Moving to a MCOL Area and Need Advice

[BradJ]

Greetings,

I just accepted an offer for a company outside the Denver metro, and while I am completely elated about the opportunity, the COL will be a huge adjustment. My wife and I both currently make healthy salaries in a VLCOL area, and have saved as much as we can. We are both 40 years old and here is our current situation:

My 401k: 602,841
Here 401k: 63,000 (she started a little later than I did)
ROTH: 101,870
529: 6k (3k for each kid, they are under 10 years old)
Pension when I get 65: 1,200 a month
No debt besides home
Savings: $197,000 (75k will go toward home in Colorado)

I think our yearly expenses will be $121,000 (that includes tithing, child care, fun money, etc..)

My question: We currently max our the ROTH, one 401k and save quite a bit every month. We are assuming the first 1-3 years in CO, we will only be able to put about 7% in the 401k, half the max of the ROTH, and a tiny amount for the 529.

Is scaling back going to put us behind from retiring in our early to mid 60s? I assume we will need about 3 million to retire.

Other questions:
Anyone care to share success stories that are similar to my situation? We are leaving behind family and good jobs (but with limited mobility up). It was essentially now or never.

Thank you!

[Minderbinder]

Tough to weigh in on the financial aspects of your move without knowing salaries etc and what the annual savings will look like.

As for moving, I moved from what I would consider LCOL in the south to VHCOL in southern California. Like you said, it was a now or never type decision. It was a bit tight at first but almost a decade later I don't want to live anywhere else. The salaries caught up, and I got lucky to buy coastal real estate which is now up about 150% from where I bought. Extremely fortunate in that regard. It's likely added a few years to my working career but ultimately I learned life is about more than just numbers on a spreadsheet and retiring super early.... Like actually enjoying where you live and the community you are a part of.

Fwiw Denver is about the only place I would consider living outside of California at this point. So I think quality of life will be almost assuredly better than wherever you are coming from.

Good luck!

[BradJ]

I’m increasing my salary from 165k to 220k. I plan on putting back 7% pre tax, and maybe 1-2% in Roth.

[bombcar]

If you get a 6% market return, and never save anything else, you would end up with $2.4m in 20 years. With your pension, that's effectively $3m already.

I would actually go the other way around - burn some savings and try to max the 401(k) and possibly a traditional IRA - because at $220k you're likely to be hitting higher tax brackets. Every dollar you can save is 24% cheaper or more. If your savings get uncomfortably low, then think about cutting back retirement savings.

529 can wait as there are infinite other options for funding college, but nobody will give you a loan or grant for retirement.

At $220k income (is wife going to have a job or keep hers?) and $121k expenses, you should have nearly $100k for taxes and retirement.

[Colorado14]

More details are needed:

1. Will your spouse be working? If so, what is your expected total income?

2. How much do you plan to spend on a home? Or will you rent before buying?

I moved from the Midwest to Denver when houses were more affordable than they are today. I retired at age 54 and don't regret moving here. I'm not a fan of your plan to reduce retirement contributions, although you may have legitimate reasons for wanting to do so.

[BradJ]

More details are needed:

1. Will your spouse be working? If so, what is your expected total income?

2. How much do you plan to spend on a home? Or will you rent before buying?

I moved from the Midwest to Denver when houses were more affordable than they are today. I retired at age 54 and don't regret moving here. I'm not a fan of your plan to reduce retirement contributions, although you may have legitimate reasons for wanting to do so.

1. That is the big question in the air. My wife's company actually has a Denver office, but they use it for meetings only. Remote work is still fairly fuzzy, and we are "hoping for the best, preparing for the worst" in terms of them letting her go. She will eventually, and hopefully, find a position in our new area.
2. We will rent for a year, and aim to buy around the 550k range (with a healthy downpayment of 150k)

[InvisibleAerobar]

Few comments.

$220k in a true MCOL area goes quite far and in general would not require paring back 401k contributions to the 7% level. Even more so if spouse also has income.

That said, the desirable areas of Denver (and nearby suburbs) are more HCOL than they are MCOL. OP should check out how much house $550k buys in those areas. Chances are, it may take at least $750k (and upwards of $1M), but should still be doable if there’s a decent second income from OP’s spouse.

[Colorado14]

Your salary is very solid and if your wife has employment prospects/interests, that will allow for some flexibility while you rent. You seem to be in a good place financially and renting before buying is a reasonable approach.

Your down payment is very generous, which is very positive. Kudos to you for that!

Not to be a downer, but $550K may be a very modest housing budget for 4 people. It's not an impossible budget, yet housing here is likely *much* more expensive than you expect. The previous poster has good insights regarding housing.

Feel free to post more questions as they arise.

[BradJ]

Your salary is very solid and if your wife has employment prospects/interests, that will allow for some flexibility while you rent. You seem to be in a good place financially and renting before buying is a reasonable approach.

Your down payment is very generous, which is very positive. Kudos to you for that!

Not to be a downer, but $550K may be a very modest housing budget for 4 people. It's not an impossible budget, yet housing here is likely *much* more expensive than you expect. The previous poster has good insights regarding housing.

Feel free to post more questions as they arise.

We are looking in the Mead, Firestone area....so maybe 550k is a decent house?
What can I expect in terms of car and home insurance?

[bombcar]

Rent where you think you want to own, as getting an idea "on the ground" is important, even if it costs more.

[jjgaucho]

I can't add much value to this discussion, but I'd love to hear how it all works out. I am looking to move from HCOL So Cal to Denver in the near future. You will have much better quality of life in Denver. That's what I want to move for. I can buy a home for less that has much more land. Weather is better with actual 4 seasons. You have a lot saved up already and will still continue to make contributions, even if it's less. You should be fine. Good luck!

[Kosh976]

We moved to Denver from the Minneapolis area and love it here. But, so do a lot of others, and they keep moving here too.

As others have said, $550K is on the low end. In my suburban neighborhood there are 2 bed lofts valued at $500K. You might find a "decent" house for $550K in Firestone, but as has been mentioned, it will likely need to be modest.

I am looking to move from HCOL So Cal to Denver in the near future <snip> Weather is better with actual 4 seasons.

I love it in Colorado, but I don't know many who would say it is better weather than So Cal. We get blizzards here. Maybe even tomorrow.

[stan1]

Do what you need to do. A 20 or 30 year plan isn't worth more than a few minutes of thought. There are so many things you have no control over and so many other things you can change. I would not think of it in binary terms as "save as much as possible" or "can't retire until old". As presented it's a false dilemma fallacy.

Congrats on the new job, it sounds exciting and that's worth a lot!

[BradJ]

Do what you need to do. A 20 or 30 year plan isn't worth more than a few minutes of thought. There are so many things you have no control over and so many other things you can change. I would not think of it in binary terms as "save as much as possible" or "can't retire until old". As presented it's a false dilemma fallacy.

Congrats on the new job, it sounds exciting and that's worth a lot!

Appreciate the kind words. I’m excited but terrified. We are leaving all we know, and extreme comfort this opportunity. I have this fear it will be hard to “unwind” if it all goes bad. Stepping forward in faith.

[rivers03]

Just chiming in with support. I could write your post almost word for word- similar numbers except we are 42. We are preparing for a move this summer to Nashville from our VLCOL area. Housing prices have skyrocketed there the last few years. I am keeping my remote job with same salary for now and spouse is getting a very small pay increase. Sometimes I think we are totally crazy but I am trying to focus on the upside- significantly more career potential for both of us, more academic opportunities for our children, more cultural options, etc. We were starting to feel stagnant in our small town despite its charm/family ties and looking forward to hopeful growth in all areas. Just an improvement in overall quality of life. But I understand, it’s a leap of faith to leave a comfortable situation- it was now or never for us with 3 school age kids as well.
I agree with the pp who said life is about more than numbers. If we have to work a few years longer so be it, but I believe those of us who consistently live below our means will be ok in retirement.
Congratulations on this opportunity!

[THY4373]

I work with several folks who work out of the Denver area and I was honestly surprised to see it called MCOL as it doesn't sound like it from what they tell me (though it seems mostly housing that is the concern). My now ex and I moved to a MCOL area about 23 years ago now from a HCOL area on the east coast. Neither of us have any regrets, I took a small pay cut that was pretty much closed in 2-3 years (she did not because she continued and continues to work remotely for the same employer). We are almost certainly in a better financial position than if we had not done this. Our daughter got a great private school education we would not have been able to afford in the HCOL area, traffic is much better and our housing quality is much better. Our amicable divorce might have been a lot less so in a HCOL area where it would have been difficult for both of us to maintain our lifestyles on approximately half the income. I would say it was one of the best moves I have made in my life though it was a risk it all turned out well. I will say since covid there has been some closing of the gap in housing costs as more and more folks have moved from (V)HCOL areas to our city, whether this trend continues as employers continue to pullback on telework I don't know.

[Watty]

No debt besides home

What does this mean? Are you keeping a home where you live now?

I’m increasing my salary from 165k to 220k. I plan on putting back 7% pre tax, and maybe 1-2% in Roth.....and save quite a bit every month.

I would not consider 9% of your income to be "quite a bit".

My situation was a lot different than yours when I was your age but I committed to myself to save half of any pay increases. By increasing my savings rate a couple of percent a years I was able to painlessly get up to saving over 20% if my income after a while and I never missed the money because I still got more take home pay every time I got a raise.

With getting a $55K pay increase it would be good to increase your savings by at least half of that. Since you are moving to a lower cost of living area you could even save the entire $55K and still have a higher amount of disposable income.

In your likely tax bracket it would be hard to justify using a Roth when you are not maxing out all your deductible contributions.

I assume we will need about 3 million to retire.

If that is in current 2025 dollars you are likely vastly overestimating how much you will need then you are retired and the kids are launched especially if you have a paid off house then.

For me having a paid off house when I retired meant that my main core expenses were things like food, utilities, cars costs, medicare supplements, home insurance, etc. It will vary with your details but I have found that $5,000 to $6,000 a month($60K to $72K) a year will cover a well above average middle class lifestyle since I have a paid off classes. While we are both still alive and getting two Social Security checks they will cover most of those core expenses. There will also be lumpy expenses like home remodeling, replacement cars, etc but it is not unusual for people to find that paying for retirement does not need to be super expensive.

[BradJ]

No debt besides home

What does this mean? Are you keeping a home where you live now?

I’m increasing my salary from 165k to 220k. I plan on putting back 7% pre tax, and maybe 1-2% in Roth.....and save quite a bit every month.

I would not consider 9% of your income to be "quite a bit".

My situation was a lot different than yours when I was your age but I committed to myself to save half of any pay increases. By increasing my savings rate a couple of percent a years I was able to painlessly get up to saving over 20% if my income after a while and I never missed the money because I still got more take home pay every time I got a raise.

With getting a $55K pay increase it would be good to increase your savings by at least half of that. Since you are moving to a lower cost of living area you could even save the entire $55K and still have a higher amount of disposable income.

In your likely tax bracket it would be hard to justify using a Roth when you are not maxing out all your deductible contributions.

I assume we will need about 3 million to retire.

If that is in current 2025 dollars you are likely vastly overestimating how much you will need then you are retired and the kids are launched especially if you have a paid off house then.

For me having a paid off house when I retired meant that my main core expenses were things like food, utilities, cars costs, medicare supplements, home insurance, etc. It will vary with your details but I have found that $5,000 to $6,000 a month($60K to $72K) a year will cover a well above average middle class lifestyle since I have a paid off classes. While we are both still alive and getting two Social Security checks they will cover most of those core expenses. There will also be lumpy expenses like home remodeling, replacement cars, etc but it is not unusual for people to find that paying for retirement does not need to be super expensive.

Thanks for the reply. I currently save 20% due to living in a VLCOL area, but moving to Denver will push that down to 7%. I expect my housing cost to double. Speaking of home, we will sell our house in our current area, and buy in Denver-our home being our only debt.

[Colorado14]

Your salary is very solid and if your wife has employment prospects/interests, that will allow for some flexibility while you rent. You seem to be in a good place financially and renting before buying is a reasonable approach.

Your down payment is very generous, which is very positive. Kudos to you for that!

Not to be a downer, but $550K may be a very modest housing budget for 4 people. It's not an impossible budget, yet housing here is likely *much* more expensive than you expect. The previous poster has good insights regarding housing.

Feel free to post more questions as they arise.

We are looking in the Mead, Firestone area....so maybe 550k is a decent house?
What can I expect in terms of car and home insurance?

My quick online search suggests that your housing budget will go much farther in the Firestone area than in the Denver area. So, since you're not planning to buy in Denver, your $550K budget is much more feasible. One website lists >20 homes for sale from $500 to $600K in Firestone, so that is potentially good news for you.

We're in the Denver metro area, so I'm not an expert on insurance prices in the Firestone area. Our property taxes are relatively low but car and home insurance are becoming quite expensive due to fires, storms, etc. throughout the country. Insurance for our cars has doubled in recent years although we do not own newish cars. State income tax is relatively low, which is a plus. You will do fine, particularly if your spouse lands a job. Your enthusiasm and attention to financial details bodes well for your future. Good work!