BadgerNCarolina
Dryer sheet wannabe
- Joined
- Nov 24, 2020
- Messages
- 21
Hi,
I have been reading for some time, but decided to dive in with a question about Roth conversions. So - I thought it was time to give some info, and say hi!
My DW and I are both 52, married 23 years now and I plan to retire in a 7 years. I work at a MC in the pharma industry and while my wife and I met in the industry, she hasn't worked for ~10 years. We have an 18 yo daughter in her first year of college, and my wife may go back to work now, but in a much lower stress type situation. College expenses should all be paid from a 529 account that we started before my daughter was born (put $20k in there 19 years ago and never put in another penny).
Financials
825K in 401(k)
22K in Roth
75K in a 409(a) deferred comp account
130K in taxable + cash
$450k equity in home (only mentioned because we may downsize and pull some out next spring)
Debt free other than mortgage/HELOC, but plan to have that paid off prior to retiring in 7 years.
My total comp takes a big bump next year, as I get my first set of vested stock bonus (3 years after starting). I will be deferring about 30% of that (should be lump sum of approx $100k-$125k), and using the remaining to pay off a HELOC, then will defer more like 80% the remaining years.
I also defer approximately 10% of salary and 20% of 'regular' bonus.
MC has a VERY generous 401k match of 11.5% if I put in 6%. So - I put in 9-10% (my max) and get approx $50k-$55k total/year.
The plan, and how much my models show us having at 59.5 -
Assuming 10% market increase and the defer/saving noted above:
$2M in 401(k)
$150K in Roth
$1.25M in a 409(a) deferred comp account
$1M in taxable + cash
So - between $4M and $4.5M in investible assets, and no debt. Again, just a model, and a lot can happen in 7 years. The model assumes 1 promotion, which could occur or I could be out of a job in 6 months - life is like that.
One concern - Our expenses are higher than I'd like, and I have not been successful in budget/money conversations with my DW. I expect our annual expenses (without mortgage) to be $150k to $175k in 7 years (including increased healthcare), then increasing with inflation from there.
Concurrently, I have been building a portfolio of dividend producing stocks which I plan to use to cover some expenses. The portfolio is a group of ~10 stocks, including bellwethers and some more aggressive options that return between 6%-8% per year, and have done well over time from an appreciation perspective. With $1M in that account, I expect ~60k-80k/year. My retirement accounts are in SPY and QQQ, so conservatively let's count 1% yield and add another 20k/year.
Oh - and the 409a account pays out 10% for 10 years upon retirement, so that would be ~$150k per year.
I'd like to live off the dividend income + deferred income for the first 10 years of retirement (150+60+20 = 230k, which should cover expenses comfortably) and leave my retirement accounts alone until we hit 70 and SS can replace some of the deferred income, and RMD can/will replace the rest (at 72) and more.
What am I missing?!? I know there is some risk in the model (including staying relatively aggressive in my portfolio at 52), but for now I am good with that approach. I may change that opinion as I get closer to FI, which will of course change the model some. I fully expect that we will have one (or multiple) year(s) where the market will regress and my portfolio won't advance, so I've actually not included the last 2 very positive years in the model.
Last concern for me is that in order for this to work, I will need to stay at my current company for 10 (total) years, which would actually be longer than I've ever been at a company, so that's not a given even though I am highly motivated to do so, like the job (mostly) and really enjoy my colleagues.
Okay - I'm done - thanks for any feedback or questions!
I have been reading for some time, but decided to dive in with a question about Roth conversions. So - I thought it was time to give some info, and say hi!
My DW and I are both 52, married 23 years now and I plan to retire in a 7 years. I work at a MC in the pharma industry and while my wife and I met in the industry, she hasn't worked for ~10 years. We have an 18 yo daughter in her first year of college, and my wife may go back to work now, but in a much lower stress type situation. College expenses should all be paid from a 529 account that we started before my daughter was born (put $20k in there 19 years ago and never put in another penny).
Financials
825K in 401(k)
22K in Roth
75K in a 409(a) deferred comp account
130K in taxable + cash
$450k equity in home (only mentioned because we may downsize and pull some out next spring)
Debt free other than mortgage/HELOC, but plan to have that paid off prior to retiring in 7 years.
My total comp takes a big bump next year, as I get my first set of vested stock bonus (3 years after starting). I will be deferring about 30% of that (should be lump sum of approx $100k-$125k), and using the remaining to pay off a HELOC, then will defer more like 80% the remaining years.
I also defer approximately 10% of salary and 20% of 'regular' bonus.
MC has a VERY generous 401k match of 11.5% if I put in 6%. So - I put in 9-10% (my max) and get approx $50k-$55k total/year.
The plan, and how much my models show us having at 59.5 -
Assuming 10% market increase and the defer/saving noted above:
$2M in 401(k)
$150K in Roth
$1.25M in a 409(a) deferred comp account
$1M in taxable + cash
So - between $4M and $4.5M in investible assets, and no debt. Again, just a model, and a lot can happen in 7 years. The model assumes 1 promotion, which could occur or I could be out of a job in 6 months - life is like that.
One concern - Our expenses are higher than I'd like, and I have not been successful in budget/money conversations with my DW. I expect our annual expenses (without mortgage) to be $150k to $175k in 7 years (including increased healthcare), then increasing with inflation from there.
Concurrently, I have been building a portfolio of dividend producing stocks which I plan to use to cover some expenses. The portfolio is a group of ~10 stocks, including bellwethers and some more aggressive options that return between 6%-8% per year, and have done well over time from an appreciation perspective. With $1M in that account, I expect ~60k-80k/year. My retirement accounts are in SPY and QQQ, so conservatively let's count 1% yield and add another 20k/year.
Oh - and the 409a account pays out 10% for 10 years upon retirement, so that would be ~$150k per year.
I'd like to live off the dividend income + deferred income for the first 10 years of retirement (150+60+20 = 230k, which should cover expenses comfortably) and leave my retirement accounts alone until we hit 70 and SS can replace some of the deferred income, and RMD can/will replace the rest (at 72) and more.
What am I missing?!? I know there is some risk in the model (including staying relatively aggressive in my portfolio at 52), but for now I am good with that approach. I may change that opinion as I get closer to FI, which will of course change the model some. I fully expect that we will have one (or multiple) year(s) where the market will regress and my portfolio won't advance, so I've actually not included the last 2 very positive years in the model.
Last concern for me is that in order for this to work, I will need to stay at my current company for 10 (total) years, which would actually be longer than I've ever been at a company, so that's not a given even though I am highly motivated to do so, like the job (mostly) and really enjoy my colleagues.
Okay - I'm done - thanks for any feedback or questions!
