- Your retirement portfolio is ~$4.1 million assuming $400k of your $4.5 million will cover college costs for your two children.
- Your annual expenses are likely closer to $215k since your $180k spend doesn’t include Federal and state taxes.
Based on the above, your portfolio is 19x expenses. Not enough for both you and spouse to retire right now. But if spouse’s compensation will cover all spend, it is fine for you to leave your job to recharge and spend more time with the family (which is likely busy with 2 kids) and lightening your spouse’s load/family stress by taking on the household chores.
But at 19x and high spend, your spouse will likely need to work for at least 10-15 more years. So consider whether this is really a permanent retirement or if you will go back to paid work at some point so your spouse can retire sooner. If you do retire permanently, consider whether you can make permanent changes to reduce your expenses such as selling the 2nd home, etc. Also re-evaluate the adequacy of life insurance and disability coverage as your spouse will be the sole earner.
Paying down the 3.5% mortgage is an option. Do you receive a tax deduction for your primary home mortgage interest? Consider instead using the cash in Taxable to make 529 contributions and for living expenses, if needed, in order to fully maximize a mega backdoor Roth (MBR). This way you shift retirement savings from Taxable to Roth. Roth accounts grow tax free.
Consider with your portfolio:
1. Whether or not to add some fixed income holdings as your equity % is 100% excluding cash.
2. Your international holdings are 5% of your total portfolio - consider whether or not to increase this
3. Large tilt due to your extended market/small cap holdings - do you want to continue this?
4. Concentration in AAPL and other single stocks
5. Consider turning off automatic reinvestment of dividends and capital gain distributions in your Taxable account and reinvest them only in the Total Stock Market fund. Or leave in cash for multi-years of a MBR or for mortgage payoff.
6. Using your state 529 plan for the state income tax deduction for contributions.
- Your annual expenses are likely closer to $215k since your $180k spend doesn’t include Federal and state taxes.
Based on the above, your portfolio is 19x expenses. Not enough for both you and spouse to retire right now. But if spouse’s compensation will cover all spend, it is fine for you to leave your job to recharge and spend more time with the family (which is likely busy with 2 kids) and lightening your spouse’s load/family stress by taking on the household chores.
But at 19x and high spend, your spouse will likely need to work for at least 10-15 more years. So consider whether this is really a permanent retirement or if you will go back to paid work at some point so your spouse can retire sooner. If you do retire permanently, consider whether you can make permanent changes to reduce your expenses such as selling the 2nd home, etc. Also re-evaluate the adequacy of life insurance and disability coverage as your spouse will be the sole earner.
Paying down the 3.5% mortgage is an option. Do you receive a tax deduction for your primary home mortgage interest? Consider instead using the cash in Taxable to make 529 contributions and for living expenses, if needed, in order to fully maximize a mega backdoor Roth (MBR). This way you shift retirement savings from Taxable to Roth. Roth accounts grow tax free.
Consider with your portfolio:
1. Whether or not to add some fixed income holdings as your equity % is 100% excluding cash.
2. Your international holdings are 5% of your total portfolio - consider whether or not to increase this
3. Large tilt due to your extended market/small cap holdings - do you want to continue this?
4. Concentration in AAPL and other single stocks
5. Consider turning off automatic reinvestment of dividends and capital gain distributions in your Taxable account and reinvest them only in the Total Stock Market fund. Or leave in cash for multi-years of a MBR or for mortgage payoff.
6. Using your state 529 plan for the state income tax deduction for contributions.
Statistics: Posted by HomeStretch — Sun Nov 10, 2024 5:18 am — Replies 34 — Views 5286