Trying to decide if we feel confident enough to pull the trigger on a partial 'retirement.' I use quotes, since our situation is a little different than most I've seen.
DH is 53, I'm 47, but we have two very young children (2.5 and a newborn). We both grew up in very frugal environments, and have managed to save a nice nest egg, but also enjoy the nicer things that we've been able to afford in the last 15 years or so. We're not interested in significantly downsizing our lifestyle at this point, especially when it comes to spending on things that benefit the kids (music, athletics, education, etc...). We don't want them to be making sacrifices for our decision.
I'm very well compensated, so am hesitant to walk away from that at my age, but the intensity, schedule and commute is a huge strain on our family and my health. I would love to be a SAHM, but know that the likelihood of being able to re-enter the workforce at a similar salary will be low given my age, so trying to plan as though this is it. DH intends to work for several more years, assuming his job holds, but he spent several years before this job un/under employed, so we don't want to bank on him working more than the next 2-3 years.
I've gone through the Important Qs post in the FAQ, and have tracked our spending pretty closely. I think I have a reasonable budget laid out, with the caveat that we spend a ridiculous amount of $ right now on help just trying to keep our head above water, given our jobs. (e.g. a ton of takeout/delivery, nanny, lots of extra childcare in AM and evenings, etc...). I'm assuming in our budget that a lot of this goes away. That said, there are obviously a ton of unknowns that come with a time horizon this long and a young family, so it's hard to know for sure that our budget is going to be accurate in 10-15 yrs.
So the numbers/plan:
We have a little over 5.8mm in assets, all in vanguard funds, 401ks, IRAs, and cash/bonds. Currently 70% equities.
We have another chunk of $ invested with an asset management firm. I'm assuming we will bring in another 350K from that over the next 2-3 years--I think I'm being pretty conservative with this return estimate, but there is of course risk here.
I'm assuming DH continues to work through 2021, at a salary of 200k--this is not including potential bonus of 30% of salary. So far, all is going well with this job and I would assume if it continues to go well, he'd like to stay longer. His position is in the middle of being reclassified and it looks like his salary has the potential to double in the next 18-24mo, but not counting on this.
No pensions. DH will receive max SS benefit. Mine is ~18K/yr. The only other additional income stream we have is $ coming in from an investment DH made in a bar several years ago. To date that's been ~20-30k/yr, but I'm not including it in our calculations.
Budget:
I'm embarrassed to actually type this, but I'm budgeting 280k/yr, including taxes, healthcare, $ for home maintenance/improvements, fully funding 529s, etc... Note that there are a ton of things in here which I *think* are conservative or go away as kids get older, etc..., but obviously some other stuff I'm guessing on. There is about 60k of spending that I think could be eliminated if we needed to without impacting kids activities, etc...
As part of this plan, we would be selling our house and moving to a new area. This should give us the ability to be mortgage free, with equity in a new home at ~2-2.3mm. I can't imagine us wanting the same type of home in 20 years, but am assuming we stay there and expenses don't decrease.
If I'm using firecalc correctly, the parameters I've entered above put our max annual spend rate at 95% success at 270k, assuming I live to 90, and 280K assuming I live to 85. I'm ok with these success estimates, given that I think I'm making a fair number of conservative estimates and there is flex in our spend, but am trying to figure out what I'm not taking into account.
My backups/old lady eating cat food prevention strategies:
If we see significant correction in the next few years I would for sure be looking to re-enter work force and we would be making significant adjustments to our spending.
Any place we buy would have at least one area which could be rented out (inlaw quarters/pool house) to generate additional income.
Lifestyle changes/move to lower COLA. I would love to do this now, but DH still wants to live in an expensive urban area.
Would love any input. Are we nuts to be considering this
Also, is there any data on the impact on portfolio success when pulling the trigger during a big bull run? This is maybe my biggest worry.
DH is 53, I'm 47, but we have two very young children (2.5 and a newborn). We both grew up in very frugal environments, and have managed to save a nice nest egg, but also enjoy the nicer things that we've been able to afford in the last 15 years or so. We're not interested in significantly downsizing our lifestyle at this point, especially when it comes to spending on things that benefit the kids (music, athletics, education, etc...). We don't want them to be making sacrifices for our decision.
I'm very well compensated, so am hesitant to walk away from that at my age, but the intensity, schedule and commute is a huge strain on our family and my health. I would love to be a SAHM, but know that the likelihood of being able to re-enter the workforce at a similar salary will be low given my age, so trying to plan as though this is it. DH intends to work for several more years, assuming his job holds, but he spent several years before this job un/under employed, so we don't want to bank on him working more than the next 2-3 years.
I've gone through the Important Qs post in the FAQ, and have tracked our spending pretty closely. I think I have a reasonable budget laid out, with the caveat that we spend a ridiculous amount of $ right now on help just trying to keep our head above water, given our jobs. (e.g. a ton of takeout/delivery, nanny, lots of extra childcare in AM and evenings, etc...). I'm assuming in our budget that a lot of this goes away. That said, there are obviously a ton of unknowns that come with a time horizon this long and a young family, so it's hard to know for sure that our budget is going to be accurate in 10-15 yrs.
So the numbers/plan:
We have a little over 5.8mm in assets, all in vanguard funds, 401ks, IRAs, and cash/bonds. Currently 70% equities.
We have another chunk of $ invested with an asset management firm. I'm assuming we will bring in another 350K from that over the next 2-3 years--I think I'm being pretty conservative with this return estimate, but there is of course risk here.
I'm assuming DH continues to work through 2021, at a salary of 200k--this is not including potential bonus of 30% of salary. So far, all is going well with this job and I would assume if it continues to go well, he'd like to stay longer. His position is in the middle of being reclassified and it looks like his salary has the potential to double in the next 18-24mo, but not counting on this.
No pensions. DH will receive max SS benefit. Mine is ~18K/yr. The only other additional income stream we have is $ coming in from an investment DH made in a bar several years ago. To date that's been ~20-30k/yr, but I'm not including it in our calculations.
Budget:
I'm embarrassed to actually type this, but I'm budgeting 280k/yr, including taxes, healthcare, $ for home maintenance/improvements, fully funding 529s, etc... Note that there are a ton of things in here which I *think* are conservative or go away as kids get older, etc..., but obviously some other stuff I'm guessing on. There is about 60k of spending that I think could be eliminated if we needed to without impacting kids activities, etc...
As part of this plan, we would be selling our house and moving to a new area. This should give us the ability to be mortgage free, with equity in a new home at ~2-2.3mm. I can't imagine us wanting the same type of home in 20 years, but am assuming we stay there and expenses don't decrease.
If I'm using firecalc correctly, the parameters I've entered above put our max annual spend rate at 95% success at 270k, assuming I live to 90, and 280K assuming I live to 85. I'm ok with these success estimates, given that I think I'm making a fair number of conservative estimates and there is flex in our spend, but am trying to figure out what I'm not taking into account.
My backups/old lady eating cat food prevention strategies:
If we see significant correction in the next few years I would for sure be looking to re-enter work force and we would be making significant adjustments to our spending.
Any place we buy would have at least one area which could be rented out (inlaw quarters/pool house) to generate additional income.
Lifestyle changes/move to lower COLA. I would love to do this now, but DH still wants to live in an expensive urban area.
Would love any input. Are we nuts to be considering this
Also, is there any data on the impact on portfolio success when pulling the trigger during a big bull run? This is maybe my biggest worry.