How Am I Doing? 39 year old asking for a checkup

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Topic Author
imsomeguy
Posts: 93
Joined: Tue Oct 06, 2015 9:02 pm

How Am I Doing? 39 year old asking for a checkup

Post by imsomeguy »

Approaching #40 and a bit anxious that I'm not far enough along. We made a decision to move pre-pandemic and then had to sell our home in less than ideal conditions. Took a bath, had to liquidate some stuff and currently renting while we save cash for the next home.

Live in VHCOL, have 3 kids (9, 7, 4) who go to public school. Wife's job is very stable, mine less so but its not too bad (yet). My wife probably thinks we spend too much, our friends probably consider us frugal and I think we have a good balance.

His 401k: $505k
Her 403B: $620k
529: $90k (~30k/each)
Her Pension: ~$45k/year (still a few more years until she is eligible)
Cash/EF/Downpayment: $420K
Real Estate: $50k in a syndicated housing situation
Debt: $800/month few years of student loans, but nothing drastic

I guess what makes me the most anxious is that we don't have a taxable account and I really thought I'd have a bigger portfolio by now. We needed to go liquid to "weather the storm" and now just trying to save cash to buy the next home.

So let me have it, how can I improve? Thoughts
Neuron
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Joined: Sat Jul 08, 2017 8:25 pm

Re: How Am I Doing? 39 year old asking for a checkup

Post by Neuron »

It is hard for this to be answered without a few more data points. What is your income, how much are you saving a year, and where do you want to be financially?
Topic Author
imsomeguy
Posts: 93
Joined: Tue Oct 06, 2015 9:02 pm

Re: How Am I Doing? 39 year old asking for a checkup

Post by imsomeguy »

Neuron wrote: Thu Jun 17, 2021 3:38 pm It is hard for this to be answered without a few more data points. What is your income, how much are you saving a year, and where do you want to be financially?
Combined Income: $400k
Savings Per Year: Its not a number I've calculated (sadly). We both max out pre-tax contributions, save as much in the EF/Downpayment fund and try to put what we can to the 529s
Where do I want to be: Again something I've never thought about. My parents retired around 68 and are loving the retired life. They worked hard, were pretty frugal too but ideally I'd like to retire a few years earlier than they did
young-ish
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Re: How Am I Doing? 39 year old asking for a checkup

Post by young-ish »

Is your Cash/EF/DP in a taxable account?

What are your annual expenses?

What will be your annual expenses in 10 years?
wetgear
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Joined: Thu Apr 06, 2017 10:14 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by wetgear »

For better/more complete advice consider posting all the details in this format: viewtopic.php?f=1&t=6212
arsenalfan
Posts: 1070
Joined: Mon Dec 09, 2013 12:26 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by arsenalfan »

The checkup is a meaningless comparison since the race is really against your goals.

Make an Investment Policy Statement with your partner, and state your personal financial goals.

This will guide your budget: how much to save and where.

And then you can right-size your budget for your own situation - who cares what your friends think; it's what you and your wife need to do to meet your financial goals.
Topic Author
imsomeguy
Posts: 93
Joined: Tue Oct 06, 2015 9:02 pm

Re: How Am I Doing? 39 year old asking for a checkup

Post by imsomeguy »

Alright clearly I have some homework to do before I post again. Helpful still. Thanks
Waiting_for_Godot
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Re: How Am I Doing? 39 year old asking for a checkup

Post by Waiting_for_Godot »

To Recap:

39 years old
~1.7 million in assets
45k/yr pension upcoming
400k combined income

I would see no reason whatsoever to be anxious, and I am a pretty anxious person myself; that being said I'd love to trade places :p

Something that might make you feel quite a bit better would be to compare where you are vs the average net worth for your age in the US, then the world at large. You'll find that you're far ahead of the vast majority of people.
WS1
Posts: 406
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Re: How Am I Doing? 39 year old asking for a checkup

Post by WS1 »

As an also anxious 39yr old

Your portfolio could generate $50,000/year for life. You basically could live well in a not terrible community with a barista’s income + that income.

Please take comfort in that fact.
arsenalfan
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Joined: Mon Dec 09, 2013 12:26 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by arsenalfan »

Waiting_for_Godot wrote: Thu Jun 17, 2021 5:23 pm To Recap:

39 years old
~1.7 million in assets
45k/yr pension upcoming
400k combined income

I would see no reason whatsoever to be anxious, and I am a pretty anxious person myself; that being said I'd love to trade places :p

Something that might make you feel quite a bit better would be to compare where you are vs the average net worth for your age in the US, then the world at large. You'll find that you're far ahead of the vast majority of people.
It's not a race against anyone else except your own personal goals.

I've found comparing against the "average US net worth" to be pretty useless.

Maybe you want to retire at 50 and spend $400k a year - then you're not doing well.
Maybe you want to retire at 55 and spend $200k a year (including healthcare and taxes). Then you're doing ok.
Only you can set the goals, and then act accordingly.

I've enjoyed crafting and revising the IPS annually
I've also enjoyed the BH posts on "what do you wish you'd done in your 30s/40s/50s etc - helpful for reflection.
Waiting_for_Godot
Posts: 103
Joined: Mon Oct 22, 2018 3:57 pm

Re: How Am I Doing? 39 year old asking for a checkup

Post by Waiting_for_Godot »

arsenalfan wrote: Thu Jun 17, 2021 5:47 pm
Waiting_for_Godot wrote: Thu Jun 17, 2021 5:23 pm To Recap:

39 years old
~1.7 million in assets
45k/yr pension upcoming
400k combined income

I would see no reason whatsoever to be anxious, and I am a pretty anxious person myself; that being said I'd love to trade places :p

Something that might make you feel quite a bit better would be to compare where you are vs the average net worth for your age in the US, then the world at large. You'll find that you're far ahead of the vast majority of people.
It's not a race against anyone else except your own personal goals.

I've found comparing against the "average US net worth" to be pretty useless.

Maybe you want to retire at 50 and spend $400k a year - then you're not doing well.
Maybe you want to retire at 55 and spend $200k a year (including healthcare and taxes). Then you're doing ok.
Only you can set the goals, and then act accordingly.

I've enjoyed crafting and revising the IPS annually
I've also enjoyed the BH posts on "what do you wish you'd done in your 30s/40s/50s etc - helpful for reflection.
I completely agree; at some point OP may give further clarity as to his wishes, spend rate, AA, etc. We don't know what his point of reference is w.r.t. where OP thought they would be. If it happens to be that OP feels behind for their age in general, I wanted to address that.
ps2me11
Posts: 20
Joined: Mon Sep 10, 2018 9:24 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by ps2me11 »

Flannelbeard wrote: Thu Jun 17, 2021 5:21 pm You are in the top 8% of net worth compared amongst all US households. You're doing better than fine.
Is there any reference index to check?
WyomingFIRE
Posts: 216
Joined: Wed Sep 12, 2018 10:44 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by WyomingFIRE »

imsomeguy wrote: Thu Jun 17, 2021 3:30 pm Approaching #40 and a bit anxious that I'm not far enough along. We made a decision to move pre-pandemic and then had to sell our home in less than ideal conditions. Took a bath, had to liquidate some stuff and currently renting while we save cash for the next home.

Live in VHCOL, have 3 kids (9, 7, 4) who go to public school. Wife's job is very stable, mine less so but its not too bad (yet). My wife probably thinks we spend too much, our friends probably consider us frugal and I think we have a good balance.

His 401k: $505k
Her 403B: $620k
529: $90k (~30k/each)
Her Pension: ~$45k/year (still a few more years until she is eligible)
Cash/EF/Downpayment: $420K
Real Estate: $50k in a syndicated housing situation
Debt: $800/month few years of student loans, but nothing drastic

I guess what makes me the most anxious is that we don't have a taxable account and I really thought I'd have a bigger portfolio by now. We needed to go liquid to "weather the storm" and now just trying to save cash to buy the next home.

So let me have it, how can I improve? Thoughts
According to the Millionaire Next Door, you are an Average Accumulator of Wealth (AAW). https://en.m.wikipedia.org/wiki/The_Mil ... ersus_PAWs.
shess
Posts: 1196
Joined: Wed May 17, 2017 12:02 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by shess »

imsomeguy wrote: Thu Jun 17, 2021 3:47 pm
Neuron wrote: Thu Jun 17, 2021 3:38 pm It is hard for this to be answered without a few more data points. What is your income, how much are you saving a year, and where do you want to be financially?
Combined Income: $400k
Savings Per Year: Its not a number I've calculated (sadly). We both max out pre-tax contributions, save as much in the EF/Downpayment fund and try to put what we can to the 529s
Where do I want to be: Again something I've never thought about. My parents retired around 68 and are loving the retired life. They worked hard, were pretty frugal too but ideally I'd like to retire a few years earlier than they did
IMHO, savings per year isn't a strong target to aim at, since there are so many reasons it could vary, many of them outside of your control. Your strongest point of control is spend per year, so understanding that is a very good thing. You don't have to control it 100% (in fact, attempting that may lead to unhappiness for many marriages), but understanding where things are going and why, and which things are right and which things are awry is important. If you have a $40k/year variable and a $400/year variable, obviously concentrating on nailing down the $40k/year is more important than the $400 (in fact, it might not even make sense to worry much about the $400. Like if you're spending $400/yr on coffee, what's the worst case scenario? You're unlikely to suddenly 10x your coffee spend unless you work at it). Knowing your spend, you can back everything else out from there.

Given your assets and income, IMHO you're doing well for 40. I'd say your issues are not around "can", they're more around "when". My rule of thumb is that things will double every ten years, and that contributions usually grow until around 50, so in the next ten years there's a good chance that you'll have on the order of 3x what you have now, which should be a pretty good base. Does it mean you can retire early? Well, only if you have a strong understanding of your spending rate to estimate against.
sureshoe
Posts: 500
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Re: How Am I Doing? 39 year old asking for a checkup

Post by sureshoe »

I think some people are telling you some nice things and good advice about giving more data about "it's not about 'can you retire' but 'when'. I'm going to go a different direction.

You stated this:
imsomeguy wrote: Thu Jun 17, 2021 3:30 pm Approaching #40 and a bit anxious that I'm not far enough along. We made a decision to move pre-pandemic and then had to sell our home in less than ideal conditions. Took a bath, had to liquidate some stuff and currently renting while we save cash for the next home.
The fact that you're 40 and "anxious" tells me a lot. You have no taxable account despite being in top 2% of earners. No HSA? (maybe neither of you are eligible) You don't have a Roth IRA. And, at 40 years old, being a top earner, in my opinion, you should not have to be liquidating assets and selling your home for a loss. That suggests to me you haven't made ideal financial decisions.
That's why I suspect you are rightfully anxious. That's my take, not to be nasty - just candid.

Having written that, it's not like you're 50 and in $100k of debt - so it could be worse :)

Here is what I suspect > you make a great income. At the same time, you've grown accustomed to a certain lifestyle and spend accordingly. The good news is, you could glide into retirement just by not touching that 401k if you wanted to. The problem is, it would be at a lower standard of living than you are used to, and probably later than you want. That's the problem with high earners. You're not going to want to retire and go from 400k/year to $50k-$100k/year. You're going to want to be more in that $150-$200k range - which means a much bigger nest egg.

But again, you're not in a disaster situation. My advice to you > get your spending under control, which I'm guessing is the real drag on your saving. Figure out your housing. What cars do you drive? I'm betting they're expensive. Where is the rest of the money going?

My opinion is that at your income levels you should be saving at a minimum: $39k 401k, $12k Roth, $7200 HSA (if you can't do an HSA, put this in a taxable account), at least another $5-$20k into a taxable account.

On that $800 debt, I'd need to know the interest rate, but I'd push every penny to eliminate that unless it was some subsidized rate less than 2%. No reason to have debt as an adult that isn't a mortgage.

For housing, that's tougher, but I believe anyone can find a good place to live, even in VHCOL. Fixer uppers, etc. That may be ignorance on my part, but shop smart. Easier said than done :) The alternative, that I'm sure isn't an option is to move. $400k/year goes a heck of a lot further in Ohio.
Last edited by sureshoe on Fri Jun 18, 2021 10:09 am, edited 1 time in total.
hnd
Posts: 672
Joined: Mon Jun 22, 2020 11:43 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by hnd »

you have much more than this 40 yr old who sleeps just fine. unless you are hoping to live a jetsetting life, relax.
mrsgoldilocks
Posts: 60
Joined: Mon Jun 07, 2021 9:15 pm

Re: How Am I Doing? 39 year old asking for a checkup

Post by mrsgoldilocks »

imsomeguy wrote: Thu Jun 17, 2021 3:30 pm I guess what makes me the most anxious is that we don't have a taxable account and I really thought I'd have a bigger portfolio by now. We needed to go liquid to "weather the storm" and now just trying to save cash to buy the next home.

So let me have it, how can I improve? Thoughts
I can somewhat understand why you're anxious. If I was in your shoes, I would be too. (1) no taxable is a little behind for your income (2) having 420K sitting around waiting for a buy opportunity on a house can be very uneasy, and who knows when you can find your house and then by then, is that still affordable? It's just an unknown hanging over you. (3) in a VHCOL area, you probably have a lot of peers who seem to achieve a lot more, and have already purchased a > $1M home and their homes are appreciating while you're still sitting on the sideline ...(4) honestly speaking, in VHCOL area, 400K income really doesn't feel that much especially with 3 kids (I know it sounds ridiculous to a lot of ppl not in the situation, but it is really true), and (5) after all, approaching 40s can be a bit of a milestone triggering thoughts for your life and how you do so far.

First, take a deep breath. Then, do something to improve your situation. like what others pointed out, you need to do the followings:

(1) Talk to your wife and have a good understanding of your individual financial goals,

i.e. do you want to have early retirement; if so, when? and how much you want to retire with? IMO this is the most important item you and your wife need to settle with and then you guys can start working to achieve it.
i.e. how to fund your kids college. ~30K each for (9, 7, 4) don't really seem much.

and talk over why you feel anxious, and if your wife also feel uneasy with the financial situation?

(2) you mentioned you wife thinks you guys spending too much. can you do a quick check up on where your money went? Just go to your credit cards and bank statement and see how much you spend on each categories, i.e. housing, kids, travel, meals, etc etc. I suggest first knowing where your money go before you setting a budget. You can't blindly set a budget as that can be totally irrelevant to your situation or unrealistic to achieve.

(3) Now, you know your budget, see how much you actually can save each months and how to put that to build up your taxable/IRA/401 accordingly.

(4) you don't have Roth probably due to income limit. Check if your company actually has Roth 401 component, consider if that's the suitable tool in your planning.

(5) in a VHCOL area, a modest house is at least $1M, so now you guys are almost 39, and if you putting 20% down and end up with a big mortgage, how does it affect your other saving goal. You need to seriously consider the impact of this big mortgage and if it is wise to do so.
Flashes1
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Re: How Am I Doing? 39 year old asking for a checkup

Post by Flashes1 »

At your income level and NW, you are the elite of the elite. Congratulations. :beer
vfinx
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Re: How Am I Doing? 39 year old asking for a checkup

Post by vfinx »

imsomeguy wrote: Thu Jun 17, 2021 3:47 pm Savings Per Year: Its not a number I've calculated (sadly). We both max out pre-tax contributions, save as much in the EF/Downpayment fund and try to put what we can to the 529s
Even if you change nothing, figuring out this number would probably relieve much of the anxiety. You’re obviously spending less than you bring in, so it’ll probably be pretty decent.
TT
Posts: 559
Joined: Sat Oct 17, 2009 7:27 am

Re: How Am I Doing? 39 year old asking for a checkup

Post by TT »

I would estimate you are doing very well financially. To relieve your concerns regarding a taxable account perhaps you can set a goal that is reasonable for post tax savings and then pay yourself first every month and invest those funds however you consider suitable for your asset allocation . Once you accomplish this then you can know that you are saving what you have planned and agreed upon. Of course you can review this and always make any necessary adjustments as life situations arise. Things have a way of working themselves out for responsible individuals. Relax and enjoy life with your family.
Live Life Simple and Less Soft
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