I have recently left the W2 world and tried to strike out on my own. I used to have income between $300k - $400k and DW has a stable, salaries physician job that pays $400K plus excellent benefits. Our new household income is now $500K/year (I get around $100k from consulting gigs while spending most of my time with a company I have founded). The idea is to spend the next 5-8 years trying to successfully grow and exit from 1-2 start ups (one has been in operation and we are talking about starting another one soon). We have young kids 6 and 9 years old and my wife and I are both 45 years old.
We live in a VERY high COL part of the country but own our home with a relatively small mortgage ($2.4M home value per Zillow with a $700k mortgage that we will pay off in the next 10 years. The mortgage has a 2% fixed interest!
For a number of reasons the 10 year time frame is key to our future plans.
1) home paid off
2) DW can get retiree status at her job, preserving several benefits while freeing her up
3) one kid off to college and the other getting ready to go. One of the benefits is tax free tuition reimbursement for the kids undergrad from DW's employer up to 50% of the fee they charge (and this fee is in the top 2-3 tuition fees in the country so we feel it will cover 60%-100% tuition where kids go to college)
4) I would have gone through a couple of cycles of creating start up companies either successfully or not
Our lifestyle is comfortable but we LBOM significantly. I estimate we spend about $250K/Year including mortgage payments. So planning for a $200K spend at retirement. Budget is steady for the last 3-4 years and a significant decrease in childcare costs will probably create room for other spending if we choose. We live comfortably on one income - always have - which is what allowed me to strike out on my own a couple of years ago.
Liquid savings:
$600K cash
$2.2M - taxable equities
$1.8 M - retirement accounts mostly tax deferred with some ROTH
We also own an investment property in our town where rents cover almost all mortgage, HOA and taxes. We have about $350K equity but I don't consider it in retirement planning.
With about $200K - $240K in annual spend we are looking at around $8M in assets required. While we are only at $4.6M I am hopeful that 10 years of growth and some continued investment will get us there. Invested significantly when we had 2 peak incomes but in the past year we have only invested in retirement accounts (around $70k/yr between DW and I which we expect to continue since hers is on autopilot and I put away 20% of my consulting income into a SEP IRA at Vanguard every quarter).
So the purpose of my message with a detailed description of our circumstances is to hear from the community about how we can make sure our future is iron-clad. We are probably not going to ER but the goal is to work without concern about money and do what makes us happy (I'm already there - DW likes her job also but keeps dropping hints of a second career in the future)
Is there anything we should be doing differently? Is there something we should look out for? How do we maximize our next egg?
Thanks for reading my message and sharing your thoughts.
We live in a VERY high COL part of the country but own our home with a relatively small mortgage ($2.4M home value per Zillow with a $700k mortgage that we will pay off in the next 10 years. The mortgage has a 2% fixed interest!
For a number of reasons the 10 year time frame is key to our future plans.
1) home paid off
2) DW can get retiree status at her job, preserving several benefits while freeing her up
3) one kid off to college and the other getting ready to go. One of the benefits is tax free tuition reimbursement for the kids undergrad from DW's employer up to 50% of the fee they charge (and this fee is in the top 2-3 tuition fees in the country so we feel it will cover 60%-100% tuition where kids go to college)
4) I would have gone through a couple of cycles of creating start up companies either successfully or not
Our lifestyle is comfortable but we LBOM significantly. I estimate we spend about $250K/Year including mortgage payments. So planning for a $200K spend at retirement. Budget is steady for the last 3-4 years and a significant decrease in childcare costs will probably create room for other spending if we choose. We live comfortably on one income - always have - which is what allowed me to strike out on my own a couple of years ago.
Liquid savings:
$600K cash
$2.2M - taxable equities
$1.8 M - retirement accounts mostly tax deferred with some ROTH
We also own an investment property in our town where rents cover almost all mortgage, HOA and taxes. We have about $350K equity but I don't consider it in retirement planning.
With about $200K - $240K in annual spend we are looking at around $8M in assets required. While we are only at $4.6M I am hopeful that 10 years of growth and some continued investment will get us there. Invested significantly when we had 2 peak incomes but in the past year we have only invested in retirement accounts (around $70k/yr between DW and I which we expect to continue since hers is on autopilot and I put away 20% of my consulting income into a SEP IRA at Vanguard every quarter).
So the purpose of my message with a detailed description of our circumstances is to hear from the community about how we can make sure our future is iron-clad. We are probably not going to ER but the goal is to work without concern about money and do what makes us happy (I'm already there - DW likes her job also but keeps dropping hints of a second career in the future)
Is there anything we should be doing differently? Is there something we should look out for? How do we maximize our next egg?
Thanks for reading my message and sharing your thoughts.