Planning our retirement by the numbers

17 thoughts on “Planning our retirement by the numbers”

  1. Wow — so interesting to see your full breakdown! Given what good shape you’re in on tax-deferred accounts, have you thought about reducing what you’re putting them, perhaps sometime down the road? We’re asking ourselves this question — we’re way ahead of the game on 401(k)s and could really use that money instead in our taxable investments to get us through the first 18-20 years of retirement, and so we’ve been gradually backing off from the 401(k) max. (Still getting our full employer max, of course — we’re not dumb enough to pass up free money!) Just curious if you’ve considered the same thing.

    1. We’ve thought about it. It would also affect our current taxes. My company is now offering a HSA which I’ll probably go for next year. So we’re going to sit down and figure it out later in the year but it’s definitely a possibility. Thank you for the suggestion!

  2. You didn’t mention one super important number- what’s the rental cap in your market? With your expenses, it looks like you would probably want about $1450 per month to choose real estate. Do you think that’s realistic?

    One more number for you- health of HOA numbers are very important, otherwise you might end up like me and buy a low HOA property only for the fees to double.

    1. We’re actually hoping for $1000 a month rent which is do-able but on the high side. It would depend on how upgraded we can get the townhome to look. If it was more like $850-900 we’d be okay with that too since we really want it for the long term and as only one of our forms of passive income.

      Thank you for the advice on the HOA. Both our current homes have HOAs but we haven’t dealt with one in a townhome/condo atmosphere and I know that can make a difference. I’m adding the HOA health to my must haves list!

      1. HOAs can be horrible because of the guaranteed price tag, but if you find a good one, the hassle elimination can be a life saver. Having the entire outside of the building cared for (most especially the roof and yard work) can be a tremendous asset.

        Also, since your planning to pay it down so aggressively, I would practically think of your townhome purchase as an all cash RE investment, with 5% expected returns (and a possibility of future growth). I like RE because it feels so secure (to me) and provides some nice variance in asset allocation. I personally would hesitate on a 5% expected ROI, but I think if this feels like a good choice for you then I would say go with your bad selves (check out the bigger pockets forums and No Nonsense Landlord to learn some more first).

        1. I like the way you’re thinking! RE feels secure to me as well. I’m the one pushing not having our eggs all in one basket though Steve agrees so it’s not too hard of a push. Thank you for the recommendations. I’ll be checking out the bigger pocket forums and No Nonsense Landlord now 🙂

    1. The idea is growing on us more and more. That’s why our plan has to be flexible. In our current dreaming the town home would be our home base and the first few years after retiring we’d be traveling a lot and renting it out while we’re not there. We shall see. 🙂

  3. Just wondering, are you going to rent out the townhome in Sedona as a short-term rental or a long-term rental? Furnished short term rental might generate you more money since Sedona is a vacation spot although there will (probably) be higher vacancy rate and it might need more maintenance as well.

    1. For the next few years it would be a long term unfurnished rental. Not as much rent but less hassle while we’re a couple of hours away. We might even hire someone to manage it for us (though we haven’t had any issues with our home 40 minutes away from Tucson). In the long run it could go either way. If we decide to travel for a few years and not buy a home we’d leave the town home furnished and rent it as a vacation rental through one of the services in Sedona. If we move into a home in Sedona I don’t know. I like the idea of the extra income but Steve is worried about the work-load. However like you’ve noticed being a vacation destination we will have the option of keeping it either a long-term or short-term furnished rental in the future.

  4. Awesome – it is great to see numbers. I love playing with numbers and spreadsheets too. I think you really hit the main point in planning “flexibility is key” That is the concept we are trying to get comfortable with.. I keep telling my husband, we could save $1 million or $3 million – and both could not be enough if we ( I mean -he) refuses to be flexible.

    1. Steve like’s to say he’s nothing if not….flexible 🙂 It’s hard for me not to have a set plan but without solid end goals that’s not happening anytime soon. So we aim for short term goals in the near term and occasionally visit the horizon to plot our course!

  5. I read this without my morning coffee, but I still loved all the details as I squinted with one eye open;) JK As a real estate FI guy, I am a fan, also I am a strong believer in multiple incomes for ER, and lastly the plan makes sense which is the most important.

    Looking from a distance here are my concerns. What if you don’t want to be landlords? Part of the plan is assuming that holding a rental property, while living in Tuscon will be puppies and ice cream. Also long term vacancy, especially if you depend on the rental income?

    Also one question is the FI Cash Bucket sitting in a savings account or allocated elsewhere?

    1. I like numbers even in the morning but I think Steve would grimace a bit at reading an article with this many numbers before his morning coffee. 🙂

      As for your questions. We know we’re okay being landlords because we currently are. We have renters locked into a two year lease in Steve’s bachelor home south of Tucson. We are very lucky with the renters we chose, though we did do our homework.

      We haven’t decided whether we’re going to work with a management company in Sedona while we’re still in Tucson. We’d like to avoid it if possible especially since we hardly need to go down to the current rental. Most problems can be taken care of with a phone call. For those who don’t know, Sedona is about 4 – 4 1/2 hours from Tucson. We’re lucky that we have a place to stay right in the middle of that trip (2 hours) whenever we need to. So if we do need to make trips up we can do it and stay for free not too far away.

      Long term vacancy is always an issue. I’ve accounted for some vacancy in our numbers but not for months and months. Luckily Sedona has a thriving rental market from the research we’ve done. A lot of the people who work in Sedona cannot afford to live there (unfortunately) so there are always people looking for rentals. It is also a retirement destination so there are a decent number of snowbirds and retirees looking for places. We always have the option of switching over to a furnished short-term rental strategy if we need to as well.

      Lastly our FI bucket is sitting in a savings account earning 0.99% APY. Not a great return but the best I could find for savings. If we had a longer time horizon we might have looked into other options but this seemed pretty good for now.

  6. Great detailed picture Courtney! You don’t plan to tap your 401k’s with a Roth conversion in retirement like some other early retirees? Also congrats on the decent match you two get… I’m assuming 18 x 2 = 36, so 11k of match. That’s great!

  7. I love the spreadsheets and I wouldn’t worry too much about not having income when you reach FI. I mean have finally realized that FI doesn’t mean I stop working. It just means I have the option to do something else. Most likely you all will stop working in general, but I am sure there will be lots of “work” with side incomes and the like. I mean I can’t see myself playing bingo all day, but then again my FI will be a little later than most. Ah to be young again :)>

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