Wanted to Rule the world--until I got there! :)

[RunningBum]

Regarding this, I've been wondering if it would be worthwhile to go all in with Roth conversions in one year taking your income to the top of the 24% tax bracket in order to set you up for very low income the next 3 or 4 years? Especially for those who are on their own for health insurance.

Sure, if you're going over the cliff, you might as well go over by a long shot, and set yourself up for other years.

For me, I have enough in taxable that I needed to swap some higher dividend paying funds with lower, and also swap out the managed funds with unpredictable cap gains distributions. So one year I skipped the subsidy to reorganize my holdings, which results in a lot of cap gains. I added Roth conversions up to where I'd have had an extra 3.8% or whatever it is on my cap gains, and I also tried to make sure I have enough cash coming out of a CD ladder to not have to sell appreciated funds for my living expenses.

I was still barely off the cliff's edge last year, so with the downturn early this year I got out of the international fund with its higher dividends, which I hope will set me up for a few more years.

 

[Koolau]

I've often thanked God that I've been blessed with a decent FIRE stash AND decent health insurance without ACA 'help'. It was bad enough playing the "cliff-hanger" game with Medicare (I went over one year due to sale of a primary residence - used for rental WITH depreciation. Don't get me started on "recapture.")

If I had needed to "titrate" my income to qualify for ACA, I think I would have lost my mind (fortunately, I think ACA covers that)

 

[SnowballCamper]

Here are some details...

Wife-45 Salary $130K/year

Expenses: including leisure would be around $90K/year

***my wife is supportive of my stepping back from traditional corp role in favor of side hustle role. She is more happy to continue with her corp job until age 60-65.

My question that I know only we can answer but would like views on--can I reasonably financially walk away at this point with what we have now?

The short version is, yes. Since DW is happy to keep working for 20 more years at $40k over the expenses, she'll be able to sock away about 40*20=800k minus taxes plus growth. Are you up for managing the domestic household to her satisfaction while she is working?

 

[Ready-4-ER-at-14]

When you are pretty certain you know what your real expenses are annually, you could try living on the amount you expect to later on. Have some nice round amount in checking and savings that you write down that is maybe 3-6 months of your planned income.
Sweep all but your side hustle money into a third account and then see how it goes..
Gee property tax, phone tax, state tax, local tax all moved a smidgen... if not the first year certainly something went up if you did this 3-7 years..

Anyhow the dry run is helpful to use and am on final year and a half of that. This year property tax, state income tax, assessments, gasoline tax all expected to raise in Chicago.

 

[LiveBelowMeans]

My take. You are still quite young. I would stick it out with the current situation and save serious $$ until the next sale. I’m assuming you sold the business to private equity and have rolled your money into their deal. It may be difficult to get your money out now. Jmho

 

[jdunc31]

My take. You are still quite young. I would stick it out with the current situation and save serious $$ until the next sale. I’m assuming you sold the business to private equity and have rolled your money into their deal. It may be difficult to get your money out now. Jmho

Yes Private Equity, it is great until the next day sometimes

I agree that the "smart" thing would be to stick it out. I have always played it safe and conservative and don't want to all of a sudden do something dumb that puts our future at risk.

However....I am increasingly frustrated with the status quo, and wonder about the time/money trade off and how much it is worth it, along with the stress on top of it.

I am seeing some of my colleagues that I came up with here getting pushed aside for new and shiny toys and seeings signs on the wall of the same happening to me.

That said, I also see lots of others with similar assets and similar expenses that are taking the leap so It makes me wonder--more than it should I guess ??

 

[npage]

Sure, if you're going over the cliff, you might as well go over by a long shot, and set yourself up for other years.

For me, I have enough in taxable that I needed to swap some higher dividend paying funds with lower, and also swap out the managed funds with unpredictable cap gains distributions. So one year I skipped the subsidy to reorganize my holdings, which results in a lot of cap gains. I added Roth conversions up to where I'd have had an extra 3.8% or whatever it is on my cap gains, and I also tried to make sure I have enough cash coming out of a CD ladder to not have to sell appreciated funds for my living expenses.

I was still barely off the cliff's edge last year, so with the downturn early this year I got out of the international fund with its higher dividends, which I hope will set me up for a few more years.

My sitution looks a little more like $30K a year in tax exempt interest for two people and needing to convert a little IRA to ROTH for the right income level to maximize subsidy. Doing it all in one year would not achieve goal of subsidy each year.

 

[Music Lover]

***my wife is supportive of my stepping back from traditional corp role in favor of side hustle role. She is more happy to continue with her corp job until age 60-65.

We're older...I'm 58 and she's 54. I was retired when I met my GF who had just quit a job she didn't like and was actively looking for another one with plans to work until she was 60. After hanging out with Retired Me for a couple months her mind started to change. The job searches became less frequent and then after a year she finally decided to retire. Now 3 years later she thinks it was the best decision she ever made.

My point being that's it's easy for one partner to say they'll keep working but when the other one is home every day don't be surprised if they also start considering retirement as an option.

 

[Koolau]

We're older...I'm 58 and she's 54. I was retired when I met my GF who had just quit a job she didn't like and was actively looking for another one with plans to work until she was 60. After hanging out with Retired Me for a couple months her mind started to change. The job searches became less frequent and then after a year she finally decided to retire. Now 3 years later she thinks it was the best decision she ever made.

My point being that's it's easy for one partner to say they'll keep working but when the other one is home every day don't be surprised if they also start considering retirement as an option.

Interesting point. DW retired 3 years before I did and it never bothered me at all. It actually worked out well for us and would have continued had not my local site of Megacorp attempted to change my w*rk assignment. At that point, there was no consideration of my staying - beyond that next Friday, as a mater of fact! YMMV as always.

 

[jdunc31]

I have thought and talked with DW about this issue and she is fairly insistent that she actually really enjoys what she is doing and it fulfills her so she actively does not want to retire/cut back.

The real issue for me is wrapping my head around not having the "9-5-or more" grind and going into an office every day type of atmosphere....

 

[jdunc31]

***Updated Information***

Here are some details...

Me-Age 42 Salary $200k/year, side hustle hobby (true desire) currently making $100K as of this year which would continue going forward...

Wife-46 Salary $130K/year

We have: no debt other than $340K Mortgage, no student loans left, no c-card, no cars, no expensive hobbies other than we love to travel when possible

Expenses: including leisure would be around $90K/year

$ status:
$250K cash liquid in bank account
$995K in 401K accounts
$365K in Vanguard brokerage account
$190K in low cost annuity with 5 year vesting rider

***Side hustle hobby is still on track for the $100K and is increasingly becoming a happier place than the grind of the new office

***Wife is still content/happy with her job and does not forsee wanting to make any changes for the near-mid future in her role or hours

***New question--how does one bridge the gap between current age and 59.5 when 401K funds are available?

 

[NgineER]

A couple of options for accessing your 401k funds. 72t distribution after conversion to tIRA. Roth IRA ladder. Convert your expected expenses every year and after five years access the contribution from five years prior. It would require having enough money/income to live off for the first five years while not being able to pull out money.

 

[YakGrl]

If you expect to continue $100K yearly in side hustle and wife's salary is $130K, your stated expenses are $90K a year, why would you need to access 401K funds before 59.5?

 

[LarryMelman]

A $100K "side hustle" is not a hobby, it's a new career. If your wife intends to keep working and provide health insurance, then your only decision is whether you want to change careers with the corresponding cut in your income.

I am seeing some of my colleagues that I came up with here getting pushed aside for new and shiny toys and seeings signs on the wall of the same happening to me.

Your first post said you are the CEO. So that comment doesn't make any sense. Did I miss something?

Although you have tabulated your expenses carefully, some of them just don't look right. $125 a month on "haircuts" and $800 a month "dining out"? There's a lot of fat you could trim.

I also don't understand why you own an annuity.

 

[Music Lover]

Although you have tabulated your expenses carefully, some of them just don't look right. $125 a month on "haircuts" and $800 a month "dining out"? There's a lot of fat you could trim.

Plus $500 a month on clothes. Even if you have to look nice for your job that's $60,000 in 10 years.

 

[cyber888]

With your wife earning $130K until 60s and you earning $100K from your side hustle, sure you can step back. Your time and freedom is more valuable than money.

 

[jdunc31]

If you expect to continue $100K yearly in side hustle and wife's salary is $130K, your stated expenses are $90K a year, why would you need to access 401K funds before 59.5?

**More just asking the "what if" question as 18 years is a long time and a lot could happen between here and then....

 

[jdunc31]

A $100K "side hustle" is not a hobby, it's a new career. If your wife intends to keep working and provide health insurance, then your only decision is whether you want to change careers with the corresponding cut in your income.



Your first post said you are the CEO. So that comment doesn't make any sense. Did I miss something?

Although you have tabulated your expenses carefully, some of them just don't look right. $125 a month on "haircuts" and $800 a month "dining out"? There's a lot of fat you could trim.

I also don't understand why you own an annuity.

I am the CEO however we now have Private Equity involved and it is just "different"....The old culture was one of a source of pride and is partly what attracted the PE in the first place but it is clear that that was the old way and the new way will be different

And the Haircut budget includes DW haircuts every 6-8 weeks along with son and me, so that number is not that high...

Agreed 100% on the dining out number, we could easily cut that back (if need be-but we enjoy it right now)

 

[jdunc31]

Plus $500 a month on clothes. Even if you have to look nice for your job that's $60,000 in 10 years.

That includes all clothes, dry cleaning, sports equip, professional clothes and misc things for the family not just 1 person....

 

[Dtail]

Do you have a budget for Travel, plus how are your taxes factored in?

 

[Aerides]

That includes all clothes, dry cleaning, sports equip, professional clothes and misc things for the family not just 1 person....

Don't worry about defending that for now. I think a lot of us don't well remember what that stuff really costs, especially for a young family with both partners in management roles.

All that matters now you know where your money is going, and you're ok with it.

 

[jdunc31]

Do you have a budget for Travel, plus how are your taxes factored in?

Yes we have travel and taxes accounted for.....

 

[Music Lover]

Don't worry about defending that for now. I think a lot of us don't well remember what that stuff really costs, especially for a young family with both partners in management roles.

All that matters now you know where your money is going, and you're ok with it.

Most of us know what that stuff costs. But they said $500 a month for clothes, not $500 a month for clothes, dry cleaning, sporting goods, and "miscellaneous"....which could be anything.

 

[Amethyst]

A good haircut (i.e. tailored to her, not "great clips") for a woman is in the neighborhood of $75.00 and up. And if she wants a color job, that adds hundreds.

I
And the Haircut budget includes DW haircuts every 6-8 weeks along with son and me, )

 

[jdunc31]

A good haircut (i.e. tailored to her, not "great clips") for a woman is in the neighborhood of $75.00 and up. And if she wants a color job, that adds hundreds.

I learned early on in marriage not to question that one