Mid 50s couple looking for a Portfolio Health Check up

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eternalsands
Posts: 8
Joined: Thu Apr 14, 2016 2:43 pm

Mid 50s couple looking for a Portfolio Health Check up

Post by eternalsands » Tue Jun 12, 2018 2:29 pm

Hi Guys,

I have been soaking up the knowledge from this fountain and today I make my first request. I reproduce my (almost) net worth picture. The request is to see if I need to tweak this in any way to improve my retirement savings picture. both self and spouse will probably have around 8 to 10 years of the same level of employment and will like to take our social security at 65.

We stopped contributing to IRAs as there was no tax benefit. Spouse has an option to start a 401k but the plan is kinda crappy (lousy MFs with high expense ratios and limited choice plus employer only matches up to 5%).

Is the overall portfolio in the right direction?
Any way we can improve performance?
Does retirement as planned look feasible?
Should we consider any other planning?

Situation
Household Gross: $195k
Age: 57 Self 56 Spouse

Debt
Home Mortgage: Balance: $380K, Payment $3200 incl. taxes and insurance; Mortgage alone: $1925.00; Maturity: 2046
Car Payments: $900

Savings
Savings: $25k (Capital One MM 1.6% APY; contributing $500/month)
Brokerage Fidelity: $18k
Spouse Traditional IRA Fidelity: $11k (Not contributing anymore)
401k Self Fidelity: $78k (contributing max; company matches 100%)
Traditional IRA Self: TRowePrice 2025 Target Date (TRRHX): $14k (Not contributing anymore)
Roth IRA Self: TRowePrice 2025 Target Date (TRRHX): 44K (Not contributing anymore)

Savings Overseas
Real Estate – Approx. MV of $200k
Savings - Approx. $150k

Holdings
Taxable Brokerage
Description Value Percent of Account

First St BK New London Wis 3.90000%
02/06/2019 Fixed Coupon CD $9,109 49%

Ishares Trust Core Msci Eafe (IEFA) ETF $6,563 35%

Ishares Core S&P Us Value (IUSV) ETF $2,950 16%

Spouse IRA
Description Value Percent of Account

ISHARES Core S&P Total Us Stock Market (ITOT) $3,928 34%
ISHARES Core U.S. Aggregate Bond (AGG) ETF $2,022 17%
ISHARES INC Core Msci Emerging Mkts ETF $1,999 17%
ISHARES S&P 500 VALUE ETF (IVE) $881 8%
ISHARES CORE S&P US VALUE (IUSV) $1019 9%
ISHARES CORE S&P SMALL-CAP (IJR) $1739 15%

401k
Description Value Percentage

FID Intl Index PR Mid-Cap (FSIVX) $8,453.12 11%
FID EXT Mkt Idx PR Large Cap (FSEVX) $15,986.98 20%
FID 500 Index PR (FUSVX) $38,493.60 49%
PIM Total RT Inst (PTTRX) $15,603.28 20%

Contribution Elections

FID EXT Mkt Idx PR Large Cap 49%
FID Intl Index PR Mid-Cap 21%
FID Intl Index PR Mid-Cap 10%
PIM Total RT Inst 20%

delamer
Posts: 6403
Joined: Tue Feb 08, 2011 6:13 pm

Re: Mid 50s couple looking for a Portfolio Health Check up

Post by delamer » Tue Jun 12, 2018 8:27 pm

It would be helpful if you summarized your investments by total amounts per account.

It looks like you have around $600K, including the $200K in overseas real estate.

You should contribute enough to get the match for your wife’s 401(k), unless the match is really small. If it is 0.5% or more (or 2.5% plus), then the match compensates for the high ERs — plus you get the tax deduction. Just find the lowest ER fund and invest in it.

Apparently you are 90% or so in stocks with your retirement accounts, which is really aggressive. Although you do have $150K in cash, if that is intended for retirement. Hard to say how the $200K in real estate should affect your asset allocation.

What is the purpose of the $500/month going into savings?

No one can tell you if you are on the right track without knowing your expected expenses in retirement.

It is important that you come up with an estimate of expenses including health insurance costs, income taxes, and irregular costs like new cars and home maintenance. That, of course, is in addition to housing, food, transportation, etc. If you are planning on staying in the same house, that $1925 for the mortgage is going to be a pretty big drag on your expenses with 18 years to go once you retire.

Finally, you need to get estimates of Social Security for both of you. Obviously, the more of your expenses covered by SS, the less you need in savings to make up the difference.

Come back here with your expense estimate and your SS numbers, and you’ll get better advice.

eternalsands
Posts: 8
Joined: Thu Apr 14, 2016 2:43 pm

Re: Mid 50s couple looking for a Portfolio Health Check up

Post by eternalsands » Wed Jun 13, 2018 10:36 am

Many thanks for the specific reply. Here is my pointwise response:
delamer wrote:
Tue Jun 12, 2018 8:27 pm
It would be helpful if you summarized your investments by total amounts per account.
Taxable Brokerage Fidelity = $18,622
Spouse IRA Fidelity = $11,588
401k Fidelity = $78,536.98 (includes 100% match by employer)
Roth IRA = $14000 (TRRHX)
IRA = $44000 (TRRHX)


It looks like you have around $600K, including the $200K in overseas real estate.

You should contribute enough to get the match for your wife’s 401(k), unless the match is really small. If it is 0.5% or more (or 2.5% plus), then the match compensates for the high ERs — plus you get the tax deduction. Just find the lowest ER fund and invest in it.


Apparently you are 90% or so in stocks with your retirement accounts, which is really aggressive. Although you do have $150K in cash, if that is intended for retirement. Hard to say how the $200K in real estate should affect your asset allocation.
The $150k cash in a not so liquid foreign currency that could be considered for retirement. The plan is to convert to dollars (tedious process over period of time).
Once done what will be the best allocation for these funds?


What is the purpose of the $500/month going into savings?
These are for the emergency fund to boost to 50K plus any other expenses like home repairs, vacation, etc. Should these be invested differently? I
need to be risk averse on these. Is there any other short-term liquid asset that can provide better than 1.6% with safety?

No one can tell you if you are on the right track without knowing your expected expenses in retirement.

It is important that you come up with an estimate of expenses including health insurance costs, income taxes, and irregular costs like new cars and home maintenance. That, of course, is in addition to housing, food, transportation, etc. If you are planning on staying in the same house, that $1925 for the mortgage is going to be a pretty big drag on your expenses with 18 years to go once you retire.
Yes we would be looking at downsizing down the line. The goal is to be mortgage free but not sure how that will happen. we live in a high cost of living state (NJ) and the current expenses are around 11k a month. I anticipate that we could bring them down to like 8k.
Any pointers on health insurance? Like do we qualify for Medicare etc.?


Finally, you need to get estimates of Social Security for both of you. Obviously, the more of your expenses covered by SS, the less you need in savings to make up the difference.
How does one check estimated Social Security income in retirement?

Come back here with your expense estimate and your SS numbers, and you’ll get better advice.

delamer
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by delamer » Wed Jun 13, 2018 1:57 pm

You can go to ssa.gov and get estimates of your Social Security benefits.

You should qualify for Medicare if you have been paying Medicare taxes. Only Medicare Part A, which covers hospitalization and related benefits, is free. To have more comprehensive coverage, most people pay for Part B, Part D, and/or a supplemental policy. It is important to understand how it works and the costs before you retire. This might help: https://health.usnews.com/health-care/h ... an-for-you

If your expenses are going to be $96K a year, then withdrawals from your savings need to make up the difference between the $96K and Social Security. So Expenses minus Social Security equals Savings Withdrawals. As a rule of the thumb, you can take 4% annually from your initial savings (adjusted for inflation) at 65 and be confident that you won’t run out of money. This is called a Safe Withdrawal Rate and is something else that you need to familiarize yourself with. And if the $96K does not include income taxes, you need to at them to that amount.

Your savings account is fine where it is. As you said, you don’t want to take risks with it.

Unless you plan to sell the overseas real estate, you can’t count it as part of your retirement investments.

Take a look at the “lazy portfolios” section of the Boglehead wiki to get recommendations for allocations and specific funds to invest in. This allocation should be set up across all your retirement accounts, not within each account.

Emphasizing that this is purely a guess on my part, I suspect you’ll find out — once you get your SS estimates — that you’ll need to up your savings rate to have enough to support your lifestyle in retirement. Even if your withdrawal needs are “only” $40,000 per year in today’s dollars, that means a million dollar nest egg (again in today’s dollars, so more in 10 years).

And, as I am sure you know, if your goal is to be mortgage free in retirement then you need a plan now to get there. The sooner you start paying extra toward the loan, the sooner you’ll get rid of it.

The good news is that the more you dedicate to savings and paying down your mortgage now, then the less income you need to maintain your lifestyle in retirement.

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CyclingDuo
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by CyclingDuo » Wed Jun 13, 2018 6:13 pm

eternalsands wrote:
Tue Jun 12, 2018 2:29 pm
We stopped contributing to IRAs as there was no tax benefit. Spouse has an option to start a 401k but the plan is kinda crappy (lousy MFs with high expense ratios and limited choice plus employer only matches up to 5%).
What do you mean "no tax benefit"? :?:
eternalsands wrote:
Tue Jun 12, 2018 2:29 pm
Is the overall portfolio in the right direction?
Any way we can improve performance?
Does retirement as planned look feasible?
Should we consider any other planning?
Standard goal is to have 25x your expenses saved up. Once you know your SS, pension-if any, and income streams as well as your monthly/annual expenses - you can figure out how close you are to achieving the 25x expenses ratio.

Our cursory look concludes that you're behind for your age and salary. You should have around 7X your salary by the time you are 55. If we are working off the $195K gross income, that's $1,365,000+ by now in your mid 50's.
https://www.fidelity.com/viewpoints/ret ... -to-retire

You currently have 25% of your gross income going to service debt (mortgage and car). Where is the rest going? It's time to play catch up as you and your wife are both allowed to contribute $24,500 into each of your 401k/403b/457b plans. You can also each contribute $6500 into a tIRA or Roth IRA. There are other catch up possibilities, but to take advantage of your current income - boosting your contributions pre-tax will lower your current income tax, allow the IRA contributions as well and get you towards a larger nest egg.

Examples of how much you have to save monthly to get you there:

Image

This shows how much you need based on your annual income needs to meet all expenses:

Image

As said above, create an account at my Social Security to see what both you and your wife will potentially receive if you take it at 62, FRA, or 70.
eternalsands wrote:
Tue Jun 12, 2018 2:29 pm
Situation
Household Gross: $195k
Age: 57 Self 56 Spouse

Debt
Home Mortgage: Balance: $380K, Payment $3200 incl. taxes and insurance; Mortgage alone: $1925.00; Maturity: 2046
Car Payments: $900
Right now, it is all about your savings rate being boosted - not really what stock funds the money is in.

$195,000 gross income
-10800 car loans
-38400 mortgage
__________________
$145,800 remaining
- 24,500 401k #1
- 24,500 401k #2
- 6,500 IRA #1
- 6,500 IRA #2
__________________
$83,800 remaining should be plenty to cover your taxes and remaining expenses, but you need to figure out what your expenses are (needs, wants, variables) outside of the mortgage, car loans to see what you have left to work with to reach your goals.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

FOGU
Posts: 146
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by FOGU » Wed Jun 13, 2018 7:14 pm

Start spending a lot less. Start saving a lot more. Max out your retirement accounts (401k and IRA) as indicated.

Figure out how to get those overseas assets working for you. Sell the property and get those proceeds and the other money into investments.

Analyze and try to reasonably estimate how much you are going to need in retirement, then work toward it as aggressively as you can.

Your assets right now wouldn't come close to supporting your current spending. Social Security will help, but won't get you there.

Fortunately you have a good income, but you must save aggressively.

It's getting late.
~ Don't just do something. Sit there. ~

eternalsands
Posts: 8
Joined: Thu Apr 14, 2016 2:43 pm

Re: Mid 50s couple looking for a Portfolio Health Check up

Post by eternalsands » Thu Jun 14, 2018 7:02 am

Wow scary but great perspectives. Some questions on 401k and IRA. Thank you all I knew I will not be disappointed. This is gold.

Is it 24.5k individually or combined that we can save in 401k?

I was told by my cpa that since I participate in a workplace retirement plan and based on our household income that savings in ira will not get us any tax deduction. Is that true?

Spouse is not contributing yet to her 401k as the plan is not very good. Employer match is Upto 5% and the plans are Federated funds with typical expense ratio being around 1.2% for a target fund returning around 5% longer term.
Does it make sense to still contribute or are there other alternatives like passive real estate like Fundrise etc.?

indexonlyplease
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Location: Florida

Re: Mid 50s couple looking for a Portfolio Health Check up

Post by indexonlyplease » Thu Jun 14, 2018 7:14 am

eternalsands wrote:
Thu Jun 14, 2018 7:02 am
Wow scary but great perspectives. Some questions on 401k and IRA. Thank you all I knew I will not be disappointed. This is gold.

Is it 24.5k individually or combined that we can save in 401k?

I was told by my cpa that since I participate in a workplace retirement plan and based on our household income that savings in ira will not get us any tax deduction. Is that true?

Spouse is not contributing yet to her 401k as the plan is not very good. Employer match is Upto 5% and the plans are Federated funds with typical expense ratio being around 1.2% for a target fund returning around 5% longer term.
Does it make sense to still contribute or are there other alternatives like passive real estate like Fundrise etc.?
Take your wife's match. They call that free money. Then you can put money into a Roth IRA for her every year.

My thinking: simplify your investments, get rid of debt, and save as much as possible into investments. Being debt free is a great thing in retirment. But you will not get there with $900 car payments and a house that will be paid of in 2046.

Years before I retired I did the same. Now I live with zero debt and all my income goes into monthly expenses with some always left over. No large payments being made. Makes retirement stress free.
Last edited by indexonlyplease on Thu Jun 14, 2018 7:24 am, edited 3 times in total.

Grt2bOutdoors
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by Grt2bOutdoors » Thu Jun 14, 2018 7:19 am

eternalsands wrote:
Thu Jun 14, 2018 7:02 am
Wow scary but great perspectives. Some questions on 401k and IRA. Thank you all I knew I will not be disappointed. This is gold.

Is it 24.5k individually or combined that we can save in 401k?
Someone who is age 50+ can contribute $18,500 + $6,000 catch-up or $24,500 on an individual basis. A couple aged 50+ could contribute as much as 49,000 jointly on a pre-tax or after-tax basis if a ROTH 401k option is offered by employer.
I was told by my cpa that since I participate in a workplace retirement plan and based on our household income that savings in ira will not get us any tax deduction. Is that true?
Why does a person save for retirement? They save so they will have funds to be able to "live, eat and keep clothes on their back in their home, instead of being under a highway overpass eating ALPO". The CPA is doing a partial disservice to you (I say partial because it may be true that you can not take a deduction, I'd have to check the tax regulations here at www.irs.gov , even if you do not get a tax deduction, you will benefit from the ability to grow your savings on a tax deferred or tax free basis if you invest in a ROTH IRA, over time you could be talking real money.
Spouse is not contributing yet to her 401k as the plan is not very good. Employer match is Upto 5% and the plans are Federated funds with typical expense ratio being around 1.2% for a target fund returning around 5% longer term.
Does it make sense to still contribute or are there other alternatives like passive real estate like Fundrise etc.?
If you put $5 in an account, and the employer put in $5 you would have $10 - that is a 100% return on your money. If the fund charged 1.2% and your returns were exactly 0% in year 1, you would have $9.88. I don't know about you, but earning $4.88 on a $5 investment is nothing short of a home run. List the funds available in your wife's 401K plan by name, we will help you select the funds if you don't know which ones to choose.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

delamer
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by delamer » Thu Jun 14, 2018 9:00 am

Your position regarding your wife’s 401(k) does not make sense.

If there was no employer match and poor fund choices, then there would be an argument for not investing in it.

But her employer is giving you 5% of her salary to invest. There is no scenario where you don’t come out ahead. Not to mention that you get the tax deduction.

daheld
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by daheld » Thu Jun 14, 2018 9:03 am

Having a mortgage that's twice my gross household income maturing at age 85 or so would scare the ever living crap out of me.

soccerrules
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by soccerrules » Thu Jun 14, 2018 9:25 am

eternalsands wrote:
Thu Jun 14, 2018 7:02 am
Wow scary but great perspectives. Some questions on 401k and IRA. Thank you all I knew I will not be disappointed. This is gold.

Is it 24.5k individually or combined that we can save in 401k?
24.5K per individual per year and $6500 per individual in either a Trad IRA or Roth IRA. You need to cut expenses and do both -- you and your spouse

I was told by my cpa that since I participate in a workplace retirement plan and based on our household income that savings in ira will not get us any tax deduction. Is that true?
Tax benefit in the current year is only one possible benefit of IRA's. Read up on IRA's -- the tax deferred growth of the monies is another big benefit

Spouse is not contributing yet to her 401k as the plan is not very good. Employer match is Upto 5% and the plans are Federated funds with typical expense ratio being around 1.2% for a target fund returning around 5% longer term.
Does it make sense to still contribute or are there other alternatives like passive real estate like Fundrise etc.?
as other have commented -- contribute at least 5% to get the FREE match. I would look harder at the funds available to see about picking alternatives with lower ER's
This is going to be a little harsh so be ready.
You both need to read the wikis' and 1-2 of the recommended books listed. The books should be overall Financial Guides covering a wide range of personal finance topics. You still have 8-10 years to get your financial house in order -- but you guys are behind.
Immediate action is needed!
Your level of basic financial understanding is fairly lacking for someone in their mid-50's. This should be a wake up call.
Cut expenses and Save more.
This board can be a great resource but you need to increase your understanding of the different aspects of personal finance, or the input/guidance will not make much sense.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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CyclingDuo
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by CyclingDuo » Thu Jun 14, 2018 9:30 am

eternalsands wrote:
Thu Jun 14, 2018 7:02 am
Wow scary but great perspectives. Some questions on 401k and IRA. Thank you all I knew I will not be disappointed. This is gold.

Is it 24.5k individually or combined that we can save in 401k?
You can each contribute $24.5K for a total of $49K between the two of you.
eternalsands wrote:
Thu Jun 14, 2018 7:02 am
I was told by my cpa that since I participate in a workplace retirement plan and based on our household income that savings in ira will not get us any tax deduction. Is that true?
Yes, that can be true based on your MAGI. However, for your spouse who is not contributing, she would be allowed to take the full deduction since she is not contributing to her 401k and with your max of your 401k, your MAGI should be below the $189K for married filing jointly to qualify for her making a full $6500 contribution to a tIRA and getting the deduction. If your MAGI is between $189K and $199K for 2018, she would qualify for a partial tIRA deduction.

It is based on your MAGI. So if you both were contributing $24.5K to your 401k's, your gross income of $195K is lowered for the tax basis to arrive at your MAGI along with all of the other deductions used to calculate MAGI. The ability to contribute to a tIRA is based on your MAGI. So your MAGI would drop below the limit for 2018 of $186K for married filing jointly. If your MAGI is below $186K - which it should be based on your gross income of $195K and your max of your 401K, you both qualify for the Roth IRA. If your MAGI is below $121K for married filing jointly, you qualify for a partial deduction for a tIRA. If it is below $101K, you both qualify for the full tIRA deduction. I doubt you are both in this category, but you could have been utilizing your wife's tIRA these past years. The important thing is going forward - including this year. There is still time to talk to HR and get her salary pouring into her 401k with 6 1/2 to 7 months of contributions still to be made.

https://www.fidelity.com/retirement-ira ... -deadlines
eternalsands wrote:
Thu Jun 14, 2018 7:02 am
Spouse is not contributing yet to her 401k as the plan is not very good. Employer match is Upto 5% and the plans are Federated funds with typical expense ratio being around 1.2% for a target fund returning around 5% longer term. Does it make sense to still contribute or are there other alternatives like passive real estate like Fundrise etc.?
The 5% match is free money and makes up for the ER fees. Once she retires, the plan can be rolled over to her IRA and immediately be put to work in lower cost ER fee options. You also get the tax deduction now, and the lowered MAGI for the allowed maximum Roth IRA contribution from both of you:

$24,500 your 401k (with your employer's match - 100% you said, right?)
$24,500 her 401k (with her employer's match - 5% of her salary, right?)
$6,500 your Roth IRA
$6,500 her Roth IRA

That's $62K contributions on your part, plus the $24,500 match from your employer, plus the 5% of salary your wife could be getting from her employer. So $86,500 + your wife's 5% salary match from her employer. 5 to 10 years of doing that is going to make great strides to your nest egg and set you up to be coupled with your Social Security income stream for a much better position in retirement than your investment portfolio currently shows at this point in time.

Obviously, you have to meet your current expenses (needs, wants, variables). So boosting your savings rate for retirement is not an all or nothing choice. In other words, you don't have to only max out both 401k's and Roth IRA's. There is room between where you are now and the full max.
Last edited by CyclingDuo on Thu Jun 14, 2018 9:54 am, edited 1 time in total.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

SagaciousTraveler
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by SagaciousTraveler » Thu Jun 14, 2018 9:46 am

Debt
Home Mortgage: Balance: $380K, Payment $3200 incl. taxes and insurance; Mortgage alone: $1925.00; Maturity: 2046
Car Payments: $900
This is scary to me. If you make payments as is on your mortgage you'll be around 85 when its all said and done. I will always be in the camp that you should not carry any debt into retirement. What you have is pretty heavy and after looking at your savings, the sum barely covers your Home Mortgage let alone Car Debt.

You both make great money, as long as you can keep your monthly expenses low, you should do everything in your power to pay extra towards the debt and save. I won't offer advice as to where to save, i'll leave that to others.

eternalsands
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by eternalsands » Thu Jun 14, 2018 11:42 am

This is ego bruising. :)
But a great surgery of our malaise.
Thank you all.

We have had some competing priorities coming in the way of our savings. We are immigrants to the USA; been here around 15 years so the foreign savings are from my financial life in my country of birth where my savings and investments are currently generating around $1100 monthly. passively. A large part of these 15 years has been to get through to the permanent residency and putting one kid through college without debt. The other part is more aspirational and kind of related to how we want to live at present when we are active and earning. The third being that SO strongly believes life is too short to save anything. :)

I still have to meet other shorter term goals (second kid education, marriage- yeah that is cultural!) so we cannot max the retirement accounts. Since I get a 100% employer match it probably makes sense for me to try and max my own 401K.

Once we have the around 150k plus remitted from my place of birth to the USA we can put that to use. We will still have a real estate there worth around $200k plus a potential of around $500k (ancestral property estimated MV in a large city) in my place of birth.

We are paying additional principal on the mortgage and will save 2 to 3 years from now.

My plan is to downsize to a debt-free living arrangement, whatever that might. Worse case I can move back to my place of birth as the dollar will stretch quite happily there.

One question is if I get some additional funds here and there should I look at investing those or reducing my mortgage (30 yrs @4.375%)?

SagaciousTraveler
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by SagaciousTraveler » Thu Jun 14, 2018 12:33 pm

eternalsands wrote:
Thu Jun 14, 2018 11:42 am
This is ego bruising. :)
But a great surgery of our malaise.
Thank you all.

We have had some competing priorities coming in the way of our savings. We are immigrants to the USA; been here around 15 years so the foreign savings are from my financial life in my country of birth where my savings and investments are currently generating around $1100 monthly. passively. A large part of these 15 years has been to get through to the permanent residency and putting one kid through college without debt. The other part is more aspirational and kind of related to how we want to live at present when we are active and earning. The third being that SO strongly believes life is too short to save anything. :)

I still have to meet other shorter term goals (second kid education, marriage- yeah that is cultural!) so we cannot max the retirement accounts. Since I get a 100% employer match it probably makes sense for me to try and max my own 401K.

Once we have the around 150k plus remitted from my place of birth to the USA we can put that to use. We will still have a real estate there worth around $200k plus a potential of around $500k (ancestral property estimated MV in a large city) in my place of birth.

We are paying additional principal on the mortgage and will save 2 to 3 years from now.

My plan is to downsize to a debt-free living arrangement, whatever that might. Worse case I can move back to my place of birth as the dollar will stretch quite happily there.

One question is if I get some additional funds here and there should I look at investing those or reducing my mortgage (30 yrs @4.375%)?
As a parent I get wanting to put your children through college without debt. However this is one of the last things you should be doing (again) and it should not come at the expense of your retirement.

To each his own, simply my opinion. Good luck!

soccerrules
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Re: Mid 50s couple looking for a Portfolio Health Check up

Post by soccerrules » Thu Jun 14, 2018 1:06 pm

eternalsands wrote:
Thu Jun 14, 2018 11:42 am
This is ego bruising. :)
Sorry I was probably a little strong in my comments. Hopefully now you can make some changes going forward to help meet your 8-10 goals.

I still have to meet other shorter term goals (second kid education)so we cannot max the retirement accounts. Since I get a 100% employer match it probably makes sense for me to try and max my own 401K.
Agree you should contribute to 401K to get the match-- more if you can. Based on your desire to have $8K a month for retirement in 8-10 years - YOUR savings has to take a priority over kids education. You can not borrow for your retirement. You (your child) can borrow for college if needed.

We are paying additional principal on the mortgage and will save 2 to 3 years from now.
I would make sure you are reducing your expenses and maxing out all tax deferred space before paying down mortgage at this point. You may need to consider downsizing at retirement and sell this house.

One question is if I get some additional funds here and there should I look at investing those or reducing my mortgage (30 yrs @4.375%)?
I would sit down and do a needs assessment for retirement for 8-10 years. My guess is you may not need the size of house that you have and the upkeep cost. If that is the case- don;t payoff the mortgage faster. SAVE in tax deferred and then taxable.
I get wanting to pay for your kids college,many on this board do. I just don't think you are prepared financially to risk your own retirement for the sake of paying for your kids college.
I will say that you could be a whole lot worse off. There are millions of adults that have $0 savings and up to their eye balls in debt. Also focus on you and what you can control - reduce expenses and save more. On a board like this it is easy to be discouraged when other posters are discussing $2M+ portfolios, million dollar homes and retirement before 50.
Don't let your outflow exceed your income or your upkeep will be your downfall.

eternalsands
Posts: 8
Joined: Thu Apr 14, 2016 2:43 pm

Re: Mid 50s couple looking for a Portfolio Health Check up

Post by eternalsands » Thu Jun 14, 2018 2:23 pm

"I would sit down and do a needs assessment for retirement for 8-10 years. My guess is you may not need the size of the house that you have and the upkeep cost. If that is the case- don't pay off the mortgage faster. SAVE in tax-deferred and then taxable."

That sir is a great synopsis of the direction I need to focus on.
Thank you all for an honest discussion and opinions. These are greatly valued.

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