Not really looking for "cut this, cut that" suggestions, as I know we still have some facepunch worthy spending (though mostly it's on vacation travel), so I'm leaving out the expense side of things, save for one specific thing. Looking more for thoughts on what to do with "extra" money.
Combined Income: $215K - $225K (depending on amount of wife's bonus)
Current annual savings (not incl. pension, SS):
401k (me) - $17,500 ($24,440 w/ match)
401k (wife) - $8528 ($14,274 w/match - currently; wife just got a nice raise, so she is going to increase this, just not sure how much yet)
Savings - $13,200
Mortgage principle - $7,500
Assets:
Home - $485K-$500K
401k (me) - $460,000
401k (wife) - $70,000
IRA (wife) - $63,000
Savings - $45,000
Liabilities:
Mortgage - $406,500 (4.25%)
Student loans - $20,000 (2.35%)
Currently dropping $1,000/month into student loans ($955 is going toward principle). Plan is to continue this until the end of this year, then pay off the balance, which will be around $15,000, from our savings account. Now, I know that mathematically, this doesn't make a ton of sense, i.e., paying off a 2.35% loan over a 4.25% loan, or investing the money in the market instead since both are low interest rates, but I want that student loan albatross off my neck more than anything. Been paying it for 16 years (@$80K initial loan value), but just got serious about paying it down in the last 3-4 years.
The plan after that is to divide the $1,000 monthly "windfall" (if you will) between catch-up contributions to my 401k (I turn 50 next year so can start catch-ups in January) -- @$500/month -- with the other $500/month going toward either additonal savings contributions or mortgage paydown. I don't expect to be mortgage-free when I FIRE (and wife is likely 5-7 years behind me on that front), and have factored my share of the mortgage payment into my FIRE calculations. But I would like to build the equity up and pay less interest in the long-run (then probably downsize to something we can pay cash for with the proceeds from selling current house down the road, maybe 10-12 years from now).
I want to build the savings account up into a suitable cash (or equivalent) buffer for covering expenses in a market downturn, so I can avoid withdrawing from the 401k, which should only require between $13,000-$15,000 annually (the remainder of my share of expenses will be covered by my pension), but I also want it to serve as an emergency fund for other things as well (if wife were to lose job, expensive home repair, new car, etc).
The question is, how much is enough in that account? In my mind, I've always wanted to have $100,000 in that account, but I'm starting to think that's overkill. Perhaps $50K-$75K is sufficient and we should then divert not only the "windfall" money from no more student loan payment, but also the current $1100 monthly addition to savings, to either the mortgage or a taxable investment account.
So the related question is, once the cash (or equivalent) savings is "enough," what to do with the money currently going there?
I hope this is enough info to get the suggestions I'm hoping to get from you all.
edited to update wife's 401k contributions; previous numbers were old data