33-Different Perspectives Welcome

[frgo0629]

33 and married with 2 children under 3.

Enjoy reading others and thought I’d share to hear any others view or perspective as I’m always looking at these numbers.

Cash-$6K
Taxable Acct-$180k
Profit Sharing & Roth-$115k
HSA-$9.5k
Cash Value LI-$15k
College acts-$12k
Investment real estate Equity Position-$210k(includes cash on hand and 6% selling costs)
Wife 403B-$55k
Wife Roth-$12k

Wife will have pension available at age of 60 or 61 that will replace 60% of highest 5 years avg salary.
No 401k available where I work.

$134k combined income.

Saving $42.5k/yr including employer proceeds going to Roth, 403b, taxable, and profit sharing acct.
Rent.
No personal debt.

No big plans to retire very early but would like to be done working by 60 or if investment properties continue to work I’d like to have the option of walking away from W2 income job down the road as properties will start to be paid off at age 43 and last set to fall off as is at age of 52 as is.

Investment properties are in a partnership with one other individual that include 22 apt units and a commercial duplex property where we operate a self service laundromat and rent out the other side. Started with a triplex 7 years ago and plan to continue to build w/ idea of having $1MM each at minimum when all said and done. Currently at $1.3MM total or $650k/piece gross. We manage and do most maintenance ourselves which has allowed us to build a decent cash reserve and grow.

2 young kids have sure made it more difficult to add to cash reserves lately.

Welcome any ideas, perspectives, or if I’m crazy to think 60 is realistic.

Thanks!

 

[DrRoy]

It all looks pretty good to me.

 

[Aerides]

You've got a great start, probably better than many of us did at your age. Of course with young kids you can expect a lot of wild cards.

Two notes:
In your shoes I'd boost that cash reserve over any other savings right now (except anything getting a match). 6 months expenses is a good goal for cash in normal times. That's not now - a year might be more prudent.

Also, your "partnership" in RE - assume that is all fully legally-contracted and all that so no real risk of disputes with one another in say 10 years? And maybe look into the cost of outsourcing the maintenance/operation - with a full time job, and that much RE, you want to have time left over in your day for the kids - don't burn out too early!

 

[frgo0629]

Aerides - Thanks. Yes cash reserve is on my radar. As far as rentals we are at a tipping point of outsourcing more work if and when more units are acquired.

 

[Gumby]

Welcome to the board, and congratulations on thinking so far ahead. As has been noted, you are doing great so far. My net worth at your age was just about zero.

To my thinking, the key component of a retirement plan is estimating spending in retirement. You can start to get a handle on that by extrapolating from what you currently spend. Many people track their spending, even though they are saving well (as you are) just so they can make that estimate. That's what the young wife and I always did.

By my rough estimate, you are spending $64k per year right now ($134k gross - $10k SS/FICA - $18k state & fed income tax - $42k savings). Probably a little more than that if the $42k savings number includes employer matching money.

Making some guesses about your spouse's age and your expected social security, FIRECalc says you are good to go if you continue to save $42k from now until you are 60.

 

[OldShooter]

Yes, great start. Be continuously paranoid, however, about the real estate. It is illiquid. Your risk is concentrated in the fate of one neighborhood in one city. The existence of a partner limits your unilateral flexibility and has the future risk of serious disagreements. I am not at all saying you shouldn't be doing it, but I would concentrate on building non-real estate assets before doubling down on apartments.

I would be even more fearful if your property is in a state or city with serious unfunded pension liabililities like Chicago, IL, CA, and others. IMO income property owners are going to get whacked pretty hard when the dust settles on those messes.

 

[frgo0629]

Thanks for the input. Enjoy the challenging comments about rental RE.

 

[HF63]

You doing great but in the mean time do not forget to enjoy life, one way street.

 

[Koolau]

Congrats! You're well on your way. Keep up the good work and DO check back often. We love success stories - especially among our younger members.

 

[frgo0629]

Update
Cash-$5,000
Taxable acct-$330,000
Profit Sharing & Roth-$194,700
HSA-$18,400
Cash Value LI-$18,100
College Acct-$23,700
Investment RE Equity Position-$256,000
Wife 403B-$82,500
Wife Roth-$14,000
Wife Equity Acct-$32,000
House-$405,000 Mortgage-$287,700

Combined Income-$150,000. 34 & 33 yrs old
Saving $45,000 yr into various retirement\investment acts mentioned above

Purchased house in 21’ and is really our first personal debt we’ve incurred since adulthood. So kind of nervous about that. No other personal debt. First kid will begin school this fall.

Continue to buy investment RE as we go. Debt associated with properties will begin to fall off at age 43 yrs old. Hopefully allow us to accelerate retirement or have option.

 

[target2019]

Can I assume you have a separate checking account with a decent balance each month?

The really important part is your home and watching child go off to school. That's a milestone you remember forever.

 

[frgo0629]

There’s a portion of the taxable acct in a cash position and excludes wife’s regular acct as I didn’t include that in the past.

 

[jollystomper]

Your savings rate is over 31% which is excellent. Do not sweat the small stuff. Keep doing what you are doing. While I am not a big fan I real estate, I just was not born with that gene, so if you fine it enjoyable, that is fine. But also be sure to enjoy life along the way. Your savings rate dipping to 25% occasionally to do something fun with your family will not hurt you.

 

[street]

You both are doing excellent for your retirement. Just being aware of the future at your age is a recipe for success. Outstanding, keep plugging away and have a plan.

 

[CardsFan]

But also be sure to enjoy life along the way. Your savings rate dipping to 25% occasionally to do something fun with your family will not hurt you.

^^This.

 

[Koolau]

I'm especially happy to see that you don't over emphasize qualified money like 401(k), 403(b), tIRAs, etc. That was perhaps my biggest mistake - well other than being a lousy investor back in the day. Upon retiring, I found qualified money to be much less flexible as I always had to consider tax consequences. Not to say that one should not take advantage of tax-saving while young. Just plan carefully and keep in mind that "what the gummint gives the gummint can take away." YMMV

 

[Bamaman]

You've got a great start, probably better than many of us did at your age. Of course with young kids you can expect a lot of wild cards.

Also, your "partnership" in RE - assume that is all fully legally-contracted and all that so no real risk of disputes with one another in say 10 years? And maybe look into the cost of outsourcing the maintenance/operation - with a full time job, and that much RE, you want to have time left over in your day for the kids - don't burn out too early!

Whatever you do, make sure you have a formal partnership agreement that at a certain date one partner has the option to purchase the other's share.

My brother in law had a partner that was inactive in the business. They bought the guy out at 10 years. The guy said, "Why did you buy me out?" My nephew told him that they were tired of doing all the work and making him rich. They also had the same agreement on the real estate, and bought him and his wife out of it.

I know another family that owned a large beverage distributorship. One brother died, and when their termination date came up the remaining brother paid dearly to his sister in law and nephews for their share.

 

[Koolau]

Whatever you do, make sure you have a formal partnership agreement that at a certain date one partner has the option to purchase the other's share.

My brother in law had a partner that was inactive in the business. They bought the guy out at 10 years. The guy said, "Why did you buy me out?" My nephew told him that they were tired of doing all the work and making him rich. They also had the same agreement on the real estate, and bought him and his wife out of it.

I know another family that owned a large beverage distributorship. One brother died, and when their termination date came up the remaining brother paid dearly to his sister in law and nephews for their share.

Yes. Son's first business was destroyed by an untrustworthy partner. Do protect yourself because YMMV>