I’m 49, my wife is 34, we have 4 kids and $2.3 million saved. I earn $300K a year but ‘lose a lot of sleep worrying about tomorrow’ — when can I retire?

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Dear Marketwatch,

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I am 49 years old (turning 50 this year) and my wife is 34 years old. We have two young children under 2 years old, and 11 year old twin girls from my prior marriage. College for twins is fully funded in a 529 plan and I make monthly savings in 529 plans for my other two children.

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I’ve had a good career in technology and make about $300,000 per year. We max out all retirement vehicles and have zero debt other than our primary residence. We have about eight rental income residential properties that net us about $6,000 per month after all mortgages and expenses. Passive income, if you will. At high levels, our monthly target spend is around $10,000 to $12,000.

Combined we have $1.7 . Is One million IRA and 401(k) assets and about $500,000 in cash and after-tax savings in Fidelity and E*Trade accounts. All are in stock-heavy aggressive portfolios and I manage my IRAs myself, averaging 12% returns.

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I started a new job in November 2020 after needing to move from my former position and cut expenses due to COVID-19. At 50, when I’m employed, I’m afraid my job might end again and going looking for another 7 months+ job will be incredibly difficult for my family and me. I lose a lot of sleep worrying about tomorrow.

I want to retire, and my wife is to retire, possibly in Colorado, when I’m 58, if I’m not forced to retire soon. I look at retirement calculators and try to see if I can achieve it, but one tells me we’ll be fine, while another says I’ll be short and out of money in 20 years will become.

I also don’t know how to look at health insurance costs for my family without a job and how to incorporate it into a plan where my spouse will keep me alive for 20+ years. I want to make sure he is fine and never runs out of money. We are both in good shape, exercising and we have good longevity on both sides of our family. She has worked long enough to qualify for Social Security.

I want to retire because I’m going to be a big father and love my wife and kids very much, so if I’m not working with them but can’t sacrifice too much on expense, I’ll do it. I would like to do I just can’t figure out a plan. I’m not opposed to working in retirement, either consulting or maybe an hourly wage job, but neither of those options are guaranteed.

can you help?

‘Retirement? How?’ I’m 65, I Have Nothing Left and I’m Coming Out of Bankruptcy

Dear reader,

Even with $1.7 million in retirement accounts, an additional $500,000 in savings, and multiple income sources, I understand why you might be worried about the future. You have a family that depends on you and the unexpected twists and turns of a pandemic certainly don’t help.

The good news: Retirement at 58 may be within your reach, financial advisors said. And if you choose to scale back from a full-time job but work in some capacity, such as with consulting work or freelancing, you have even more flexibility, said Jane Grant, a financial advisor at Perryman Financial Advisory. “There are dozens of ways to reach that goal,” she said. “Now he must decide on the best course, work for it for eight years and reduce the stress and anxiety so that he can enjoy his young family.”

If you retire at age 58 (or any time before Medicare becomes available at age 65) one of the top priority tasks before you is health insurance. COBRA may be available temporarily after you leave your old job but you must make it 65, at which point you can apply for Medicare.

There are a few options to cover, including saving now for later at any price in the open market; taking a part-time job with health benefits so you can take advantage of healthcare, earn a little extra income but still have more freedom than a full-time job; Or ask your wife to take a job that offers family health insurance (if she doesn’t already). Since you are healthy, you may also want to look into a Christian health sharing company, which is a faith-based health savings approach Grant said, where members help meet the needs of others. [Note: This healthcare option is a faith-based, cost-sharing program but is not traditional insurance or government-protected. Critics say Christian health-sharing plans may be more affordable than traditional insurance policies, but not all essential health needs will be covered.]

To get an idea of ​​what health plans cost in the market now, you can visit Healthcare.gov, Although keep in mind that health spending is rising every year, there is no sign of stopping.

You mention that your biggest concern right now is losing your job. This is completely understandable, but try to delve a little deeper into why you have these fears. Do you feel that you will not be able to adapt to a new job in the future? Or won’t have the skills to be the lucrative hire? Is it that if you were temporarily out of work your current expenses would be too much for you to handle? Knowing that answer will help you figure out what you need to do next.

For example, if you’re worried that you might need to brush up on skills (or develop new ones) to keep the job search short, start now. You may not need to do this for applications, but doing one thing every week to brush up on old skills or learn new ones can position you as a valuable asset to your current company and keep you at work in the future. May hold for the holding manager. Plus, you may be able to take advantage of this continuing education (in the form of a classroom or YouTube video) for a higher salary later.

If you’re worried about losing your job because you think your current expenses will be too much to handle, even temporarily and knowing you have rental income, go for it now. Look at your cash inflows and outflows and ask yourself what it would look like if you were out of work yesterday. You clearly know how to save, so does it come down to spending?

“Are they spending in areas that are not meaningful to them as a family? If so, reduce spending,” said Jeremy Finger, certified financial planner, founder and CEO of Riverbend Wealth Management.

There are a few other things you can do to reduce stress. Because of the age difference between you and your wife, Grant recommends life insurance. You are a high income earner and if something happens to you, life insurance can help replace your income. He said that along with life insurance, pay attention to disability insurance as well.

It’s fine to keep your investments in an aggressively allocated portfolio, but make sure you have about two to three years’ worth of living expenses in a more conservative portfolio, Grant said. “It will protect him if the market turns bad the year he plans to retire,” she said. “They will not be forced to sell stock at a loss or destroy real estate.” A large emergency fund will also provide you with some comfort – the money can be used in an unforeseen situation, or if nothing happens between now and your target retirement date, the money can reduce stress as you transition into retirement. Is.

Also, even if you are not worried about your investments, check them from time to time to ensure that they are properly allocated. A balanced — the key word here is “balanced” — can work in an 80% stock/20% bond portfolio, or even a 90%/10% mix, with extra cash on hand, such as $200,000. , but those portfolios should be balanced, Finger said.

Check out the Businesshala column “Retirement Hacks” For actionable advice for your retirement savings journey

Finger had some other ideas depending on your situation. He suggests consulting an attorney about placing your rental properties in an LLC to protect against liability, and also consider adding umbrella insurance to protect yourself. If you’re netting $6,000 in rental income, you’ll only need $4,000 to $6,000 per month from other income and investments (or $72,000 per year?), so that’s at least cash-like assets. Recommends for safe keeping. ,

I say this in almost all of my letters, but you might want to consider working with a financial planner who can create a financial plan for you. A professional can advise you about your investments — for retirement and kids’ college funding — as well as provide clarity on how to retire comfortably in the future. “He can outsource the worry to someone who does it for a living and then let them monitor the plan and adjust as needed,” Grant said.

If it doesn’t interest you, do the work yourself. Make a complete financial plan for yourself and map out what scenarios, and store it somewhere nearby so you can look at it or make adjustments when life changes.

“You can’t completely neutralize everything that’s possible, but you can do your best,” Finger said. “Also be flexible and prioritize your time and expenses. If he can make up more time with his family, then any small lapses later in life when he looks back will be an easy deal. ,

Reader: Do you have any tips for this letter writer? Add them in the comments below.

Have a question about your own retirement savings? email us [email protected]


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