49 with 4 yrs left

[luv2hunt]

Hi all, I have been a visitor to this site for a couple years. I figured I would finally introduce myself as I now have a target retirement date in mind. My wife and I are currently planning to retire or at least go part time at the end of 2024 when we are 53. We both generally like our jobs, and both are fairly low stress stable jobs, but it would be nice to have additional time to spend in different ways.

Here is a little background on us. We live in a HCOL area with a combined salary of 500K. In addition, my spouse receives a 50K bonus. We have two kids 13/10. We currently have no debt having recently paid off our house with proceeds from selling some ISO’s. Home value is roughly 1.35M. We plan to stay in the current house at least 8 yrs at which time both kids will be in college. At that point we will probably move somewhere but not sure where to exactly.

Current investment portfolio is just north of 4M broken into an asset allocation of 55% stock/ 45% bonds and 100% is invested in index funds.
Taxable: 1.19M
Tax Deferred : 2.69M
Roth : 44K
529 : 186K
HSA: 33K

We currently max two 401K’s. My solo 401K (64.5K) and my spouse (30.5K inc match). We also max the HSA account. We plan to allow all HSA money to grow and we pay for medical from our taxable accounts. We have two fairly large rollover IRA’s so we are unable to do a backdoor roth at this time. The 529’s we funded years ago. If college expenses are higher, we plan to supplement with taxable funds.

The goal is to grow the taxable portion of the portfolio by adding any additional dollars available after maxing tax deferred accounts and by selling ISO’s & RSU’s and investing the after tax portion of them into index funds. Unvested ISO’s are worth 1.94M before tax. ½ the shares vest this April ‘21 and the other ½ vest April ‘22. Unvested RSU’s are currently worth 950K before tax with ¼ of the shares vesting each of the next 4 years. At this point we do not anticipate being granted any more ISO’s or RSU’s.

Social Security : If we work through 2024, SS at FRA for me: $2622/mo and spouse: 2714/mo. Using an online calculator it said the optimal strategy would be to take my SS at FRA in 2037 and Spouses at age 70 in 2042. 2043 and beyond we would receive around 69K.

We plan to live off the taxable account when retirement starts and convert as much taxable IRA money to Roth IRA as we can while minimizing taxes.

The hardest thing I think in our plan is to narrow down what expenses we will have in retirement to include healthcare expenses and taxes. We also need to figure out the optimal amount of money to convert to Roth IRA while at the same time try to minimize future taxes. Our current expenses are 120K/yr. I welcome any advice or helpful resources that you think pertain to our situation.

[cyber888]

I think 1 or 2 years is already do-able. You'll easily hit $5 million in 1 or 2 years. No need to wait 4 years.

$120,000 expense x 40 years = $4.8 million .. You're good to go in 1 or 2 years.

[RxMan]

Your taxable account has ten years of expenses which would carry you until at least the 59.5 age. Overall you are good to go. As mentioned already you wouldn’t have to wait until 2024 if you don’t want to but that is a personal decision. Congrats on your success and enjoy your retirement whenever it happens to begin.

One thing to consider is to shop for healthcare plans now as if you are retiring immediately and have no access to any employer plans. That should give you an idea what your healthcare costs might look like in retirement. Be sure healthcare is factored into your yearly expenses as you finalize your retirement plans.

[luv2hunt]

Thank you for the feedback. I agree we will most likely have enough in < 2 yrs assuming we get close to current price for the ISO's and RSU's. It will be tough leaving the RSU's on the table so I'm guessing we will stick it out the 4 yrs. I recently searched healthcare plans and have an idea how much that will cost. As I see others have done, I will come back here and post updates over the next couple years.

[38Chevy454]

I also think you are able to retire sooner than 4 years, although the extra time will just give additional insurance for your plan. Not a bad thing, the likely result is either blow the dough more, or have larger inheritance at the end. Tradeoff of course is that is less time in retirement. I certainly understand the decision of leaving money on the table leaving early. Especially when you say work is not too bad for staying. Hopefully the market value of your ISO and RSU stay high over the next 2-4 years. Those golden handcuffs can be tough.

Health care is going to be a major consideration and cost for you. No way around it, and your budget level means that ACA is not going to be able to get much of any subsidy. Overall you have done very good with savings and setting up for kid's college. Your plan seems good. Just keep it up and then you can just review progress and make the decision when the numbers meet your goals.

[HI Bill]

As someone who had health issues crop up at age 47, and experienced decreased energy and motivation at 54, I'd strongly suggest RE now, unless there's something really huge you want to buy in RE, or want to up your spending from your $120K budget. You can't buy time, or health.

[CardsFan]

Quote:

Originally Posted by luv2hunt Unvested ISO’s are worth 1.94M before tax. ½ the shares vest this April ‘21 and the other ½ vest April ‘22. Unvested RSU’s are currently worth 950K before tax with ¼ of the shares vesting each of the next 4 years. At this point we do not anticipate being granted any more ISO’s or RSU’s.

If I understand this correctly, if you both work 4 more years, to age 53, you can add almost $3 million to your savings (call it $2 million after taxes, maybe a little less), and you both like your jobs.

Work 4 more years, take more time off (even if this reduces the bonus), do things with the kids, travel (when we can again).

Basically, have some fun.

And you will still be retired at 53!

[luv2hunt]

Thanks Hi Bill. We both enjoy pretty good health at this point(I have dealt with some back issues) but I know that can change in an instant. We don't have any real big purchases in mind at this time.

Cards Fan: That is how I am looking at it. I would love to have 3M taxable/3M tax deferred. I'm hoping we can unload the shares at a high price.