49 and 6 years to go in TX

[jekbrown]

Hey gang. I'm about to turn 49 and my wife 44. We live in South TX. At the moment we have about $1M in retirement savings, 90% of which is tax deferred and the rest in Roths. My father retired at 55 and that has long been my goal as well, though I am very well aware that the timing is likely not up to me. Like many people, my employer is making a major effort to outsource, contract, automate, and AI as many jobs away as possible. I could get downsized next week, next year, or never. I've been there 20+ years, so severance would be sizable, but I have no interest in leaving and wouldn't do so willingly.

Every year I max out my 401k to the IRS limit and my HSA also. IRA contributions are more sporadic, depending on expenses in a given year. Other than savings, one of our major monthly expenditures ($800) the last couple of years has been monthly payments to my father to buy a 12ac lot that our retirement house will sit on. The plan is to build a small house (tiny house ideas for space efficiency, but less than 1000sq ft total) on our acreage with a portion of the equity we have in our current house, eliminating our mortgage and reducing property taxes at the same time. The lot will be paid off next year, and I plan on contributing those $ to IRAs, leveraging catch up contributions since I'll turn 50 that year.

We've had major medical bills the last 3 years (wife had cancer), but otherwise spending is largely discretionary and I fully admit that I spend to much on my hobby. This is a key motivation as to why I'm here. My wife is very frugal and doesn't care about spending money on things, of the two I'm definitely the big spender. It's a problem that I really need to resolve. I don't waste money on little things...we hardly ever eat out, I don't drink (coffee or alky or soda), we don't spend hardly anything on entertainment stuff. My hobby on the other hand...i can spend, a lot. I don't need to, but I choose to, and like I said, it's a problem. Anyway, I'm here to develop a better plan and better strategies to maximize the likelihood we'll have a long and well funded retirement. Looking forward to interacting with all of you.

 

[MBAustin]

Welcome to another Texan! If you haven't found them already, we have a helpful list of things to think about before you make the leap:

Some Important Questions to Answer

Good to hear that your wife's cancer is behind her. Your plan to downsize makes sense, however the hobby spending seems to be a big concern for you. You haven't given any specifics so we can't help with details of how you might be able to moderate the spend and still enjoy it. The main things at this point are to max your savings, track your total spending, plan for things like vehicle replacements and the house build, and model scenarios using FIREcalc (link at the bottom of every page here) or other tools. If you give more specifics, others here will be happy to give you feedback.

 

[jekbrown]

I don't know how it will help, but I'm a gun collector, researcher, and aspiring author. I have one of the more extensive AK mag collections in the US. On the plus side, I'm running out of new variants to collect, so expenditures in that area are definitely going down. �� We have no kids, i drive a 13 year old econobox, and I have no other hobbies, so it's generally what I spend my time and money on. The issue is that I spend too much. I don't want to reduce it to zero, it's my lone hobby, but it definitely needs to be more disciplined and planned than it is right now.

 

[pacergal]

Welcome to the forum!
Answering the questions that MBAustin posted will take you through expenses and budgetary items.
You will then know if you need to adjust your spending for your gun hobby. But, if you already feel that you are spending too much, that is a place to start.

 

[HI Bill]

Welcome to the forum! I also have hobbies and like to spend. My wife likes to spend on what she wants, and admittedly, her purchases are a small fraction of what I spend. It took nearly 11 years of being together, but I discovered that if I allow her to buy whatever she wants, I can buy whatever I want (but we're in ER, and over saved). What about talking to her and establishing savings percentages, and a budget for the fun stuff? To me, as long as you're solidly on the path to ER. But before you BTD (blow that dough), have you determined your retirement budget, the cost of health care between ER and Medicare, and your pension and/or Social Security Benefits? Have you run FIRECALC with the answers to the questions above? Are your investments diversified?
Best wishes!

 

[bloom2708]

Is your plan to use 72T (SEPP) to fund your retirement in the beginning?

Start making the plan. For each year, understand your total spend and then where the income will come from. Cash, taxable, Roth, 72T, etc. If your income is the same or higher than your anticipated spending, you are good.

Many bumps in the road. Make sure your mix of stocks/bonds and cash match your timeline. At 50% drop at age 53 with too much stock could alter the numbers dramatically.

Make the plan and see what happens. Health coverage from 55 to 65 needs to be adressed through ACA or other.

Here and bogleheads.org are two great places to plan and learn.

 

[JBTX]

I don't know how it will help, but I'm a gun collector, researcher, and aspiring author. I have one of the more extensive AK mag collections in the US. On the plus side, I'm running out of new variants to collect, so expenditures in that area are definitely going down. �� We have no kids, i drive a 13 year old econobox, and I have no other hobbies, so it's generally what I spend my time and money on. The issue is that I spend too much. I don't want to reduce it to zero, it's my lone hobby, but it definitely needs to be more disciplined and planned than it is right now.

Is the desire to simply accumulate/posessing more (guns) or is the fun in acquiring new ones? I assume these have market value. Perhaps you can manage spending by selling some to buy new ones?

If you like just having them, perhaps you have enough to enjoy, between maintaining them, or shooting them (if you actually do that with collectors.

If the goal is just to accumulate more and more then yes that’s going to take a change of mindset. The question becomes for each new one that costs X, would you work an additional Y hours of equal net compensation for the joy of acquiring it? If the answer is no, there’s your answer.

 

[Exchme]

Your plan is good if you are able to keep working. But your plan falls apart real fast if your income goes away or gets cut back.

Since your job isn't super-secure and health is never guaranteed, I recommend a little self control. You can play more eventually once you reach financial independence.

 

[pb4uski]

Since you may be retiring, volunratily or not, before 59-1/2, you should assess whether you have enough money that can be accessed penalty-free to carry you to 59-1/2 when you can do penalty free withdrawals of tax-deferred account money. If you don't have much in taxable accounts or accessable in tax-free accounts (like Roth contributions) then you might consider a 72t/SEPP as bloom2708 mentions.

On your hobby, if you set an annual "budget" for those expenses could you stick to it and use it as a motivational tool to restrain your spending? Another thing to consider is legacy issues... at somepoint someone will need to sell your collection as they settle your estate so better to pare things down now.

 

[piccolopat]

One way to control your hobby expenses is to determine how much of that new 1000 square foot house will be needed to Safely and securely store your collection and then agree not to add more storage space. I also agree with the idea of setting and sticking to a hobby budget.

 

[imnontrad]

You need to beef up your assets in taxable and tax free portfolios (regular brokerage and Roth). Thining you have a million dollars and it's all in pre-tax accounts is incorrect - a significant chunk of that will go to income taxes as you withdraw the money. So that account is actually worth much less to you.
If you have a 401K Roth option, max that out. Otherwise, just contribute to the 401K up to the match and then invest in a taxable brokerage account. This will give you more options if you retire before you can tap any retirement funds or just want to work to keep your income lower.
A really small house on 12 acres is really not a good idea. If you chose to move later, you would have a hard time reselling it.
Look for ways you can monetize those acres. This could be something like planting trees now to turn into a tree farm (lower taxes), identifying areas to plant a large garden or food producing trees and plants (a possibly great reselling point), and a house that is super energy efficient including orienting it correctly for the best breezes, passive solar plus solar panels/wind generation, a layout that could mean you could age in place (wider doorways/hallways, reinforcements in walls for grab bars, etc), and at least a 3-car garage. If you are near an area where people like to vacation, using some acres for a campground or something might bring in a lot of income (or a storage facility for campers/RVs and trailers?). And maybe there is a way to monetize that hobby.

 

[Harris4crna]

First, welcome to the community. Second, thank you for taking the time to be transparent in regards to finances, goals and hobby spending. I can imagine many of us can find common ground. I know I do.

1. I too, have approximately 1-1.5 million AUM. All depends on how the market is doing. The only difference is the wife and I have pensions. I agree with above, the pre-tax funds will be taxed funds when you withdraw. this needs to be accounted for in your withdraw plan. I only have 20% of my total allocation in a pre-tax fund and now looking back I wish I had less.

2. I too, am looking at buying land and building a house. I am new to this concept, so I do not have much opinion on this. I am still learning. Although, I do know, despite my desires to live in it forever, this most likely will not be the case. I will be purchasing a marketable piece of land in a good location with a reasonable sized house.

3. I too, have an expensive hobby and a frugal wife. I am an audiophile and spend much on it. Plus, I like expensive cars. I have always had a budget, but this year I decided to track my spending onto a spreadsheet that is shared with my wife. This spreadsheet is titled, "CASHFLOW TRACKER". So far, 4 months into it, the tracker has truly paid dividends. It has allowed me to be accountable to myself and more so to my wife. Now, I realize to continue this desired lifestyle, I will need to plan accordingly. In conclusion IMHO, nothing wrong with having a hobby however expensive it may be. It just needs to be transparent and planned for into the future.

Again, welcome to the group and looking forward to tracking to process to FIRE.