Financial Picture

[snafu]

I suggest you look at Buy/Sell volumes to see if you can identify a pattern perhaps over three years. The Mutual Fund managers and big volume buyers tend to 'sell in May and go away' from trades until after Labor Day unless something major happens that jerks programmed selling or buying candles into action.

[Jluke]

UPDATE: opted to sell the two remaining sets of stock options over the last 2 weeks.

I pulled in $14k net:

I added $2800 to my escrow account so I will have $500/month going to real savings for Aug to Dec.

I paid off the HVAC loan that had a remaining balance of $3200. So the $150/month payment is also gone.

I put $1000 to the Roth to reach the max for 2016.

$7000 to cash savings to replenish some of the money I used earlier to pay off the mortgage. Earmarked for 2017 Roth.

Sadly 14k seems like a lot of money, but in the end I found a way to use it up real fast.

Always contemplating the 401k contributions to reach 18k max, which I am currently on target to achieve, but have to wonder if having all of that money in retirement funds is a good move.

I say that looking at the breakdown of net worth: 52% retirement; 36% house; 7% taxable investment; 5% cash. I have a lot of illiquid assets at this point.

Only debt is a car loan for $11,800.

thoughts???

[autoxer]

Always contemplating the 401k contributions to reach 18k max, which I am currently on target to achieve, but have to wonder if having all of that money in retirement funds is a good move.

I say that looking at the breakdown of net worth: 52% retirement; 36% house; 7% taxable investment; 5% cash. I have a lot of illiquid assets at this point.

As long as you can still meet your short and mid term goals, then this shouldn't be an issue. I'm 37yo and my networth breakdown is 67% retirement accounts; 7% home equity; 3% automobiles; 9% taxable investments; 15% cash. The only reason cash is getting high, is because we are planning to move into a different school district soon. Before saving up for a house downpayment my emergency fund was closer to 5% of net worth.

[Goldy]

why are you concerned about locking away money in your 401k? Are you planning to retire early? There are a few ways to get money out of a 401k and into a Roth but they are usually only viable if you don't have income coming in.

[Jluke]

why are you concerned about locking away money in your 401k? Are you planning to retire early?

Right now it feels like all eggs in one basket (401k and ROTH).

I am still adjusting to life w/o the mortgage payment, which seems to have been replaced with the increased 401k contributions.

Investing/saving outside of retirement accounts is also important; potentially for the ability to retire early before I can access my 401k. I know I can access my ROTH contributions early; just not the gains.

I guess I just need to have the mindset that you really can't save enough for retirement and continue to max 401k and ROTH while I can. You never know what the future holds... one day I might not be able to max them out due to job change, etc.

[LivingAlmostLarge]

You can draw from the 401k early using the equal distribution rule.

[Goldy]

Right now it feels like all eggs in one basket (401k and ROTH).

I am still adjusting to life w/o the mortgage payment, which seems to have been replaced with the increased 401k contributions.

Investing/saving outside of retirement accounts is also important; potentially for the ability to retire early before I can access my 401k. I know I can access my ROTH contributions early; just not the gains.

I guess I just need to have the mindset that you really can't save enough for retirement and continue to max 401k and ROTH while I can. You never know what the future holds... one day I might not be able to max them out due to job change, etc.

Those are good baskets to hold your eggs. I'm in a very similar boat to you with about 70% of my liquid assets locked in the roth and 401k but I am perfectly happy with that setup right now. I'm planning to be able to retire by 40 if I want to and will be tapping the Roth and 401k to make that happen. My plan is to convert the 401k to a Roth in smaller chunks (like 30k) annually and let it simmer in the roth for 5 years like a CD ladder. After 5 years I can pull that 401k money out of the roth just like a contribution and the only tax I pay is from the conversion which isn't much at all.

[Jluke]

Those are good baskets to hold your eggs. I'm in a very similar boat to you with about 70% of my liquid assets locked in the roth and 401k but I am perfectly happy with that setup right now. I'm planning to be able to retire by 40 if I want to and will be tapping the Roth and 401k to make that happen. My plan is to convert the 401k to a Roth in smaller chunks (like 30k) annually and let it simmer in the roth for 5 years like a CD ladder. After 5 years I can pull that 401k money out of the roth just like a contribution and the only tax I pay is from the conversion which isn't much at all.

thanks for taking the time to provide those details.

That plan sounds great and congrats on being able to retire by 40.

can you direct me to where I can learn more about the 401k conversion, etc and using that strategy to retire early?

[Goldy]

This one is pretty good

http://retireby40.org/roth-ira-conversion-ladder-minimize-taxes/

Long disucssion here with many links

http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

[Goldy]

One more

http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/

[Thrif-t]

^^^ Wait a minute I find this interesting but after you retire and no longer have work income you can roll some of your 401k into a Roth? I didn't think you could do that??

[Jluke]

figured I would dig this one up and post some new information, including 2019 expenses

UPDATE
Age 42
Family: Married, 6 year old, baby due March 2020
His Monthly Income (Net): $4400 or so.



His Assets
401k: $490k; Contributions: MAX
Roth: $94k; Contributions: MAX
Cash: $65k
Taxable Investments: $123k balance



His Debts
Mortgage: $940/month ($183k balance at 3.875% with ~28 years remaining)
Escrow: $950/month (manage myself)
Car Loan: $296/month ($5.3k balance at 0.9% with 2 years remaining)


Life Insurance
Term: 250k (20 year policy ending at age 57). $246/year
Employer: 3x salary

And since i picked on disneysteve’s budget...

2019 Expenses (year)
extra mortgage: 1675
electric: 1100
propane: 2000
trash: 336
water: 678
sewer: 600
childcare: 2750
cable/internet: 2265
cell phone: 410 x 2
dining: 1300
“groceries/household supplies”: 11,000 (broad category)
auto fuel: 2475 (3 vehicles for auto)
auto service: 770
auto registration: 86
auto insurance: 1865
vacation: $0.00 (not a typo)

not all encompassing but a good idea of expenses.

thoughts? Additional info?

[disneysteve]

figured I would dig this one up and post some new information, including 2019 expenses

UPDATE
Age 42
Family: Married, 6 year old, baby due March 2020
Monthly Income (Net): $4400

thoughts? Additional info?

The first thing that jumps out is that almost 5 years later, your net income is $200 less than it was before. Why is that?

Thoughts? Eat less; Vacation more.

[disneysteve]

It looks like your monthly surplus is about $1,900 which is 43% of your net. I'd say you're doing just fine, and you're maxing a 401k too.

[Jluke]

The first thing that jumps out is that almost 5 years later, your net income is $200 less than it was before. Why is that?

Thoughts? Eat less; Vacation more.

Income: Maxing the 401k now since I wasn’t before.

yeah vacation travel just didn’t happen in 2019 due to poor planning (we need a dog sitter)