Hi there wonderful Reddit strangers. Thank you in advance for any assistance or guidance you can provide. First, what I would like to accomplish; second, my current life and financial situation; and third, my questions:
What I Want to Accomplish
I want to "soft retire" by 55. I'm currently 40. Upon retirement, I want to cut my work hours to 20 or so per week, and spend a good deal of time traveling.
My Current Life & Financial Situation
I'm married, my wife and I are both 40, and we have no children. We will not be having children. We live in Charlotte, NC. I own a law firm and I teach entrepreneurship at a local university, part-time. My wife has been unemployed for a bit, but she just graduated with her Masters in Social Work, and she is beginning a part-time job as a mental health counselor in the next month.
First, income. My 2023 employment-based income:
When my wife begins work in the next month (1099 independent contractor), she will make around $20,000 / year.
Other than my job, I own a rental property, but I rent it to friends of mine who are wonderful tenants. They pay me just a bit more than the $1,700 mortgage each month, although I could get around $2,300 / month if I were to rent it out at market rate to someone else. They've lived there for 3+ years and I've never had to do anything to maintain or repair the property--they take good care of it and pay rent. My rental property is a wash and I break about even.
Second, assets and liabilities. My current assets and liabilities are:
Description
Asset Value
Debt
Primary Residence
$715,000
$315,000 (3.63% APR, 30 year mortgage, with 26 years left)
Rental Property (across the street)
$550,000
$218,000 (3.75% APR, 30 year mortgage, with 22 years left)
2024 BMW
$60,000
$0 (purchased in cash)
Mutual Funds managed by Financial Advisor
$381,000
$0
SoFi Savings Account (4.75% APR)
$83,000
$0 (we were saving money to buy a second home in NYC, but now we're saving to add on to our current home, see below)
IRA (rolled over from 401k with my previous employer)
$97,000
$0
My 401k
$56,000
$0
Wife's 401k
$43,000
$0
Ally Savings Account (4.75% APR, and I'm using this money exclusively to assist my aging parents, who are in ill health)
$62,000
$0
Chase Bank checking and savings
$50,000
$0
Wife's student loan
N/A
$28,000 (unknown interest rate because she graduated recently, but the are federally subsidized loans)
TOTAL
$2,097,000
$561,000
Re: retirement savings, I started late in life. Because I don't have much knowledge re: retirement savings, I hired a financial advisor. The advisor charges 1% of all investments I have with him, each year, as a management fee. My wife and I are both employed by the firm, and we max out our 401k each year. I also deposit $10,000 into my brokerage account each month, for investment by my financial advisor. The money is invested in a mix of funds and has grown very well in the last couple of years.
Finally, we have a couple of expenditures I expect to incur in the next 2 years. Our home is relatively small and not well suited for 2 people working from home. Therefore, we intend to undertake a $500,000 renovation in the next year or so. Other than this, my wife and I moved to Charlotte from New York, so we'd like to spend more time in NYC. This may mean renting an apartment there in the next 2 years, or so. We would spend around $4,000/month renting a place (we looked at buying and it was insanely expensive, and more reasonable to rent because we can stop renting at the end of any lease term). If we rented a place in NYC, we would spend no more than 6 months there, to avoid paying state or city taxes in NY.
My Questions
When I met with my financial planner initially, they gave me some incredibly high and unobtainable amount of money that I would need to retire (something like $11,000,000). I don't agree with their number and I'm trying to dial in on what exactly I will need to retire. My plan is to "soft retire" at 55. That likely means working part-time as a lawyer and teacher. I would expect to make around $200,000 or so (net, today's dollars) working part-time, upon retirement at 55. So my first question: what amount of money will I need to "soft retire," at 55? Let's assume my wife and I, combined, will spend around $150,000 per year upon "soft retirement." So effectively, we can live off of my income and bank $50,000 or so for further retirement savings, each year, upon soft retirement at 55.
My rental house is another conundrum for me. I could sell my rental house upon "hard retirement" (when I actually stop working), if that makes financial sense. It would give me a big influx of cash for retirement, and the property will likely be worth much more in the future (it's in an incredibly desirable part of Charlotte with insane growth around it). But it could also be a good source of passive income in retirement. So my second question: should I sell my rental house or keep it, and if I should sell it, when?
Assuming all of the above, my third question: at what age could I comfortably "hard retire" (meaning, stop working entirely)? I'd like to do this around 65, if possible.
Finally, my last question: what retirement savings elements am I missing? I'm maxing out 401k and putting $10,000/month into brokerage accounts. Is there anything else I should be doing?
Thank you again, in advance, for any assistance or guidance you can provide me! I appreciate your time!
What I Want to Accomplish
I want to "soft retire" by 55. I'm currently 40. Upon retirement, I want to cut my work hours to 20 or so per week, and spend a good deal of time traveling.
My Current Life & Financial Situation
I'm married, my wife and I are both 40, and we have no children. We will not be having children. We live in Charlotte, NC. I own a law firm and I teach entrepreneurship at a local university, part-time. My wife has been unemployed for a bit, but she just graduated with her Masters in Social Work, and she is beginning a part-time job as a mental health counselor in the next month.
First, income. My 2023 employment-based income:
- $100,000 in salary from my law firm
- $360,000 in distributions from my law firm
- $5,000 or so from teaching
When my wife begins work in the next month (1099 independent contractor), she will make around $20,000 / year.
Other than my job, I own a rental property, but I rent it to friends of mine who are wonderful tenants. They pay me just a bit more than the $1,700 mortgage each month, although I could get around $2,300 / month if I were to rent it out at market rate to someone else. They've lived there for 3+ years and I've never had to do anything to maintain or repair the property--they take good care of it and pay rent. My rental property is a wash and I break about even.
Second, assets and liabilities. My current assets and liabilities are:
Description
Asset Value
Debt
Primary Residence
$715,000
$315,000 (3.63% APR, 30 year mortgage, with 26 years left)
Rental Property (across the street)
$550,000
$218,000 (3.75% APR, 30 year mortgage, with 22 years left)
2024 BMW
$60,000
$0 (purchased in cash)
Mutual Funds managed by Financial Advisor
$381,000
$0
SoFi Savings Account (4.75% APR)
$83,000
$0 (we were saving money to buy a second home in NYC, but now we're saving to add on to our current home, see below)
IRA (rolled over from 401k with my previous employer)
$97,000
$0
My 401k
$56,000
$0
Wife's 401k
$43,000
$0
Ally Savings Account (4.75% APR, and I'm using this money exclusively to assist my aging parents, who are in ill health)
$62,000
$0
Chase Bank checking and savings
$50,000
$0
Wife's student loan
N/A
$28,000 (unknown interest rate because she graduated recently, but the are federally subsidized loans)
TOTAL
$2,097,000
$561,000
Re: retirement savings, I started late in life. Because I don't have much knowledge re: retirement savings, I hired a financial advisor. The advisor charges 1% of all investments I have with him, each year, as a management fee. My wife and I are both employed by the firm, and we max out our 401k each year. I also deposit $10,000 into my brokerage account each month, for investment by my financial advisor. The money is invested in a mix of funds and has grown very well in the last couple of years.
Finally, we have a couple of expenditures I expect to incur in the next 2 years. Our home is relatively small and not well suited for 2 people working from home. Therefore, we intend to undertake a $500,000 renovation in the next year or so. Other than this, my wife and I moved to Charlotte from New York, so we'd like to spend more time in NYC. This may mean renting an apartment there in the next 2 years, or so. We would spend around $4,000/month renting a place (we looked at buying and it was insanely expensive, and more reasonable to rent because we can stop renting at the end of any lease term). If we rented a place in NYC, we would spend no more than 6 months there, to avoid paying state or city taxes in NY.
My Questions
When I met with my financial planner initially, they gave me some incredibly high and unobtainable amount of money that I would need to retire (something like $11,000,000). I don't agree with their number and I'm trying to dial in on what exactly I will need to retire. My plan is to "soft retire" at 55. That likely means working part-time as a lawyer and teacher. I would expect to make around $200,000 or so (net, today's dollars) working part-time, upon retirement at 55. So my first question: what amount of money will I need to "soft retire," at 55? Let's assume my wife and I, combined, will spend around $150,000 per year upon "soft retirement." So effectively, we can live off of my income and bank $50,000 or so for further retirement savings, each year, upon soft retirement at 55.
My rental house is another conundrum for me. I could sell my rental house upon "hard retirement" (when I actually stop working), if that makes financial sense. It would give me a big influx of cash for retirement, and the property will likely be worth much more in the future (it's in an incredibly desirable part of Charlotte with insane growth around it). But it could also be a good source of passive income in retirement. So my second question: should I sell my rental house or keep it, and if I should sell it, when?
Assuming all of the above, my third question: at what age could I comfortably "hard retire" (meaning, stop working entirely)? I'd like to do this around 65, if possible.
Finally, my last question: what retirement savings elements am I missing? I'm maxing out 401k and putting $10,000/month into brokerage accounts. Is there anything else I should be doing?
Thank you again, in advance, for any assistance or guidance you can provide me! I appreciate your time!