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39 y/o newbie
Old 07-15-2013, 10:43 AM   #1
Confused about dryer sheets
Join Date: Jun 2013
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39 y/o newbie

Hi! I am thankful I found this site and wish I had found it years ago. Dh is 42 and works for megacorp for 18 years. I am self employed and work part time during the school year. We have 2 kids 8 and 11 and no debt. We have always LBOM but never had a budget. I will admit I have never paid much interst to our finances because we had "no debt and am not super spenders" foolish I know. I decided to see where are money is spent and it was a wake up call on my frivolous spending. I am now using to budget. Just started mid. June. I have a ballpark figure (by looking at annual cc statements and checkbook past 2 years) that we spend 60k a year. I want to get the number down and put excess our taxable account. We max out 401k, Simple IRA, both Roth's. i would like dh to ER since he is no longer satisfied with his job. I would keep working during the school year and we could take the summers off to travel. Dh has lots of vacation time but can't take off for more than 2 weeks at a time. Neither of us will receive a pension. So far between 401k, simple IRA, and both Roth we have 800,000. We have 85k in taxable account which will be $150k had dh sell ESPP. I am confused on how much we need in taxable account for him to retire early. I will need taxable to last from his ER (whatever year that would be) to 59. Dh currently makes 100k and I make 30-40k. I would project when he ER and kids are still in school I would increase my work and make 40-50k. Dh is not the type to walk away from a good paying job. He always thought we would ER when youngest completed college. I want to him ER sooner but have not brought it up since I need to learn more and get my ducks all in a row. We follow Gone Fishin' portfolio. I can earn more and plan to when I go back to work in Sept. which the money will go to the taxable account and 529. Forgot to add with also have 6 months emergency fund, 4 yrs. pre-pay college for 11 y/o and started 529 for 8 y/o. So how much taxable do we need? Healthcare is a big worry we live in TX if that matters. Any recommendations, blogs, or books for a newbie?
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Old 07-15-2013, 11:08 AM   #2
Dryer sheet wannabe
Join Date: Dec 2012
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You guys have done well saving so much at your age. I'm not going to comment on your specific situation since I don't have experience budgeting for kid's expenses.

However, as a comparison, my wife and I are 47, and with a company Pension (that I'll eventually take out as a lump sum), we're looking at being financially independent by 55. By that time, including the pension lump sum, we should have about $1.4 to 1.6 mil.

Since we don't have any kids, our yearly expenses right now are about $35,000. We have our LBOM's in common
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Old 07-15-2013, 03:30 PM   #3
Confused about dryer sheets
Join Date: Jun 2013
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Cdn_47- thanks. I think because we have always been good savers I wasted lots of years not being focused and having a game plan.

As a newbie the world of investing is like speaking a foreign language. Slow process for me to learn but I am trying.
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Old 07-15-2013, 10:21 PM   #4
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You've got lots going on, but I think you've got a really good start. Getting your budget really worked out is the most important thing, because until you know what you spend every year, you won't know how much you need.
There are ways to access some of the money in your ROTHs (contributions can be withdrawn at any time), 401k (via 72T) that you can start to look into, so your taxable balance isn't as critical. Also, if you're going to keep working, and if you reduce your spending a bit, you might only need to make up 10-20k per year. And maybe DH would want a part time job during the school year as well.
Healthcare is changing a lot right now, you'll probably have a better answer on this in just a few months.
I think there's a list of good books somewhere on the site, and people will probably chime in with specific recommendations as well.

I hope you keep posting, we're close in age (38) and assets, but my expenses are a bit higher even though I don't have kids. I'm hoping to change jobs in a few years and find something part time for hubby and I to make $40-$50k a year, and only draw down our accounts by a little bit. I think you're closer than I am to FI (financial independence), so I'm excited to see what you figure out in the next few months.
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Old 07-17-2013, 06:36 AM   #5
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Congratulations on the amount of savings in tax deferred accounts. The amount of savings in the taxable category is pretty small however for your ages and ER. You didn't state how your husband views his job but sort of implied that he is not in love with it. He is however, the main financial contributor and after 18 years at megacorp has developed a set of skills that has some value. For many, going back to a good paying job after only a few years out of the workforce is unlikely. If he falls in this category, and depending on how he views the current job, you might consider staying put for a few years, continue to fund retirement (especially the relatively small taxable component) and fine tune your ER plan. And kudos on the savings for kids college. Other factors for thought include car purchases for the two kids, longevity risks (45+ years without working is a long time), and as you mentioned, healthcare costs. Good luck.
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Old 07-17-2013, 07:44 AM   #6
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A ballpark estimate of what you would need in taxable accounts for DH to ER would be:

(annual spending - your annual takehome pay) * (59.5 - DH age @ ER)

so if you need $60k to live and will earn $40-50k once DH ERs then you'll need ~$30k from savings each year to augment your take home pay.

This assumes that the investment return on this money is the same as inflation (0% real return). In reality you may need a bit less, but the above should be a good ballpark estimate.
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Old 07-17-2013, 01:00 PM   #7
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I think you've done splendidly so far--maybe you saved even more because you weren't sure how you were doing. That is a nice chunk of change for someone your age with preteen kiddles.

It will be interesting to see how your spending changes now that you are tracking it. It doesn't seem from your situation so far that you have to change anything!

Welcome to the boards and keep us posted.
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