So I'm in the last half of my final year to RE. Date is first part of January 2015. Husband is to work through 2015 and then retire himself in 2016. Through 2015, I will be reducing expenses on the homefront, husband's job will pay for health insurance and most of our living expenses (still waiting on the numbers for his company's plan). We will be getting on the ACA in 2016.
Portfolio is a lazy three fund (85% Stocks-REIT/13% Bonds with 2% in cash) with an average expense ratio of ~0.15%. I'm quite happy with it, and has performed ridiculously well, so other than rebalancing to have a bit more in bonds and more in cash in a year or (or sooner), I don't see having to fuss with it much.
Half my portfolio is in retirement accounts (IRA, 401K, inherited IRA) and half in a taxable account (currently invested 100% in FSTVX which is equivalent to VTSAX). So I will be instituting a Roth Pipeline method, while using cash/taxable account to live off of once husband joins me in funemployment. I also have to take an MRD for the inherited IRA that I have taxes withheld from, and end up getting around 4-5K each year minimum.
I've run countless simulators - cfiresim and Fidelity's RIP (ha! Love that acronym) are my faves and using both regular, monte carlo, whatever ... still end up 99% - 100% successful over a 45+ year span. So on paper (computer) I'm good to go.
Oh, and my work situation just keeps getting crappier and I may pull the plug early, but I'm really, really wanting to make it to the first of the year. Sigh. You have no idea how hard it is to keep from blurting out "well screw you guys, I'm outta here." So one of the dangers of f-u money towards the end is the possibility of derailing the smooth and classy exit strategy I envision. But it will involve dolphins, a towel, and a book with "Don't Panic" on the cover (will be making props for my last day!) cause I'm pulling the plug at 42... "so long, and thanks for all the fish" indeed.
I am shortly (fingers crossed anyway) selling a property that will net me $42K cash. (shouldn't have any short term cap gains since held longer than a year, stepped up value when inherited, and renovations/seller fees offset the "profit" i.e. long term cap gains according to the IRS reading materials I've found so far - hell, I might be able to claim losses considering the renovation costs) so I'm debating about what to do with this cash considering that RE is fast approaching.
1. Invest. Leaning towards this, but maybe not the entire amount because I'm so close to RE, not sure if I should keep more cash somewhere.
2. Pay off current home's mortgage. Would still need to save $350/month for taxes/insurance. House is not our forever home, but planning on staying for at least 2-3 more years. Only owe 50K now, and total worth is around 110K. ADDING INFO: mortgage is 3.75%, we've never had enough interest paid to count towards taxes (lower cost house means not enough interest to pass that threshold). Don't mind having a mortgage payment since it is around $600/mo.
3. Keep as cash. We have an emergency fund that we try to keep around 10K. Agreed upon minimum level with husband. But with me no longer bringing in a paycheck shortly, might be a good idea to keep a larger buffer/living expenses for next two years to avoid having to sell off funds prematurely.
So what am I missing as far as stuff to set up for being "funemployed," what should I do with the cash, and holy crap I can't believe I'm this close....