Been lurking on this forum for about a year. Lots of helpful information here but wanted to get some feedback on my own situation from the forum.
DW and I are both early 40's, married 13 years and have 2 young kids (7 & 4). Both highly educated, so our current income levels have only been in place since the last 7-8 years.
Current gross family income is ~$650K, almost equally split. DW's income is steady and dependable, my income fluctuates (up and down) and subject to layoff etc. So from the start we tried to live within DW's income, trying to bank mine. With 2 young kids and the resulting childcare expenses (~40K per year) this has not always been possible, but we still save over $150K in pretax and aftertax for retirement each year. We live in Palo Alto, California so high housing costs (our home is valued at $2M and we have $1.2M equity in the home).
We have grown our investable assets from $400K in 2006 to around $3M at present thanks to continued investing and market appreciation. This does not include home equity.
We anticipate paying off the home in the next 13 years, which is also the timeframe for retirement. Actually I am not sure either DW or I will retire, but this is the timeframe after which we would like to work without regard to what the financial rewards are. We expect to continue living in our current home, and also expect that this would be the time when our kids would have left home (our younger one would be starting college).
Our financial goals are to have sufficient funds to enjoy a luxurious retirement, pay our kids college expenses so they start life without debt, and possibly help them with their initial home purchases.
FIRECalc analysis tells me that we have 100% success rate of living a comfortable retirement of 50 years i.e. until age 105 (I use annual expense of $280K from 2027 onwards and annual savings of $150K until 2027 with a $3M initial portfolio).
One of my key concerns is that since FIRECalc does not account for taxes, and because taxes are big ticket item for us each year - how do I take this into account? The $280K living expenses for example include a component of income taxes - i estimated at 20% but that is just a guess. If i were to use our current tax rates (~40% total, 54% marginal) then success rate drop significantly.
Any idea how to deal with this uncertainty in planning?
Any other insight into a high income, high spend retirement analysis would be welcome.
Thanks!
PA
DW and I are both early 40's, married 13 years and have 2 young kids (7 & 4). Both highly educated, so our current income levels have only been in place since the last 7-8 years.
Current gross family income is ~$650K, almost equally split. DW's income is steady and dependable, my income fluctuates (up and down) and subject to layoff etc. So from the start we tried to live within DW's income, trying to bank mine. With 2 young kids and the resulting childcare expenses (~40K per year) this has not always been possible, but we still save over $150K in pretax and aftertax for retirement each year. We live in Palo Alto, California so high housing costs (our home is valued at $2M and we have $1.2M equity in the home).
We have grown our investable assets from $400K in 2006 to around $3M at present thanks to continued investing and market appreciation. This does not include home equity.
We anticipate paying off the home in the next 13 years, which is also the timeframe for retirement. Actually I am not sure either DW or I will retire, but this is the timeframe after which we would like to work without regard to what the financial rewards are. We expect to continue living in our current home, and also expect that this would be the time when our kids would have left home (our younger one would be starting college).
Our financial goals are to have sufficient funds to enjoy a luxurious retirement, pay our kids college expenses so they start life without debt, and possibly help them with their initial home purchases.
FIRECalc analysis tells me that we have 100% success rate of living a comfortable retirement of 50 years i.e. until age 105 (I use annual expense of $280K from 2027 onwards and annual savings of $150K until 2027 with a $3M initial portfolio).
One of my key concerns is that since FIRECalc does not account for taxes, and because taxes are big ticket item for us each year - how do I take this into account? The $280K living expenses for example include a component of income taxes - i estimated at 20% but that is just a guess. If i were to use our current tax rates (~40% total, 54% marginal) then success rate drop significantly.
Any idea how to deal with this uncertainty in planning?
Any other insight into a high income, high spend retirement analysis would be welcome.
Thanks!
PA