I feel like I am at a real crossroads and could use some unbiased opinions. Thank you in advance to anyone who takes the time to read and/or comment on my situation. We are considering having me "retire" while my spouse continues to work.
Family of Four – Two Spouses Working Full Time, Two Children (4 and 2)
Income:
Me Gross: 11,466/month (+ annual bonus of approx 20K, which I prefer not to consider in this analysis)
Me Net: 6,816/month
Spouse Gross: 14,515/month (+ annual bonus of approx 30K, which I prefer not to consider in this analysis)
Spouse Net: 7,838/month
Rental Income: 1,570/month
Total Gross: 27,551/month
Total Net: 16,224/month
Current expenses:
- Mortgage + Property Tax = 3,750/month
- Vacation Home Mortgage = 810/month
- Vacation Home HOA = 405/month
- Electric/Gas = 162/month
- Cell = 150/month
- Water = 55/month
- Netflix + Phone = 30/month
- Grocery = 900/month
- Dining out = 300/month
- Misc Shopping = 780/month
- Gas = 90/month
- Pre-school = 575/month
- Childcare + Related Expenses = 3,280/month
- Vacation = 500/month
- Kids Activities + Supplies = 460/month
- Misc (entertainment) = 220/month
- Cleaning = 40/month
- Insurance = 300/month
- 529 Accounts = 700/month
- Cable Internet = 65/month
- Security System = 50/month
- Credit Protection = 25/month
- Uncovered Medical Expenses = 245/month
- Misc Services = 50/month
Total = 13,942
Assets:
- 401k = 605,000
- IRA = 240,000
- Small Pension = 10,400 cash value
- House = 875,000 (290k equity)
- Vacation Home = 180,000 (75k equity)
- 2005 Honda Accord = 5,000
- Emergency Fund = 50,000
- Liquid Savings = 65,000 (planning to invest somewhere)
- 529 = 22,500
Total = 2,052,900
Liabilities:
- House 585,400 – 3.875%
- Vacation Home 105,000 - 5%
Total = 690,400
Net Worth = 1,362,500
Notes:
- The Accord is paid off and my spouse has a company car
- Spouse and I are both maxing out 401K accounts
- Spouse's job covers medical insurance at 120/month (great price, I know)
- We have a lot of wiggle room with the following expenses: Misc Shopping, Childcare (would be largely eliminated), Kids Activities and Supplies, Groceries, and Entertainment
Specific Question(s):
Spouse and I both have demanding, high profile jobs (although I am afforded the opportunity to work from home). With having two young children, we are looking for a better quality of life, and to have the opportunity to be the primary influence in raising them (vs. paid childcare). We are considering me "retiring" to be with the children and also potentially pursue other potential opportunities down the road, TBD. However we are both very risk-adverse and don't want to jeopardize our financial future having worked so hard to get to even where we are today.
1. Is an early retirement for me reasonable at this point in time, considering our general "risk-adverseness"? Is it foolish considering we are in our "peak earning years" to retire now?
2. Welcome any advise on investment strategy or debt reduction (e.g. should we be putting extra money each month to our primary mortgage? Best ideas on investing liquid income beyond emergency fund?)
3. If early retirement is not reasonable at this point in time, welcome any advice on steps to achieve this sooner than later.