Hello from Utah

[DesertSolitaire]

Hello everyone,

I just discovered this forum about a month ago, and I've been reading a lot of the posts and I'm grateful for the information provided here by the members.

About me: I'm married, 46 years old, my wife is 42. We live in Utah and are avid backpackers, and travelers. We enjoy hiking, motorcycle riding, camping, music, and traveling.

We are looking to retire in 2031. Currently, our net worth is sitting at $861,156. Of that number, we have $89,991 in cash, $358,584 invested in 401k's/Roth IRA's/HSA/Brokerage. We have no debt, and I have included our home in our net worth at $362,000. I'm not sure if I should include the home in my net worth as I have read differing views on that. We are currently maxing out our 401k's, Roth's, and HSA, plus investing 10k into our brokerage account.

We are looking to purchase an additional home, and get it paid off in 10 years or less with tenants paying rent, and us adding additional money on top of that coming from our income, and unexpected bonuses. After we get the second house paid off, our plan is to save and buy 10 acres or more near the Utah and Colorado border in southern Utah. It's possible depending on circumstances we would sell our two rentals at that point to purchase our forever home, but ideally, we would like to keep them. My wife plans on working until 59. She loves her career and has the opportunity to work in foreign countries on a contract basis. She loves what she does and can't see herself completely walking away until age 59.

We currently make $218k per year combined, and plan on spending in the neighborhood of 80k per year in retirement. Currently we are spending around 40k per year.

Any insight, hole poking is welcome. I'm very happy I discoverd this forum.

 

[pacergal]

Welcome to the forum.

 

[Out-to-Lunch]

Welcome aboard!

 

[Rianne]

Welcome! You're both still working and have room to make changes. Since you have no debt, you can build your portfolio. I'm guessing your home will appreciate considerably in Utah. Many moving parts here with plans to purchase a rental property and settle in one of the most beautiful places in the world. I envy you! Does the $40K include taxes? When you ER, will you go on ACA for healthcare? How will you keep your income low to keep HC costs low?

Our income was similar when we were around the age you are. We dumped every bonus, and extra income in the market. 2008...scary times but continued to invest. Who knew we'd have a tidal wave that secured us if we live to 100? We kept our income @ $50K since 2014 to stay within ACA guidelines. Had an HSA plan with a high deductible. Continued to invest in the tIRA to keep income low. Healthcare is the biggest concern here. The rest of your portfolio is in a sweet spot.

 

[Bigdawg]

About me: I'm married, 46 years old, my wife is 42.
We are looking to retire in 2031. Currently, our net worth is sitting at $861,156. Of that number, we have $89,991 in cash, $358,584 invested in 401k's/Roth IRA's/HSA/Brokerage. We have no debt, and I have included our home in our net worth at $362,000. I'm not sure if I should include the home in my net worth as I have read differing views on that. We are currently maxing out our 401k's, Roth's, and HSA, plus investing 10k into our brokerage account.

We currently make $218k per year combined, and plan on spending in the neighborhood of 80k per year in retirement. Currently we are spending around 40k per year.

Welcome and congrats and your progress so far. It begins with a goal and a plan. You have those. I'll address the bolded above. 46 and 42 are good ages to start ramping up your plan. 2031 gives you 8 solid years to implement your plan and make changes if needed. Your #'s look good at this point. My question is how will your #'s look with all of the real estate plans you have? I could see many of those plans not working out as well as you hope. Do you have experience as land lords? How about developing acreage? The hardest part of a plan is the financial aspects and you seem to have those covered. I see success without the real estate adventures. You'll find that most people on here DO NOT include their home value in their networth. We all need to a place to live and you can't spend the equity in your house (well, with a HELOC I guess or cash out refi). My advice is to #1. Put that cash to work. Maybe CD's or something to make a little bit of return. #2. Maybe slow down on the 401k's. Contribute to get the company match, then max HSA then taxable accounts/ROTH's. Overall you look good to me. Keep us updated on your progress.

 

[DesertSolitaire]

Welcome and congrats and your progress so far. It begins with a goal and a plan. You have those. I'll address the bolded above. 46 and 42 are good ages to start ramping up your plan. 2031 gives you 8 solid years to implement your plan and make changes if needed. Your #'s look good at this point. My question is how will your #'s look with all of the real estate plans you have? I could see many of those plans not working out as well as you hope. Do you have experience as land lords? How about developing acreage? The hardest part of a plan is the financial aspects and you seem to have those covered. I see success without the real estate adventures. You'll find that most people on here DO NOT include their home value in their networth. We all need to a place to live and you can't spend the equity in your house (well, with a HELOC I guess or cash out refi). My advice is to #1. Put that cash to work. Maybe CD's or something to make a little bit of return. #2. Maybe slow down on the 401k's. Contribute to get the company match, then max HSA then taxable accounts/ROTH's. Overall you look good to me. Keep us updated on your progress.

Thank you for the reply and the input.
I'm not positive the numbers will work with the real estate. If it turns out we have to side hustle to make it happen, then we don't mind doing that either. My wife has landlord experience, and I have other family members that have experience in developing acres. But I agree, the real estate plans could not work out, or could certainly change.

As far as the cash goes it is allocated to some different buckets, ie emergency fund, the down payment for the next property, and vacations, but we will look more closely at putting more of it to work. I think that's sound advice.

We currently are maxing out 401k's, Roth, and HSA, plus 10k additional to our brokerage.

 

[DesertSolitaire]

Welcome! You're both still working and have room to make changes. Since you have no debt, you can build your portfolio. I'm guessing your home will appreciate considerably in Utah. Many moving parts here with plans to purchase a rental property and settle in one of the most beautiful places in the world. I envy you! Does the $40K include taxes? When you ER, will you go on ACA for healthcare? How will you keep your income low to keep HC costs low?

Our income was similar when we were around the age you are. We dumped every bonus, and extra income in the market. 2008...scary times but continued to invest. Who knew we'd have a tidal wave that secured us if we live to 100? We kept our income @ $50K since 2014 to stay within ACA guidelines. Had an HSA plan with a high deductible. Continued to invest in the tIRA to keep income low. Healthcare is the biggest concern here. The rest of your portfolio is in a sweet spot.

Thank you for the reply and input. We really value the opinions here.
Yes, the 40k does include taxes.
We hope to be able to live on our rental incomes after retirement if that plan indeed works out as we hope. If not, we will take steps to keep our income low to stay within the guidelines. It's possible with my wife's career (Project Management, Produce Engineer) her salary has tons more room to grow, as does her bonus structure. Ideally we would invest a good portion, and get our additional real estate paid off if it goes that way.

 

[COcheesehead]

Are you a fan of Arches NP? Your user name would imply so. Welcome to the forum. I am your neighbor next door in western Colorado and share many of your same interests.

 

[DesertSolitaire]

Are you a fan of Arches NP? Your user name would imply so. Welcome to the forum. I am your neighbor next door in western Colorado and share many of your same interests.

Absolutely! Arches is one of our favorites, particularly the Beehive Traverse.
Nice to meet you! What part of western Colorado?

 

[pb4uski]

Hello everyone,

I just discovered this forum about a month ago, and I've been reading a lot of the posts and I'm grateful for the information provided here by the members.

About me: I'm married, 46 years old, my wife is 42. We live in Utah and are avid backpackers, and travelers. We enjoy hiking, motorcycle riding, camping, music, and traveling.

We are looking to retire in 2031. Currently, our net worth is sitting at $861,156. Of that number, we have $89,991 in cash, $358,584 invested in 401k's/Roth IRA's/HSA/Brokerage. We have no debt, and I have included our home in our net worth at $362,000. I'm not sure if I should include the home in my net worth as I have read differing views on that. We are currently maxing out our 401k's, Roth's, and HSA, plus investing 10k into our brokerage account.

We are looking to purchase an additional home, and get it paid off in 10 years or less with tenants paying rent, and us adding additional money on top of that coming from our income, and unexpected bonuses. After we get the second house paid off, our plan is to save and buy 10 acres or more near the Utah and Colorado border in southern Utah. It's possible depending on circumstances we would sell our two rentals at that point to purchase our forever home, but ideally, we would like to keep them. My wife plans on working until 59. She loves her career and has the opportunity to work in foreign countries on a contract basis. She loves what she does and can't see herself completely walking away until age 59.

We currently make $218k per year combined, and plan on spending in the neighborhood of 80k per year in retirement. Currently we are spending around 40k per year.

Any insight, hole poking is welcome. I'm very happy I discoverd this forum.

Welcome aboard!

Most forum members only include assets that can be used to generate retirement income in analyzing retirement resources. So in most cases that would exclude your house unless you intended to downsize your housing and a portion of the proceeds from sale would be invested or if you planned to sell and rent (but in the case of renting your assets would increase but your spending would increase as well).

If you own a home and don't include it in your retirement assets, then your spending is lower because you can use the house. And in theory anyway, the cost of ownership with real estate taxes, home insurance, maintenance, etc is less than paying rent so you still benefit from owning.

If you are going to buy rentals, you should learn about depreciation recapture, where a portion of your gain on the sale of rental property is taxed at higher than the normal 15% capital gains tax rate... up to 25% tax on the portion of the gain arising from depreciation of the rental (whether you actually claimed a depreciation deduction or not). Depreciation recapture is a surprise for many member ho have sold rentals, so good to go in with your eyes wide open.

 

[DesertSolitaire]

Welcome aboard!

Most forum members only include assets that can be used to generate retirement income in analyzing retirement resources. So in most cases that would exclude your house unless you intended to downsize your housing and a portion of the proceeds from sale would be invested or if you planned to sell and rent (but in the case of renting your assets would increase but your spending would increase as well).

If you own a home and don't include it in your retirement assets, then your spending is lower because you can use the house. And in theory anyway, the cost of ownership with real estate taxes, home insurance, maintenance, etc is less than paying rent so you still benefit from owning.

If you are going to buy rentals, you should learn about depreciation recapture, where a portion of your gain on the sale of rental property is taxed at higher than the normal 15% capital gains tax rate... up to 25% tax on the portion of the gain arising from depreciation of the rental (whether you actually claimed a depreciation deduction or not). Depreciation recapture is a surprise for many member ho have sold rentals, so good to go in with your eyes wide open.

Thank you so much for your reply and information!

I will exclude my home moving forward. What everyone is saying in that regard totally makes sense.

I will absolutely do a deep dive into depreciation recapture, and thank you so much for putting it on my radar. We really appreciate it.

 

[COcheesehead]

Absolutely! Arches is one of our favorites, particularly the Beehive Traverse.
Nice to meet you! What part of western Colorado?

Grand Valley

 

[DesertSolitaire]

Grand Valley

My aunt lives up there and I have friends that live near the Utah border. Fantastic area. I get up there multiple times a year.

 

[COcheesehead]

My aunt lives up there and I have friends that live near the Utah border. Fantastic area. I get up there multiple times a year.

We love it and we also love heading into eastern and southern Utah. Lots of good hikes.

 

[DesertSolitaire]

We love it and we also love heading into eastern and southern Utah. Lots of good hikes.

For sure. I've been hiking that area my entire life, specifically Bears Ears and Grand Staircase. I'm heading out in 30 days to do one of Steve Allen's route's in the Escalante area.

 

[wingfooted]

If you are contemplating rural real estate , I would suggest you pull the trigger sooner rather than later, even at the expense of a portion of existing savings.

These properties have appreciated considerably post pandemic and will likely continue to climb in value. If you don’t get in now, you probably won’t be able to afford a land purchase later.

Also, developing rural real estate takes a long time. If you already own land, you can start some of the development now rather than wait and delay occupation of your forever home until well after you actually require.

It sounds like your immediate development priorities are going to be water, power and access.

 

[DesertSolitaire]

If you are contemplating rural real estate , I would suggest you pull the trigger sooner rather than later, even at the expense of a portion of existing savings.

These properties have appreciated considerably post pandemic and will likely continue to climb in value. If you don’t get in now, you probably won’t be able to afford a land purchase later.

Also, developing rural real estate takes a long time. If you already own land, you can start some of the development now rather than wait and delay occupation of your forever home until well after you actually require.

It sounds like your immediate development priorities are going to be water, power and access.

Thank you for taking the time to reply. I certainly hadn't thought of the amount of people snatching up rural land during the pandemic. It's possible we could pull the trigger sooner rather than later and will look into doing so.