[USER]

Need advice from you smart folks!

Husband and I are 39 and 42 with kids age 6 and 3. We’re hoping to retire in 15 years if possible after our youngest is done with high school. We make about $250k a year in California (after taxes, 401k and deductions – we live on about 55% of our gross income)

Current assets – completely debt free aside from our mortgage

769k in 401k
320k in 401k
22k in Roth IRA

Home $865k (owe $390k and will be paid off in 13 years)

529 plans funded for both kids (31k and 10k)

We have both kids in private schools and they’ll stay there until they graduate high school. I feel like we can’t invest more than the $3k a month we already put towards 401k because we also wanna live a little instead of waiting until retirement.

Do you think we’ll have enough for early retirement in 15 years? I’m estimating annual expenses at $120k.

What % do you use for projected growth on 401k? (The larger 401k fund above had an average growth of 12% in the last 10 years)

[Alisa]

Eventually you may need more in after tax buckets like Roth ( via roll overs), regular brokerage or HSA to bridge the gap until age 59.5 and to avoid IRMAA.

[Allison]

There’s a bunch of different interactive calculators out on the internet – I advise playing with multiples of them to see if their calculation/projection works for you.

I think my only head scratcher is your annual expenses of $120k. Is that just – property taxes, car maintenance, utilities, or is that your projected annual budget? If that’s your budget, I feel like that’s pretty low for the area you live, what I can guesstimate your taxes are, and the fact you’re already itching to live a little.

Additionally, consider: Accessing 401k in early retirement without 10% penalty, which is better SEPP or backdoor Roth?

[Gavina]

Congrats on what you already have done.

People have 🔥 on less.

How much less then the 125k year do you plan on living on. Do you plan to pass on wealth to children.

Will you move to a lower cost of living city or state?

These are questions to discuss.

[Stan]

I’m in CA too and in my 50s. The struggle is real in this state. I would consider planning for: 1) investment account for living expenses before 59.5 or excessive college expenses or major cash outlays in the future 2) whether account you plan in the 529s is enough, 3) 401ks – 1 or 2 of you working?, if 2 then not yet maxing them out 4) how to budget/pay for capital expenditures (home improvements, new car, etc. )……money does not go far in CA. If you want to retire early I think you need to live super frugally or increase investments.

[Author]

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