Could use your advice – I am finally within site of retirement! At least military retirement anyway. I’ll lay out my situation, and will welcome your thoughts.
Currently at 2 ½ years away from retirement. Expected retirement pay will be around $3550. I currently live on around half my income (I net around $5806 after taxes, pay a total of around $1200/mo in taxes), which includes $1100/mo rent. In retirement, I expect to be able to live on around $1300-$1800/mo (assuming no mortgage) plus will need to put away around $1000 (or reserve that amount) per month to pay things like propertytaxes, have money for vacations, save for a new car, etc.
I plan to buy some property in an ideal location. Currently I own a home that could probably sell for around $120k (paid for) – I will live in that home for about a year while searching for my ideal home. Own two other homes, one in Colorado and one in Georgia – both have lost around $20-30k in value due to current housing market. Colorado house (financed at 4.625%) – bought for $146k and could probably sell for around $118k. Georgia home (financed for 6.5%) bought for $136k and could probably also sell for around $118. Owe $43k on the Colorado house, $103k on the GA house. I plan to sell all three at some point and put the money towards my dream home and property, which I plan to spend no more than $250-$300k for. All homes are currently rented thru July of 2014. I would like to sell the CO and GA properties, one in 2014, and one in 2015. I figure it would help decrease taxes during what will likely be my two highest earning years. I would likely still be selling at a loss, and there’s a chance that both of these properties could further lose value since they are both in areas where divisions are closing a brigade each.
So…total net home assets is approx. $210k as of right now.
So here is what I currently have in investments (approximates):
$66k TSP
$68k Roth IRA
$25k (REIT’s) – at the rate it’s going will probably be retirement before I can pull out that money
$8k (mutual fund savings for education, niece and nephews)
$10k cash (emergency fund, which I plan to beef up to about $25k before I retire)
I have been paying approximately an extra $3k per month on the Colorado house. I have not been saving more than 1% in TSP recently, because I’ve been following the Dave Ramsey plan and trying to pay down the lowest balance house as fast as possible. I also plan to not work at all the first year, and after that try some home based businesses which I don’t want to count on an income for a while, and may never earn much money again, but think I’ll be happy doing them, and they should have generally low startup costs). Here are my questions.
Do I increase my TSP and/or Roth IRA savings to 15% of my salary and lower my current taxable income? This would lower my ability to pay extra on the house or save by approximately $2k per month, but would lower my current taxes and give me the ability to save more for later whereas in the future, I’m not sure how much extra income I’ll have to save for retirement.
Am I foolish to sell the properties off in the next two years? I really don’t want the hassle of having these rental homes in other states after I retire? I would much rather use them to buy a new home in cash rather than have them fund a mortgage.
Should I start stockpiling cash now (the extra 2-3k I have per month), or should I continue to pay on these mortgages?
There is an 80% chance I’ll be out in 2 ½ years. The only way I’d stay in longer is if I receive an assignment of choice closer to where I plan to retire. Finally, I am currently not married, no children, and 40 y/o. Thanks for the input!
Currently at 2 ½ years away from retirement. Expected retirement pay will be around $3550. I currently live on around half my income (I net around $5806 after taxes, pay a total of around $1200/mo in taxes), which includes $1100/mo rent. In retirement, I expect to be able to live on around $1300-$1800/mo (assuming no mortgage) plus will need to put away around $1000 (or reserve that amount) per month to pay things like propertytaxes, have money for vacations, save for a new car, etc.
I plan to buy some property in an ideal location. Currently I own a home that could probably sell for around $120k (paid for) – I will live in that home for about a year while searching for my ideal home. Own two other homes, one in Colorado and one in Georgia – both have lost around $20-30k in value due to current housing market. Colorado house (financed at 4.625%) – bought for $146k and could probably sell for around $118k. Georgia home (financed for 6.5%) bought for $136k and could probably also sell for around $118. Owe $43k on the Colorado house, $103k on the GA house. I plan to sell all three at some point and put the money towards my dream home and property, which I plan to spend no more than $250-$300k for. All homes are currently rented thru July of 2014. I would like to sell the CO and GA properties, one in 2014, and one in 2015. I figure it would help decrease taxes during what will likely be my two highest earning years. I would likely still be selling at a loss, and there’s a chance that both of these properties could further lose value since they are both in areas where divisions are closing a brigade each.
So…total net home assets is approx. $210k as of right now.
So here is what I currently have in investments (approximates):
$66k TSP
$68k Roth IRA
$25k (REIT’s) – at the rate it’s going will probably be retirement before I can pull out that money
$8k (mutual fund savings for education, niece and nephews)
$10k cash (emergency fund, which I plan to beef up to about $25k before I retire)
I have been paying approximately an extra $3k per month on the Colorado house. I have not been saving more than 1% in TSP recently, because I’ve been following the Dave Ramsey plan and trying to pay down the lowest balance house as fast as possible. I also plan to not work at all the first year, and after that try some home based businesses which I don’t want to count on an income for a while, and may never earn much money again, but think I’ll be happy doing them, and they should have generally low startup costs). Here are my questions.
Do I increase my TSP and/or Roth IRA savings to 15% of my salary and lower my current taxable income? This would lower my ability to pay extra on the house or save by approximately $2k per month, but would lower my current taxes and give me the ability to save more for later whereas in the future, I’m not sure how much extra income I’ll have to save for retirement.
Am I foolish to sell the properties off in the next two years? I really don’t want the hassle of having these rental homes in other states after I retire? I would much rather use them to buy a new home in cash rather than have them fund a mortgage.
Should I start stockpiling cash now (the extra 2-3k I have per month), or should I continue to pay on these mortgages?
There is an 80% chance I’ll be out in 2 ½ years. The only way I’d stay in longer is if I receive an assignment of choice closer to where I plan to retire. Finally, I am currently not married, no children, and 40 y/o. Thanks for the input!