First time poster here. Just discovered MMM ~1 month ago and it’s been a huge time suck ever since.
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Out Stats
Me (35, Electrical Engineer) – 160,000-180,000 + Cash balance pension +small 401K match
Husband (34, Mechanical Engineer) – 90,000-105,000 + small 401K match
Boy (3, future engineer) – 0. But he does have his grandmother wrapped around his little finger and therefore she buys him almost everything he wants or needs. So we spend very little on him.
6 week old parasite living in my uterus that potentially will become future engineer #2 this spring.
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Debt – Mortgage 124,000 (Interest rate 4.25% fixed)
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Savings
401Ks – 460,000
Roth IRAs – 82,000
Cash Balance work pension – 120,000 (will roll into IRA/401K when I retire)
ESPP – 22,000
Mutual funds- 51,000 (includes college fund for future engineer(s))
Cash – 133,000
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Our spending/saving. Not a concern for me. I’m sure there are areas we can improve but for now we spend WAY less than what we make. Hence the large amount of cash. I have no doubt we will be able to happily live and save on my husband's income.
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Onto the questions. Do we have too much in our 401Ks/IRAs? And what should we do with the large cash surplus we have?
Even before I found out I was knocked up again, I was considering retiring in 6 months to 1 year. Mostly because I am getting big-time job burn-out. I work in a demanding industry that pays well. But I recently I came to the realization that we don’t need to make that much money to live the live we want to live. So it’s making working less and less bearable.
Husband stated he will keep working, for at least 10 years. He works for a good company, and likes his job.
Here’s my thought process that leads me to think we have too much in 401K: Right now we’ve got ~662K tied up in funds we can’t touch, without penalty, until we are 59.5. That’s ~60% of our net worth and over 75% of our liquid funds. If we want the option for husband to retire at 45, I think we need to start scaling down our IRA/401K investing and start putting more in other mutual funds.
As long as I am still working we will keep maxing out our 401K contributions b/c we need every friggin tax break we can get. But when I retire, I think husband should drop down his contribution to the min that his company matches and we should put the difference in other after-tax. Any fatal flaws in this logic? Other options to consider?
As far as the 133K we have sitting around doing nothing. I’m trying to figure out the best decision for what to do with it. Should we pay off all or part of the house or invest? Is it stupid to pay off all but 50-60K then refinance the remaining balance? Right now we could get a 10 year fixed at ~3.25%. My reasoning for this is that it would lower our required monthly payment by about 1200/month, which would give us more money to invest now.
I’m new to this early retirement and managing my money stuff. We’ve been pretty much operating on auto-pilot in this area for our whole lives. So I’m learning a lot, very fast. Any input/thoughts/pointing out of things I am missing will be greatly appreciated.