Welcome to the forum ken830. You will find many persons here that will give you lots of great advice and encouragement. Look forward to hearing from you again soon.
Welcome Ken,
Living Below your Means, plus saving & investing will get you to your desired endpoint sooner rather than later. Knowing your priorities & having a plan is the 1st big step. Good luck & remember to enjoy the journey!
Thanks for the warm welcome! I'm feeling encouraged already!
I feel guilty whenever I read about how I should live below my means. I mean, when it comes to everyday things, I don't spend extravagantly. I don't buy/drink coffee everyday (I've never even tried coffee), the shirt I happen to be wearing was a gift (from my then-girlfriend, now wife) 10 years ago, I use coupons, comparison shop, buy used stuff from Craigslist/ebay, and turn off the lights as I leave the room.
One big thing that I feel guilty about and struggle with is that I live in one of the most expensive cities in the San Francisco Bay Area, which is itself, one of the most expensive metro areas in the country. And we're even thinking about moving into a slightly more expensive city to get access to better public schools. The reason is that I was raised in San Francisco and me and my wife have lots of family and friends here. I want my kids to be close to their grandparents, great-grandparents, uncles, aunts, cousins, and other family. My kids see my in-laws nearly everyday and they see my side of the family 2-3 times weekly. My career as an electronics engineer is also a strong draw for me to stay in this area. The reason I feel guilty is I think I could immediately sell my home, move just an hour or two away, and probably have enough to semi-retire either now or in a few years. Moving even further to the Central Valley or out of state would probably net me a mansion (by my standards) and an extra 1/2 to 1 million dollars. In the back of my mind, this is always the safety net plan if we run into financial troubles (like double-loss of jobs).
I also feel this way every time I read early retirement articles or spending/budgeting techniques. It just feels like it doesn't apply to anyone living in the Bay Area because our housing expenses are so out of whack compared to most of the rest of the country. Even if I pay off my entire mortgage today, I would still continue to spend $1,200 every month for property tax! I can't even imagine what it's going to be in a few decades. That just sounds crazy. Feels like a rat race but I don't see much of an alternative.
I wonder if others feel this way. And am I crazy to stay?
Can you transfer this IRA into your present 401k plan? That would clear the decks for backdoor IRA for you. (Your IRA holdings wouldn't impinge upon your wife's ability to do backdoor though!) Here is a discussion of this tool:
https://www.nerdwallet.com/blog/investing/rollover-ira-to-401k/ And another:
Understanding The IRA To 401k Reverse Rollover
Otherwise, I'd recommend saving in a taxable account. For early retirees in particular, having a good amount in those accounts is nice. (DW and I are soon-to-be semi-early retirees at 57/56 and are grossly disproportionate towards tax deferred accounts. That would have present a problem to work around if we had retired a couple of years earlier. As it is, we'll be doing aggressive roth conversions in retirement to avoid tax issues down the road....)
I'm holding a lot of TSLA in my IRA that I'm not ready to give up yet.
But I didn't know the backdoor trick would still work for my wife! I will definitely need to explore that option.
Also that second link you posted led me to the article on "Mega Backdoor Roth IRA", which is the first time I've learned of this technique. Very interesting, but boy does that make it complicated for me. I think I have the option for after-tax 401k contributions, but not my wife, so my IRA still gets in the way. But it's very informative and interesting for me to keep in mind if I find myself still working as I get closer to the 55/59.5 age...
But overall, you're right. I don't want to be too lopsided in accounts that are age-restricted if the ultimate goal is early retirement. I've been considering using one of those robo-advisors with a taxable account. They're supposed to be extra tax-efficient due to automated tax loss harvesting algorithms.
If only I didn't have a full time job, long commute, and two young kids, then I would have time to figure all of this out! Isn't that ironic?