year for 50 years (ignore the pensions and SS whenever) with a 3% SWR. With 3 kids they are paying~ 0 in federal taxes and CA is also pretty progressive. They might need slightly more but it is pretty darn close. Use a still very safe 3.5% and they seem to be well in the clear.

If the wife has any desire to work for say 5 years, this is beyond safe. Yeah there is always risks of something coming up (i.e. the 120k medical visit when you get balance billed) but if you can't live that way. I don't know how fast the home based business is dying but squeaking out another couple years might also be a way of going. Making 40k when you used to make 80k (or whatever the real numbers are) isn't great but it is still a bunch of money. If you don't need the income, the stress of a dying business shouldn't be too bad. There is also a line between retired and full time employed where you need the money. It was mentioned real estate/flipping as a second career. Find someone to work for and learn the ropes to see if it what you want to do. A new job might be very invigorating.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by naha66 » Wed Aug 24, 2016 4:47 am

celia wrote:I'd like to hear how that conversation goes.

HE: Hey honey! Since my at-home business has slowed down, why don't we just say I "retired". Of course we need money to live on, so I think it would be safe if you just kept working...until you get enough Social Security for us to live off of.

SHE: Honey, why do you continue to talk non-sense? First, we have that rental property that's a money pit. We have to supplement the rent we get with $200 a month of my pay check just to pay the mortgage. Then we have to pay property tax, insurance and repairs. And you don't keep up the landscape over there like you were going to. Second, there's a matter of vacations. You got to see <named of deceased> several times last year while I stayed home with the kids. Third, if I'm the only one working, we will live off my income and nothing will be added to our retirement accounts. Lastly, it is time for us to change rolls. You go find a job while I stay home with the kids.

(Am I close?)

Just because you got an inheritance, you still need to keep saving as if you didn't get one. Let the kids enjoy it by doing well in college.



Put the SHE first and the HE in the 2nd paragraph and would we be getting the same response. I don't think so, roles still haven't change much. She is the primary bread winner, it pretty common for the wife to quit to be SAHM but to suggest that a husband do it is still taboo and notice who wrote the above. So much for women rights.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by keystone » Wed Aug 24, 2016 8:24 am

As a 42 year old who plans to retire in his 40's, with a wife who plans to continue working, I love this thread!

First off, I think some of the posters aren't providing the objective feedback that you are looking for when it comes to the numbers, because they can't get past the idea that you will retire and your wife will continue working with possible resentment. The marital issues that may result from this shouldn't be ignored, but I think your plan to retire or at least semi-retire is very doable from a strictly financial perspective.

I ran a quick calculation and came up with 1.64 million in liquid assets, excluding your well funded 529 plans. With a withdrawal rate of 3%, which I'd feel comfortable with over a 50 year time period, that gives you 49.2K. If you sell the rental property and pay off your primary residence mortgage, this number would be even larger. If you focus on withdrawing from the taxable account first, some and possibly all of the withdrawals will be tax free as long as you stay within the 15% tax bracket. So combine the taxable withdrawals with your wife's take home pay and you should be fine given your estimated annual expense level.

If I were in your shoes, one thing I would do is examine your current social security situation and figure out how much of a hit you will take if you decide to call it quits now. You may decide that it's in your best interest to work full or part-time for a while, perhaps to get past the second bend point if you aren't there already.

Also, this doesn't have to be all or nothing. Maybe find a part-time job that allows you to continue maxing your retirement accounts and mitigate some of the withdrawals? That might be the key to easing your wife into a full retirement scenario in the not too distant future.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by junior » Wed Aug 24, 2016 8:43 am

I think you can bring it up with your wife today but the conversation should be "what is our long term financial plan for retirement". Or "where do we see ourselves 10 years from now?"

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by junior » Wed Aug 24, 2016 8:54 am

naha66 wrote:So much for women rights.


For what it's worth OP didn't say he wanted to spend more time with the kids or be a stay at home dad, he said he wanted to "retire". Which might bring to mind a guy laying around the house watching TV while his wife works 10 hours days then cooks dinner then helps the kids with homework.

If OP had said he wanted to be a stay at home Dad he might have gotten a different response. In other words people here have little information to go on.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by Leemiller » Wed Aug 24, 2016 8:58 am

I think you should sell the rental, looks like a bad rate of return for your money after expenses and upkeep is included. What is stopping you from getting a real estate license now? Or getting a part-time job, more education, a new career path? This plan wouldn't fly in my house, but I know a few stay at home dads. The kids are all much younger than yours. The women have long hour, high income jobs, one with travel and the guys may have trust funds backing them up as well. Really you're asking if you can quit working on your combined assets and just hang out. Honestly, I feel the exact same way about stay at home moms except men still have an easier time in the workplace and make up the majority of senior positions in most industries.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Wed Aug 24, 2016 10:59 am

randomguy wrote:
If the wife has any desire to work for say 5 years, this is beyond safe. Yeah there is always risks of something coming up (i.e. the 120k medical visit when you get balance billed) but if you can't live that way. I don't know how fast the home based business is dying but squeaking out another couple years might also be a way of going. Making 40k when you used to make 80k (or whatever the real numbers are) isn't great but it is still a bunch of money. If you don't need the income, the stress of a dying business shouldn't be too bad. There is also a line between retired and full time employed where you need the money. It was mentioned real estate/flipping as a second career. Find someone to work for and learn the ropes to see if it what you want to do. A new job might be very invigorating.


Home based online business going on 15 years - first 10 made an average of $100k/year, then gradually less, with last year only $40k. Current plan is still keeping business as it could pretty much run by itself and can still generate $20k which would cover my solo 401(k) contribution, plus I do still enjoy it for the most part.

I was/am planning to get a real estate license to sell/flip/buy investment property for myself (or extended family for investment purposes only) - maybe 2 to 4 properties/year, though I wouldn't be an agent. Anyone here have experience with doing this and if it is worth it/not be a waste of time?

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by bigred77 » Wed Aug 24, 2016 11:19 am

From your numbers in the OP It looks like you have $1.64M in financial assets, an extra 300k saved for your 3 kids college, 1 million in real estate (340k in mortgages) and 40k-50k yearly spending.

Assuming your estimate of expenses is accurate there is no reason why you and your wife both couldn't retire right now if you wanted to and keep the same lifestyle.

Lets assume that your "spending" estimate is actually on the high side of 50k AND doesn't include your current mortgage payment. Sell your rental and pay off your current mortgage, add the left over 60k to your investable assets and lets call it $1.7M.

Withdrawing 50k per year is a 2.94% withdrawal rate (with you both retired). Presumably you will both get something in SS in your later years. You will 600k in property to backstop you in your later years. Your kids college is taken care of. You can call it quits if you want. Congrats.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Wed Aug 24, 2016 11:37 am

keystone wrote:As a 42 year old who plans to retire in his 40's, with a wife who plans to continue working, I love this thread!

First off, I think some of the posters aren't providing the objective feedback that you are looking for when it comes to the numbers, because they can't get past the idea that you will retire and your wife will continue working with possible resentment. The marital issues that may result from this shouldn't be ignored, but I think your plan to retire or at least semi-retire is very doable from a strictly financial perspective.

If I were in your shoes, one thing I would do is examine your current social security situation and figure out how much of a hit you will take if you decide to call it quits now. You may decide that it's in your best interest to work full or part-time for a while, perhaps to get past the second bend point if you aren't there already.

Also, this doesn't have to be all or nothing. Maybe find a part-time job that allows you to continue maxing your retirement accounts and mitigate some of the withdrawals? That might be the key to easing your wife into a full retirement scenario in the not too distant future.


Well, I did start this post strictly for financial advice so the feedback I received re: wife's feelings were somewhat surprising, and honestly needed for me to see. I assumed she would have to be OK with whatever I did as long as our finances were adequate, but her possible resentment is important and I might have taken that part of the equation for granted.

I imagine our spending is low enough where we wouldn't withdraw anything from our savings for next 5 years or so, no matter what my employment situation was. That's the plan at least.

RE: social security - I was always told to not rely on SS for retirement so never considered that at all when planning for it. So really whatever I receive will be a bonus. Thank you for this, will be interesting to see what I'll get.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by HomerJ » Wed Aug 24, 2016 11:41 am

sickman wrote:Wife knows she can't retire soon, her company's benefits (excellent health, eye, dental, plus legal plan, 401k, family life insurance, 4 weeks vacation) are just too good! So I can't be blamed for that, right? She doesn't love the job but is OK with it - strict 9 to 5, commute is only 25 minutes to downtown LA and she has some good friends there - it's not too bad.


Wife will also know that if you weren't lying around the house, the both of you could retire in 7 years instead of her working 15.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by HomerJ » Wed Aug 24, 2016 11:46 am

sickman wrote:I imagine our spending is low enough where we wouldn't withdraw anything from our savings for next 5 years or so, no matter what my employment situation was. That's the plan at least.


Start with tracking your expenses. You need to know how much you spend each year before you can make a good plan.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Wed Aug 24, 2016 11:52 am

junior wrote:
naha66 wrote:So much for women rights.


For what it's worth OP didn't say he wanted to spend more time with the kids or be a stay at home dad, he said he wanted to "retire". Which might bring to mind a guy laying around the house watching TV while his wife works 10 hours days then cooks dinner then helps the kids with homework.

If OP had said he wanted to be a stay at home Dad he might have gotten a different response. In other words people here have little information to go on.


No, I'm not that bad (close, but not that bad!). Timing worked out for us that I was able to start my home business right before kids were born so I was/am able to take them to all the ortho/dr. appts, school pickup, soccer/volleyball, help w/ homework,etc..all these formitive years. Wife really appreciates that we are so fortunate to have that at least.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by sickman » Wed Aug 24, 2016 12:17 pm

HomerJ wrote:
sickman wrote:I imagine our spending is low enough where we wouldn't withdraw anything from our savings for next 5 years or so, no matter what my employment situation was. That's the plan at least.


Start with tracking your expenses. You need to know how much you spend each year before you can make a good plan.


OK - this is is how I guesstimated $50k annual expenses. For 2015, $120k household income minus $20k taxes minus $50k retirement contribution = $50k leftover/expenses.

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Re: Will I be able to tell my wife I can semi-retire (maybe retire!)?

Post by celia » Wed Aug 24, 2016 3:19 pm

sickman wrote:
junior wrote:
naha66 wrote:So much for women rights.

For what it's worth OP didn't say he wanted to spend more time with the kids or be a stay at home dad, he said he wanted to "retire". Which might bring to mind a guy laying around the house watching TV while his wife works 10 hours days then cooks dinner then helps the kids with homework.

If OP had said he wanted to be a stay at home Dad he might have gotten a different response. In other words people here have little information to go on.

No, I'm not that bad (close, but not that bad!). Timing worked out for us that I was able to start my home business right before kids were born so I was/am able to take them to all the ortho/dr. appts, school pickup, soccer/volleyball, help w/ homework,etc..all these formitive years. Wife really appreciates that we are so fortunate to have that at least.

Then, what are your plans for this "retirement"? That will be the key.

If the household responsibilities disappear and your wife comes home to a home-cooked meal each day with homework and shopping already done, that would be one thing. But if she still needs to cook, clean, supervise homework, pay bills, etc. (ie, have a second job) while you drink beer in front of the TV, that won't fly.


Have you thought of this: Ask your wife to read this thread and see what she thinks. Does she laugh or does she yell at you? If you're too scared to show it to her, that's your answer.
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