Your critique needed: what else should I do?

[Fern]

In another threat on how we will retire, i was quite impressed with retire@50s answer, and in answer to to jmjj's question, what am i doing to reach my goal:

Since retire@50 has been so frank in sharing their financial circumstances, it has encouraged me, in the wonderful spirit of anonymity, to do the same and invite others here to critique where I am and what else I could be doing to accelerate my meeting my objectives.

I will soon be 46 and am single. Have a house with a market value of between $400 and $425K, I'd say, and an outstanding mortgage of about $90K. My liquid savings include about $210K retirement money and about $110K in taxable savings. I plan to sell the house (getting tired of the maintenance) and buy a less expensive condo within the next 3 years or so. By doing so I'd cut my property taxes in half. Either that or marry my new boyfriend.

I fully fund my IRA every April. I contribute 5% to 401k, enough to get the company match. I pay an extra $100 each month toward mortgage. I put an extra $50 (nominal, i know) toward taxable savings with auto deduction into my mutual fund money market. Always pay credit cards in full every month and have no debt other than my mortgage.

Have a 75 year old house, so after repairs/maintenance, and all other expenses, not a lot left over.

if i do have extra $$, does anyone have advice re: putting it toward taxable savings vs. increasing the 401k contribution vs. paying off the mortage or something else?

Retire@50 sounds like he/she really has things all figured out, and i hope it does. One thing i worry about is how to continue health insurance if i do retire early. I have a chronic (lifetime, but stable) health condition that requires rather expensive medication.

Any comments/suggestions are welcome.

[mjrube94]

Re: Your critique needed: what else should I do?

Personally, I'd opt to use extra $$ to increase the 401(k) first, then pay down the mortgage. It seems like you have a good cushion of after-tax savings, so why continue to contribute to that if you can go the tax-advantaged route? As for the mortgage, I guess it depends on your interest rate and personality. I have about 12 years left on a 15-year fixed at 4.62%, and I pay $100 extra each month. I'm sure given the low rate and the fact that it's deductible, I'd be better off investing it elsewhere, but it's a psychological thing.

[terry1156]

Re: Your critique needed: what else should I do?

here is something to consider with the health insurance - I have a friend that is doing this. If you reach powerseller status on ebay, you qualify for their health insurance coverage (I think that is elling $1000 a month over a three month period). While that may sound like a lot, he sells just a few items for $100+ and doesn't try to make much profit - he simply does it to qualify for the insurance. Since I don't do this I don't know the details, but it might be something to check out.

[BAGAGT1]

Re: Your critique needed: what else should I do?

It sounds to me like you are doing very well for yourself, I do agree with mjrube94, you have more than enough of a safety net in your taxable accounts so that you should increase your contribution to your 401k. My rule of thumb with 401k is generally start off contributing to get the company match, then when you get a raise, increase your contribution by 1%. You will still see an increase in your take home pay (unless you only get a 1% raise), but you will be contibuting more for your future. I started doing this 6 years ago, when I started my current job, and I am currently contributing 10% of my pay (it should be 11%, but because of some CC debt, I didn't increase it yet, I'll increase it next month when the CC is paid off).

Other than that, you get a big thumbs up from me, for a job very well done.