aroundtheblock
Confused about dryer sheets
- Joined
- Oct 15, 2010
- Messages
- 7
My wife and I have been truly blessed. We have our health, 4 wonderful children and a very comfortable (if not hectic) life. I like my work and am striving for financial independence (however I can't see myself not working even then - might consider doing some entreprenurial at that point). First time posting here. Just wanted to say 'hello'
Here are the basic facts:
- Mid 30s, married with 4 children under 7
- Income of $500k (only in last few years)
- Savings of ~$700k ($350k in tax-free / $350k in taxable)
- No pension / DB plan through employer
- Home equity of ~$500k (just bought this year)
- Fully insured - health (employer), life ($5mm+), disability, umbrella
- Both my parents and wife's parents well to-do but not rich (ie won't require financial support)
Here is our plan / approach. Your input welcome!
1. I'd consider myself financially independent at the $5m NW mark (I consider true financial independence as not having to dip into principal - ie living off interest alone); I view folks who retire 'early' and immediately begin dipping into savings (even at a modest rate) to be taking a substantial risk. Not to say it's not a rational decision, just that there is more risk attached to it than many seem to believe.
2. We invest only in CDs and MM funds - much more focused on adding to our pile via substantial year-over-year savings than putting it all at risk trying to chase returns. Since we have the luxury of a high savings rate it doesn't make sense to me to risk losing $ when high returns are not required to grow capital. My main concern is maintaining purchasing power over time - and towards this end might consider a broadly diversified equity index and commodity fund for 25% of our savings.
3. We hope to hit our NW target by my mid 40s. Of the $5m NW $3m will be liquid, allowing for a before-tax return of ~$100k, which would barely cover our living expenses
4. At this stage I'd probably down-shift career-wise and work an easier job (still paying ~$250k) in order to 1) spend more time with the family - ie less hours and travel 2) pay for the kids college (which will cost $1mm in today's dollars) 3) add modestly to our pile, perhaps indulge in a few 'extras' like a nicer cars / vacas and 4) keep health insurance.
5. Our belief is that folks were made to be productive - and are happiest when so. Moreover, we believe it's important to set a good example for our children - so they'll never know our NW (potentially demotivating) and they'll see that 'daddy works hard' to afford them their lifestyle / opportunities
6. We hope to retire in our current home (close to large city) where we'll be able to spend time with our kids (and grandkids one day!) assuming they stay reasonably close and do the snowbird thing to/from FL. One issue with this is that RE taxes very high here (>$35k/year) which may dissuade us from staying or force us into smaller home (which we'd like to avoid if possible given that we want extra room for family and kids much more likely to visit the home they grew up in)
Here are the basic facts:
- Mid 30s, married with 4 children under 7
- Income of $500k (only in last few years)
- Savings of ~$700k ($350k in tax-free / $350k in taxable)
- No pension / DB plan through employer
- Home equity of ~$500k (just bought this year)
- Fully insured - health (employer), life ($5mm+), disability, umbrella
- Both my parents and wife's parents well to-do but not rich (ie won't require financial support)
Here is our plan / approach. Your input welcome!
1. I'd consider myself financially independent at the $5m NW mark (I consider true financial independence as not having to dip into principal - ie living off interest alone); I view folks who retire 'early' and immediately begin dipping into savings (even at a modest rate) to be taking a substantial risk. Not to say it's not a rational decision, just that there is more risk attached to it than many seem to believe.
2. We invest only in CDs and MM funds - much more focused on adding to our pile via substantial year-over-year savings than putting it all at risk trying to chase returns. Since we have the luxury of a high savings rate it doesn't make sense to me to risk losing $ when high returns are not required to grow capital. My main concern is maintaining purchasing power over time - and towards this end might consider a broadly diversified equity index and commodity fund for 25% of our savings.
3. We hope to hit our NW target by my mid 40s. Of the $5m NW $3m will be liquid, allowing for a before-tax return of ~$100k, which would barely cover our living expenses
4. At this stage I'd probably down-shift career-wise and work an easier job (still paying ~$250k) in order to 1) spend more time with the family - ie less hours and travel 2) pay for the kids college (which will cost $1mm in today's dollars) 3) add modestly to our pile, perhaps indulge in a few 'extras' like a nicer cars / vacas and 4) keep health insurance.
5. Our belief is that folks were made to be productive - and are happiest when so. Moreover, we believe it's important to set a good example for our children - so they'll never know our NW (potentially demotivating) and they'll see that 'daddy works hard' to afford them their lifestyle / opportunities
6. We hope to retire in our current home (close to large city) where we'll be able to spend time with our kids (and grandkids one day!) assuming they stay reasonably close and do the snowbird thing to/from FL. One issue with this is that RE taxes very high here (>$35k/year) which may dissuade us from staying or force us into smaller home (which we'd like to avoid if possible given that we want extra room for family and kids much more likely to visit the home they grew up in)