Life Situation – 45 years old, wife 56 years old. Pretty standard folks I’d say. Kids are grown and we live a mostly frugal life style. We could afford a bigger and more expensive house than we have, better cars (although she just leased a Jeep Renegade against my suggestion – ARGGG – but looking at winning the war not the battle) and in general just more stuff that we don’t need. Our biggest relative expense seems to be groceries and I wish I could match MMM on that!
The house is one negative issue we have vs. most folk’s positive situation. We plan on moving and we will have to pay more for a similar house (1,300 sq ft). But, the taxes should be significantly less. (NY is expensive for RE taxes). Based on home prices in South Carolina, I think we are looking at say $200K purchase and $2K/yr taxes.
The one nugget of wisdom is that having a smaller house has without a doubt reduced some of my spending. That old, in need of major repair ’69 mustang that I really want - No room in the single car garage. The pinball machine that I played as a kid or the MAME arcade box - Nowhere to put it. House size definitely is related to spending in more ways than one.
The advice we are really looking for is twofold:- Would love some advice on how to pick up some alternative income streams that are very flexible with time commitments. Especially something that might be reoccurring revenue. If I could nail this one and say net just $20-$30K a year; I’d be retired.
o We have some rentals, but we are moving and I cannot keep them. The ROI for rentals in the area we are looking to move are rather paltry atm, in the 3%-6% range at best.
o Would even consider investing upwards of say $200K into a solid business with predictable returns.
- Managing our money and getting the most out of it after our primary incomes end.
My Wife is clearly behind in savings. But plans on working till about 65 and is now contributing the max amount to 401K as well as a Roth IRA I set up for her. Next step will be stashing some dollars in a savings account from each paycheck. :) Calculating here final value and since she should receive SS, I have her at $40K/year income.
I’ve lived pretty frugally since I was young and that’s how I got here. I paid for my first car to my last car and my college education from working since I was 12 delivering newspapers, collecting shopping carts, stocking shelves, mowing lawns, raking leaves and shoveling sidewalks. I didn’t buy new iPhones when they came out, I didn’t have cable until I was like 30, I didn’t buy new or expensive cars and I saved something from every paycheck. So, I know my current expenses are relatively high, but I can also chop a chunk off (see below) once I stop working from home as a 1099.
Gross Salary from Primary Jobs- Me: $80K/year
- Wife: $45K/year
- AGI = $87,500 (after taxes)
Rental Income = $10,000 (varies year to year based on vacancy and repairs), but at worst paying down that much in principle. Zero appreciation in the area I live in. Houses have actually dropped slightly in value and we did NOT get the housing boom at all. It’s essentially a town just hanging on to life.
My retirement/stock market investments are about this:
- 50% in income producing vehicles like REITS and Preferred shares (avg. return 5.9% atm)
- 10% bonds, brokered CDs (low risk)
We both are currently maxing out our 401Ks.
Current net worth just hit about $1mm. This along with the once great job, which has become more soul sucking in the last year has me really considering a change. Plus with my wife older than I, I need to plan for a retirement close to hers.
I expect her to get about $15K/yr. in SS.
Notes
No Pension or other retirement plans. 401K babies (This scares the daylights out of me btw)
I’m not expecting to get or planning for Social Security (it will be bankrupt by my payout years). If it comes, that’s a bonus.
Insurance is high because I’m self-employed. Welcome to self-employment and New York State.
Notes on Expenses
Verizon is so high because I have to have 2 landlines to work from home. This plus two iPhones on the plan (luxury I know, but I also use it for work and it’s a write-off).
Cable is a luxury that I should really get rid of. My rationalization is that everything is on auto-record and I can watch a 60 minute show in 32 minutes at any time. Time is the most precious of resources; which means I shouldn’t watch TV at all; but I’m a sucker for Game of Thrones and ice hockey.
Health insurance is off the hook for self-employed. Nothing I can do about that atm.
Gas is what it is for where we live and I drive a lot for work.
I can reduce about $9K/yr from the dry cleaning expense to the real-estate dues line items after retiring.
- Defiantly spend too much with Amazon, but it’s primarily for some dry goods and books that I use for work or reading pleasure, which is my hobby outside hockey.
- Spend too much on groceries, but having a hard time getting that down!!!! Even shopped at WalMart a few weeks to see if it made a difference. The $10 difference is NOT worth sopping their vs. Wegamns!
[li]Pets have been very expensive (more than below) this year due to illnesses and expensive medicine.
These are primarily my expenses. This doesn’t include some of my wife’s spend on incidentals. Since most big ticket items like mortgage are bundled in, I’d put her extra spend at about $10K/year.
The say that when you retire your expenses should go down. In our situation, I don’t see much of that, as there’s no big drop in home expense or child expense.
Property taxes are currently $5K/year. And this is on a house value of $60K! Insane. I wish I could move to MMM’s area in CO and pay $2K. But, South Carolina’s property taxes are about $2K, which is where we hope to go, or somewhere similar.
Liabilities Primary Home $ (30,000.00)
Investment Props $ (60,000.00)
Car Lease (Wife) $ (3,600.00)
Assets Primary Home $ 60,000.00
Investment Props $100,000.00
Car - Mustang $ 10,000.00
My 401K $500,000.00
Wife 401K $136,000.00
Cash $400,000.00
Verizon $190.00
Cable $110.00
Netflix $8.99
Internet $54.00
Gym $45.00
Car Payment $270.00
Car Insurance $100.00
Gas $125.00
Wegs - Supermarket $800.00
NYSEG Utilities $200.00
Water $30.00
Health Ins. $800.00
Tech/Web $100.00
Clothing $60.00
Travel $400.00
Books $100.00
Eating Out $200.00
Entertainment $150.00
Dry Cleaning $50.00
Yearly Web Reg/Sites $100.00
Accounting $300.00
O&M Insurance $40.00
Real Estate Insurance $25.00
Real Estate Lock box $20.00
Real Estate Dues $200.00
Other $200.00
Hockey $70.00
Amazon Prime $10.00
Amazon Purchases $50.00
Mortgage $450.00
Pets $50.00
Total Expenses: $63K/year
