Status: single, 53, no kids, hoping to retire in either June 2017 or June 2018
Income:
Rent: $800 per month
Royalties: $400 per month (no guarantee these will continue)
Full-time job: $5000 net
Total: $6200
Current monthly expenses:
Minimum mortgage payment, including principal, interest, property tax and homeowner’s insurance: $1294
Everything else: $1100
Total: $2394
Expected ER monthly expenses:
Minimum mortgage payment, including principal, interest, property tax and homeowner’s insurance: $1500 (I am guessing that property tax and insurance will both increase)
Everything else: $1500
Total: $3000
Assets:
Retirement funds in TIAA-CREF: $282,732
TIAA-CREF 403b: $11,517
Beneficiary IRA: $25,203
Roth IRA: $15,159 ($13,000 in contributions)
Cash: $16,590
Total Cash and Investments: $351,201
House: Zillow says it is worth $345,000, but I am conservatively using $300,000 as the value
2003 Toyota Tacoma (paid off)
Liabilities:
Mortgage: $201,575 @ 4.375%
Savings Rate so far for Jan – Oct 2014: 82%
Notes:
* I refinanced in October 2013. Because I rent out my main house and live in the accessory dwelling unit (separate structure on same property), my situation was seen as an investment property and I was unable to get a lower rate.
* I have a defined contribution plan with my employer. The employer contributes 11.4% of my salary and I contribute 8% of it to my retirement funds. I also have a 403b account and can contribute an additional $23,000 per year to it (pre-tax).
* For those of you who might be unfamiliar with a beneficiary IRA, I must make minimum withdrawals (RMDs) since my parent was over 70.5 at time of death. I can also withdraw more than the RMD. I pay tax on all withdrawals (but no penalties).
Goals:
* I am hoping to retire in July of 2017 or July of 2018. cFIREcalc confirms that this is possible. At that point, I will be 55 or 56 years old.
* I want my Cash + Investments – Mortgage Balance to be at least $420,000, which, at 4% is $16,800—plenty for me to live on.
* I would like to minimize my tax bill, but also have enough of a cash flow to meet my expenses until I am 59.5 years old.
My basic question is: How do I proceed in my last few years of employment?
With the extra income each month, should I:
• max out the 403b? (that is $1917 per month—doable)
• pay extra toward my mortgage?
• Fully fund my Roth—in 2015? Again in 2016?
• Stash cash in a taxable account (at Vanguard)?
• Some combination of the above?
Many thanks in advance!
XCIV