Its taken me quite some time to work up to doing a case study. The good news - I'm doing better than I would have thought (because I tend to catastrophize) and doing better than I have in the past (took a huge hit in a divorce and lawyers bills 4 years ago). I want to make sure I am on track in general, and with an eye towards retirement in ~15 years (likely not ER sadly). I struggle with tracking my spending, but know I spend a lot in some categories (I love to travel with my kids, as an example). Willing to make changes to get myself more in line with realistic retirement goals.
Anyhow - here it is - please be kind - and many thanks in advance for looking this over and any advice or guidance.
Topic Title: How to do better with retirement planning and investments?
Life Situation: 47 y/o single parent
IRS filing status: single head of household
number & ages of dependents: 13y/o. I also have a 10 y/o but ex claims him on taxes.
Gross Salary/Wages: 10,392
Before any deductions (per 2 pay periods there are 26 pay periods per year)
Pre-tax deductions:
401K (TSP) 1384
Non-taxable 374
Paid by employer: (Not counted in income calculation)
401K matching 377
Retirement Plan 1294
Other Ordinary Income:
Child Support 2450
Rental Income, Actual Expenses, and Depreciation:
Monthly rental income: 750
Costs (approximate): accounted for under spending (approx. Ό utilities)
Adjusted Gross Income: 11,834
Taxes and other payroll deductions:
Health insurance 175
FSA HC 200
Tax (state, federal, Medicaid, etc) 1991
NET INCOME 9468 (pay, rent, child support)
.
Expenses
Mortgage 2200
Principal and interest 1443
Extra on Principal 251
Tax/Insurance 506
Car (insurance/fuel/repairs) 200
Groceries 500
Eating out 100
Movies/Netflix/Entertainment 100
Childcare 135
Gym Membership 80
Activities (sports, equipment, coaching, etc.) 300
Clothing 150
Haircuts, pedicures, etc. 60
Vacation 1000
Healthcare 350
Allowance 100
Utilities 341
Gas 60.00
Electric 105.00
Phones 80.00 (3 phones)
Internet 40.00
Water 56.00
Household repairs/maintenance 800
large expenses typically replaced all windows this year, roof a couple years ago, etc. Expected furnace/AC <5 years
Maid 400
Life Insurance 80
Animals 100
Misc. Household 350
Unaccounted/Misc. ~ 460
TOTAL EXPENSES ~ 7806
Additional Savings Contributions: 1650
Vanguard fund (life strategy) 450
Savings Contribution 800
College Accounts Contribution 400 to state 1 investment fund
Anticipated large expenses:
1. New furnace and A/C < 5 years 10000?
2. Bathroom/bedroom remodel next 5 years 20000?
Expected ER expenses: Have not calculated. I will relocate if my children move out of the area and/or to a lower COL area.
Assets:
House Market value approximately 575,000
Car KBB 15,000
Checking 5000 10,000
Emergency / cash savings 22000
TSP 135,000 (6.8% avg annual return)
Vanguard Accounts
Brokerage (life strategy moderate growth) 31,700
Traditional IRA (500 index) 9,100
SEP IRA (Long-term treasury) 30,685
Roth IRA 1 500 index and Short-term bonds 83,600
Roth IRA 2 Target retirement 2035 18,000
Total Assets: 930,085
Additional Savings
Kid 1 College Savings (state 1) 4900
Kid 1 College Savings (state 2) 39,500
Kid 1 College Savings (Vanguard) 40,000
Total Kid 1 (8th grade): 84,400
Kid 2 College Savings (state 1) 4900
Kid 2 College Savings (state 2) 24,300
Kid 2 College Savings (Vanguard) 19,000
Total Kid 2 (4th grade): 48,200
Total additional savings (college): 132,600
Liabilities:
Mortgage: 268,000 @ 3.5% 30 year note, 26 years remaining
No other loans, debts, or liabilities
Net worth (not including college savings): 662,085
Specific Question(s):
1. What to do about other investing I exceed income requirements for IRAs and need to park the money elsewhere.
2. Will I be able to retire in ~15 years? What else can I do w/ my investments to improve upon what I am doing right now? Earliest possible (theoretical) retirement is in 7 years at age 55 (20 year pension), which I believe will not start paying out until age 62. If I wait to age 62 I will have 27 years in. I am not sure what will be feasible I am likely to wait until age 62 just so my kids are through college. There are sometimes early retirement incentives so that may play a roll, but there is no way to know now when/if one will be offered.
3. I really want to increase payments towards the mortgage because 26 years is too long to be paying it down. I would (emotionally) prefer to have the housing expense lower at time of retirement. Suggestions?
4. I know spending is some categories is CRAZY and I am looking at ways to cut back. I have tried multiple times tracking my spending and I dont manage to keep it up this is what I could reconstruct from my bank statements. Some areas may be higher and others lower.
5. Vanguard called me and offered to put together an investment plan they took some details and that for a fee of .03% per year (of the total managed funds) would manage the funds for me including balancing and handling any changes to the plan based on changes in my circumstances. This would include whatever could be done about backdoor roths and such. I am overwhelmed by these financial details and have great admiration for the people on this forum who master this stuff. Im waiting to hear about what their plan proposes before I make any decision. Id like to see what recommendations come from this case study as well.