When can I retire? Where to go from here?

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skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

When can I retire? Where to go from here?

Post by skiguy18 » Sat Jul 07, 2018 4:13 pm

Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
Last edited by skiguy18 on Mon Jul 09, 2018 9:24 am, edited 1 time in total.

02nz
Posts: 579
Joined: Wed Feb 21, 2018 3:17 pm

Re: Checkup Please! Where to go from here?

Post by 02nz » Sat Jul 07, 2018 4:35 pm

Others will surely chime on these questions but to answer #4: with expenses of just 52K, and a $2M+ portfolio, early retirement in 10 years should be easily doable. You've already reached financial independence and could just about retire now, if you could get health care (e.g. ACA) at a reasonable cost. If your annual expenses, including health care and property taxes, add up to no more than about 3% of your portfolio, you can retire early. (There's lots of literature about a safe/sustainable withdrawal rate, and the "rule of thumb" has been 4%, but for early retirees with a long time span ahead of them, and given today's high stock valuations, it's prudent to be more conservative.) That's even before accounting for any income from part-time work.

Lafder
Posts: 3843
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Checkup Please! Where to go from here?

Post by Lafder » Sat Jul 07, 2018 6:31 pm

Does your wife have any employees? A solo 401k allows bigger pretax contributions than a SEP for the same income.

Fidelity would allow her to roll her SEP into her solo401k.

You are only allowed a SEP or Solo401k in a tax year. So if she has made SEP contributions for 2018 already, she can do a solo401k next year.

lafder

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: Checkup Please! Where to go from here?

Post by skiguy18 » Sun Jul 08, 2018 8:23 am

02nz wrote:
Sat Jul 07, 2018 4:35 pm
Others will surely chime on these questions but to answer #4: with expenses of just 52K, and a $2M+ portfolio, early retirement in 10 years should be easily doable. You've already reached financial independence and could just about retire now, if you could get health care (e.g. ACA) at a reasonable cost. If your annual expenses, including health care and property taxes, add up to no more than about 3% of your portfolio, you can retire early. (There's lots of literature about a safe/sustainable withdrawal rate, and the "rule of thumb" has been 4%, but for early retirees with a long time span ahead of them, and given today's high stock valuations, it's prudent to be more conservative.) That's even before accounting for any income from part-time work.
Thanks for your input. I was under the same impression but it's always nice to hear someone else's thoughts! Thanks again.

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: Checkup Please! Where to go from here?

Post by skiguy18 » Sun Jul 08, 2018 8:24 am

Lafder wrote:
Sat Jul 07, 2018 6:31 pm
Does your wife have any employees? A solo 401k allows bigger pretax contributions than a SEP for the same income.

Fidelity would allow her to roll her SEP into her solo401k.

You are only allowed a SEP or Solo401k in a tax year. So if she has made SEP contributions for 2018 already, she can do a solo401k next year.

lafder
Unfortunately, my wife does not have any other employees at the time. Perhaps she will grow in the future. If she does, I will keep the Solo401K in mind. Thanks for the input!

User avatar
bertilak
Posts: 6158
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Checkup Please! Where to go from here?

Post by bertilak » Sun Jul 08, 2018 8:57 am

skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?
My son works for a small company that does not have a 401(k) plan. They just recently started a SIMPLE IRA. I know little about that but am pretty sure the company wanted something cheap and easy. Here is the IRS description:
  • A SIMPLE IRA plan is a Savings Incentive Match Plan for Employees. It gives small employers a simplified method to make contributions toward their employees’ retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions. All contributions are made directly to an IRA set up for each employee (a SIMPLE-IRA).
    ...
    Available to any small business – generally with 100 or fewer employees
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker, the Cowboy Poet

Lafder
Posts: 3843
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Checkup Please! Where to go from here?

Post by Lafder » Sun Jul 08, 2018 9:45 am

It is the other way around.

A solo401k is if you have no employees or just a spouse employee.

A solo401k lets you put away as the employer and employee, so generally about 18,000 a year more than a SEP for the same income.

lafder

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: Checkup Please! Where to go from here?

Post by skiguy18 » Thu Jul 12, 2018 6:58 am

Lafder wrote:
Sun Jul 08, 2018 9:45 am
It is the other way around.

A solo401k is if you have no employees or just a spouse employee.

A solo401k lets you put away as the employer and employee, so generally about 18,000 a year more than a SEP for the same income.

lafder
Thanks for the clarification!

financeguy88
Posts: 57
Joined: Thu Feb 23, 2017 3:58 pm

Re: When can I retire? Where to go from here?

Post by financeguy88 » Thu Jul 12, 2018 7:20 am

skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
A few questions:

Are the properties included in the taxable account value? That wasn’t clear. Do you have a mortgage?

Do you plan to have kids? Obviously that and the number of kids changes things.

Any other big liabilities like supporting the parents or in laws coming down the road?

ignition
Posts: 201
Joined: Sun Dec 11, 2016 11:28 am

Re: When can I retire? Where to go from here?

Post by ignition » Thu Jul 12, 2018 8:08 am

As a rule of thumb you need about 25-33 times your annual expenses in assets to be able to retire early. With a healthy allocation to stocks (70% is certainly fine) and some flexibility in your spending, you should be set for life. So yes, with expenses of 52k-75k and a 2.1M portfolio you should be able to retire.

This is an interesting read on the subject: https://www.gocurrycracker.com/what-is- ... nt-page-1/

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: When can I retire? Where to go from here?

Post by skiguy18 » Thu Jul 12, 2018 8:01 pm

financeguy88 wrote:
Thu Jul 12, 2018 7:20 am
skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
A few questions:

Are the properties included in the taxable account value? That wasn’t clear. Do you have a mortgage?

Do you plan to have kids? Obviously that and the number of kids changes things.

Any other big liabilities like supporting the parents or in laws coming down the road?
The properties are not included in the taxable account. They are easily worth 1.3-1.5 M together, so that would put our net worth in the ballpark of 3.5M. We have no mortgage.

We would like to have one kid but are not sure if that is going to be possible for us.

No other known liabilities. My parents are retired and have done very well. My dad is the one who originally turned me on to this site! Although my in-laws live in our apartment, I don't foresee other expenses there. They are retired and live in a very social country, so they are well taken care of.

21&lewis
Posts: 17
Joined: Sun Nov 06, 2016 8:42 pm

Re: When can I retire? Where to go from here?

Post by 21&lewis » Thu Jul 12, 2018 8:24 pm

Respectfully, a $3.5M net worth without debt at your current salaries suggests some "outside" help. I know you commented on well paying jobs that weren't sustainable, but honestly, at your age, I don't know many folks who would transition to a HH income of ~$140K and have your net worth without some additional cushion for financial help. You mention your parents are well off. Have you received some financial help that is not accounted for in your annual $52K need? I apologize if I'm off base. If so, please share how you amassed your impressive net worth in relatively short (career) order.

financeguy88
Posts: 57
Joined: Thu Feb 23, 2017 3:58 pm

Re: When can I retire? Where to go from here?

Post by financeguy88 » Thu Jul 12, 2018 8:56 pm

skiguy18 wrote:
Thu Jul 12, 2018 8:01 pm
financeguy88 wrote:
Thu Jul 12, 2018 7:20 am
skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
A few questions:

Are the properties included in the taxable account value? That wasn’t clear. Do you have a mortgage?

Do you plan to have kids? Obviously that and the number of kids changes things.

Any other big liabilities like supporting the parents or in laws coming down the road?
The properties are not included in the taxable account. They are easily worth 1.3-1.5 M together, so that would put our net worth in the ballpark of 3.5M. We have no mortgage.

We would like to have one kid but are not sure if that is going to be possible for us.

No other known liabilities. My parents are retired and have done very well. My dad is the one who originally turned me on to this site! Although my in-laws live in our apartment, I don't foresee other expenses there. They are retired and live in a very social country, so they are well taken care of.
With owning the house debt free and your current expense level you’re set up well to retire in 10 to 15 years. You could probably pull it off now if you don’t have a kid. If you do your expenses might go up especially if you want to send them to private school.

Do you think the house is actually a good investment? What are the property taxes / carry cost? I know you said you like living there but that’s a big piece of your portfolio sitting an illiquid asset if you don’t think it is a good return. You might be better off selling it and investing some of the proceeds and downsizing to a smaller place. That is the biggest question that I would address.

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: When can I retire? Where to go from here?

Post by skiguy18 » Thu Jul 12, 2018 9:04 pm

21&lewis wrote:
Thu Jul 12, 2018 8:24 pm
Respectfully, a $3.5M net worth without debt at your current salaries suggests some "outside" help. I know you commented on well paying jobs that weren't sustainable, but honestly, at your age, I don't know many folks who would transition to a HH income of ~$140K and have your net worth without some additional cushion for financial help. You mention your parents are well off. Have you received some financial help that is not accounted for in your annual $52K need? I apologize if I'm off base. If so, please share how you amassed your impressive net worth in relatively short (career) order.
No offense taken. I would have assumed the same thing had I read this information in another post. When I said that my parents were well off, I meant that more in the way that they are comfortably retired and live well within their means. I did not mean to imply that they are super wealthy.

We received $0 in outside help. We were both professional athletes. Father time waits for no one!

Lafder
Posts: 3843
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: When can I retire? Where to go from here?

Post by Lafder » Thu Jul 12, 2018 10:08 pm

How awesome that you both earned this $$ with hard work! Great job thinking through how to make the most of it.

This site has the most useful info of any financial site I have found.

lafder

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: When can I retire? Where to go from here?

Post by skiguy18 » Fri Jul 13, 2018 2:07 pm

financeguy88 wrote:
Thu Jul 12, 2018 8:56 pm
skiguy18 wrote:
Thu Jul 12, 2018 8:01 pm
financeguy88 wrote:
Thu Jul 12, 2018 7:20 am
skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
A few questions:

Are the properties included in the taxable account value? That wasn’t clear. Do you have a mortgage?

Do you plan to have kids? Obviously that and the number of kids changes things.

Any other big liabilities like supporting the parents or in laws coming down the road?
The properties are not included in the taxable account. They are easily worth 1.3-1.5 M together, so that would put our net worth in the ballpark of 3.5M. We have no mortgage.

We would like to have one kid but are not sure if that is going to be possible for us.

No other known liabilities. My parents are retired and have done very well. My dad is the one who originally turned me on to this site! Although my in-laws live in our apartment, I don't foresee other expenses there. They are retired and live in a very social country, so they are well taken care of.
With owning the house debt free and your current expense level you’re set up well to retire in 10 to 15 years. You could probably pull it off now if you don’t have a kid. If you do your expenses might go up especially if you want to send them to private school.

Do you think the house is actually a good investment? What are the property taxes / carry cost? I know you said you like living there but that’s a big piece of your portfolio sitting an illiquid asset if you don’t think it is a good return. You might be better off selling it and investing some of the proceeds and downsizing to a smaller place. That is the biggest question that I would address.
We definitely plan on staying in the house, so I do not consider it an investment. I look at it more as a safety net; if need be, we could probably sell it for a decent gain and downsize. We built the house and went with the longest lasting materials possible, so upkeep at this point is extremely minimal. Certainly, this will increase in the future but I also enjoy doing that type work myself. Right now we are paying about $6,500 in taxes. Last year we only spent $400 dollars total on utilities! The house was built to a very high-efficiency standard.

I certainly hear you on the house being a big chunk of our portfolio. We made this decision knowing that it was not the best financial choice but we were comfortable with our financial outlook. This was the one area in our lives where we really splurged.

The Outsider
Posts: 19
Joined: Thu Feb 22, 2018 1:07 pm

Re: When can I retire? Where to go from here?

Post by The Outsider » Fri Jul 13, 2018 2:34 pm

skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
1st Congrats on the hard work, and good decisions that got you and your wife to this point.

2nd There may be an opportunity for your wife to treat you as an employee of her business to potentially maximize before tax retirement contributions for both of you. My recommendation would be to find a reputable CPA to discuss

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: When can I retire? Where to go from here?

Post by skiguy18 » Fri Jul 13, 2018 7:58 pm

The Outsider wrote:
Fri Jul 13, 2018 2:34 pm
skiguy18 wrote:
Sat Jul 07, 2018 4:13 pm
Hi Bogleheads,

I wanted to check in for a financial checkup as my wife and I have just completed major career transitions. This post is not a “humble brag”, I am truly looking for advice and or reassurance that I am doing the right thing. I have always handled the financials by myself and that can be a bit lonely, but it would certainly be a lot tougher without this site!

Emergency Fund- Yes. 12 months.
Debt- none
Tax filing- Married/jointly
Tax rate- 24% Federal, 6.65% State
State of residence- New York
Age- Mid to Late 30's
Allocation- 70%Stocks (40% International), 30% Bonds (5% International)

Portfolio:

Basic 3 fund portfolio with additional Limited, Intermediate, Long Term Bond tax-exempt funds in a taxable account. I need Bonds in my taxable accounts to maintain a 70/30 allocation.

Total Portfolio: 2.1 M

Tax-advantaged accounts (SEP, Trad IRA, Roth IRA): 200k
Taxable account: 1.9M

Quick Summary:

We both just transitioned out of our first careers where we were self-employed. These paid well but it's not a job that you can do past your mid-thirties. On top of this, my wife moved, along with her assets, to the US a few years ago from Europe. It took a long time to organize her assets and get things transferred over to a three fund portfolio.

I now work for a non-profit and make 70k. My wife has started her own business and also makes around 70k. Last year we spent 52k (before tax) and I don't foresee us spending more than 75k a year in the future. My new job offers free health insurance for the both of us but no other retirement benefits. My wife has a SEP that she will max out every year and we both max out Roth's.

We own a house/property that is easily worth 1m in a quickly growing area. The property includes my wife's business and also a vacation apartment that we can rent. We plan on doing this occasionally in the high season and I think we can easily make an extra 5-8k a year. Don't think McMansion with the house. Think newly built, with lifetime materials, net-zero house. This is our dream house and we certainly don't plan on selling but could in the future if we need to. We also own an apartment in Europe valued at 325,000. My in-laws live in this and will for the foreseeable future. Eventually, we will sell this.

Our tax advantage accounts are much smaller when compared to our taxable accounts. This is because my wife did not have access to these accounts until recently and I did not know about SEP's for too long. I wish I would have found this site earlier!

Questions:
1. The non-profit I work for is quite small and I think they would consider adding some type of retirement plan if I brought the idea to them and it was easy. Even something that I could contribute to without their help. What should I consider here? Is there something that could be easy for them to set up and not cost them much?

2. We will continue to max out Roth's and my wife's SEP but we will still have more to invest. Should I just continue to add to our taxable accounts? Dare I even mention real estate?

3. I know it's best to hold bonds in tax-advantaged accounts. But should I be concerned that we only have bonds in these accounts and we also have limited opportunity to contribute to these accounts? As in, the growth of these accounts could be limited by potentially smaller returns.

4. We would love to retire early if possible, perhaps in 10-15 years. By retiring early I mean a transition to more part-time and volunteer work. Is this realistic?

5. What am I missing?
1st Congrats on the hard work, and good decisions that got you and your wife to this point.

2nd There may be an opportunity for your wife to treat you as an employee of her business to potentially maximize before tax retirement contributions for both of you. My recommendation would be to find a reputable CPA to discuss
Thats a great point and something that I had not considered before. I will definitely look into that! Thanks!

BogleBike
Posts: 52
Joined: Wed Jun 27, 2018 2:26 pm

Re: When can I retire? Where to go from here?

Post by BogleBike » Fri Jul 13, 2018 9:23 pm

OP, your finances, plans and decision making all sound laudable. I agree with the posters who feel you can safely retire right now.

Fwiw, I was guessing that one or more had been athletes, so your confirmation of that made me chuckle. Congratulations on making such a thoughtful and well-balanced transition into your lives off the playing field.

In case you want additional perspective, another site with related examples is http://www.mrmoneymustache.com/. Its specialty is less the financial aspect, more of the lifestyle configuration aspect, with special emphasis on retiring in 30s or 40s. I have spent more time on that site, only recently visiting this one because even the "Mustachians" tend to holds Bogleheads in high regard re financial analysis. Nonetheless there are numerous examples there to confirm that other people do make the decision to retire in similar situations to yours, if those would help.

skiguy18
Posts: 37
Joined: Mon Nov 24, 2014 9:53 am

Re: When can I retire? Where to go from here?

Post by skiguy18 » Sat Jul 14, 2018 8:19 pm

BogleBike wrote:
Fri Jul 13, 2018 9:23 pm
OP, your finances, plans and decision making all sound laudable. I agree with the posters who feel you can safely retire right now.

Fwiw, I was guessing that one or more had been athletes, so your confirmation of that made me chuckle. Congratulations on making such a thoughtful and well-balanced transition into your lives off the playing field.

In case you want additional perspective, another site with related examples is http://www.mrmoneymustache.com/. Its specialty is less the financial aspect, more of the lifestyle configuration aspect, with special emphasis on retiring in 30s or 40s. I have spent more time on that site, only recently visiting this one because even the "Mustachians" tend to holds Bogleheads in high regard re financial analysis. Nonetheless there are numerous examples there to confirm that other people do make the decision to retire in similar situations to yours, if those would help.
Thanks! I am familiar with mrmoneymustache and always enjoy reading over there as well. He is a bit more extreme than me but I like the message.

I watched plenty of other athletes make similar money but retire from sport with very little besides a big mortgage. I was just lucky that my wife and I were always on the same page and I was just smart enough to know that I could not outsmart the market!

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