Thanks for giving me comments...just putting all this information together took a while and was a great exercise!
US: ME 49, HIM 51, KIDS 18,16,11
Married Filing Jointly
Washington State (no state income tax)
TARGETED RETIREMENT DATE: JUNE 2020
Income: Him 115,000 government employee - loves his job
Me (manager of our real estate portfolio) 65000 net see below under rental income
Dividend income 4243
Capital Gain 2416
Pretax Deductions according to W2 statement:
Him: 24,500 into 457 plan
21,047 employee sponsored healthcare coverage
Rental Income 155,000
Mortgage Interest: 20,000
Mortgage Principle: 28,000
Depreciation:23,000
Other Expenses: 47,000
Net 65,000
Mortgages paid off in 15 years: 520k balance 4% interest
Taxable Income 171,000 last year's tax return (expected to be close to that)
Taxes: 24,336 last year expected to be about the same this year
Current Yearly Savings: 24,500 (457 from above)
Max out Roth IRAS each -6500,5500
27,000 in taxable accounts
Current Expenses
House Payment: Mortgage : 1,088 monthly P:5684 I:7372 (250k loan, 30 amt, 3.25% - 25 years left)
Property Taxes: 560
House Maintenance: 100
Term Life Insurance: 10 (150k policy on my husband began 15 years ago)
Haircuts: 20
Utilities: 225 Gas, Electric, Water and Sewer Garbage
180 Phone, cable, internet (no other option in my rural area)
Cars: 3 cars,
100 maintenance?
400 gas
150 insurance
Charity: 100
Child activities: 150
Holidays: 300
Clothing: 200
Computer: 10
Dining out: 100
Grocieries: 800
Medical: 100
Cell phones: 85 (four phones on TING)
Travel: 1000 (not necessary but wanted)
Total: 7676 per month = 92000 per year
ER expenses: I would like to plan for 115,000 in expenses moving forward. I expect my expenses to increase for a while as we pay for healthcare and travel more with our family maybe. As we get older 65+ and my kids get older my expenses should go down, but maybe not?. Tax rate bracket will be 22%?
ASSETS:
35,000 Expected spending from Real Estate per year until age 67 when mortgages are paid off and then income increases to 95k conservatively (remaining 30k amount is saved because I am so conservative - Currently netting 65k)
42,540 Pension taken beginning Age 67 of husband
19,884 Social Security husband at Age 62
9,948 Social Security Me at my age 62
500,000 in Taxable Accounts + (30k x 2 years)
131,000 Deferred Comp 457 +25000x2 (2019&2020)
200,000 traditional IRA
286,000 Roth IRA +13,000 x2 (2019&2020)
525,000 House Equity
750,000 Real Estate Equity
100,000 college fund for kids separate from retirement funding, this is enough for 3 kids, they pay the rest
Here’s How I plan to do it….
At age 67… the office park will be fully paid off and we can draw 93,000 from it (35,000 grows to 45,000 in rent plust 48,000 in payments). We will have 42,450 in state pension and 32,600 in social security payments at that time too. Total income will be 95k+42k+32k = 169k At that time, 115,000 expenses inflates to 155,000, so we will be 14k more income than expenses. So all is covered without any income from other sources. Gravy.
Now how do I fund ages 52 to 67? The big 3 questions always......
Yearly required amount: 115,000-35,000 from Real Estate = 80,000 per year until social security kicks in at age 62
COLA 3% increase
5% return on all balances per year except Real Estate increase in rent 2.5%
DRAWDOWN ORDER? : 1)Deferred Comp - can be used as soon as separation from employer 2) Taxable 3) Traditional 4) Roth
IRA (457)
Age Year Spending Pension SS Taxable Traditional Def Comp Roth
(Beginning
Balance 2020) 560,000 200,000 181,000 309,000
53 2020 80,000 0 0 588,000 210,000 110,000 324,500
54 2021 83,000 0 0 617,400 220,500 32,553 340,725
55 2022 85,000 0 0 597,450 231,525 0 357,761
56 2023 88,000 0 0 539,322 243,101 0 375,649
57 2024 91,000 0 0 448,322 255,256 0 394,431
58 2025 94,000 0 0 376,738 268,018 0 414,152
59 2026 97,000 0 0 298,575 281,418 0 434,860
60 2027 100,000 0 0 313,504 295,489 0 456,603
61 2028 103,000 0 0 226,179 310263 0 479,433
62 2029 105,000 0 19,884 152,488 325,776 0 503,404
63 2030 108,000 0 20,481 72,112 342,065 0 528,574
64 2031 111,240 0 29,832 0 359,168 0 545,002
65 2032 116,802 0 30,727 0 377,126 0 488,255
66 2033 122,642 0 31,649 0 395,982 0 425,667
67 2034 128,774 42540 32,598 0 415,781 0 446,950
(After age 67 Office Park mortgage is paid off and contributes 93,000 to living expenses instead of 35,000)
(Pension kicks in at 42,540 and SS is 32,598 = 168k covering living expenses of 155k)
67 DONE!!! See above information on funding the rest of retirement
We have an 11 year at home until age 18. So we won't probably go off too much. My guess is my husband will keep his job for 2-3 more years and we will travel a whole bunch while he works...which is why travel expenses go up.
Questions: There are a LOT of scenarios for taking your pensions and SS.... how do I know which one is best?
Do I have the correct draw down order?
How do I calculate my RMDs and what age should I take them?
When do I convert my traditional IRA to Roth?
What do I estimate my tax bracket to be after husband stops working?
Do I need a trust?
I feel like I am in my peak spending years do to the extra costs of teenagers and 11 year old, until they get out of the house. I feel like when it is just the two of us, our spending will go down, but idk.... is this true?
Do i follow the simple path to wealth guidelines or do I invest money according to a 60/40 split or bucketize? Right now I am 80% index funds 20% cds and MMarket accounts
Our parents are 80 now, and I definitely foresee spending a lot of time back in the midwest in order to take care of them in 7-10 years...
Thank you very much for all your comments!
