Hi all,
This is my first post in this subreddit, and I am hoping to get some perspectives on a good path forward for our family in planning for our future retirement.
Background: we are both 36 years of age with two children aged 4 and 1.5 meaning another 4 years or so of child care expenses. Current household income is $165,000 in a medium-COL college town which we moved to two years ago. Currently, we are pending on a sale of our home in Seattle, which we purchased for $400k and are selling for $825k. After paying off mortgages and making some deferred purchases and home improvements, we should have approx. $275k in net proceeds. We currently own our home in our new town and with a low interest rate I’m not in a huge rush to pay the mortgage down.
Current retirement assets are $200k in a municipal government pension, $30k in a 403b, $18k in a money market fund (this definitely needs to be reallocated). My retirement plan saves 7.5% of my salary, with a 100% employer match (15% of income saved). My wife’s retirement plan saves 7.5% of her salary, with a 150% employer match (total approx 22.5% income saved), but she is fairly new in her profession so not much has been saved yet.
Our only debts are the mortgage on our existing home, plus $120k in student loan debt which we hope to have forgiven, either through the public service loan forgiveness program (currently enrolled) or through a change in policy from a future administration.
Our goals are to retire by approx 55 (wife perhaps a few years later) and to save for approx half of our children’s college expenses, probably needing around $250k total starting in 15 years. I would like to begin maxing out an additional 401k or 403b at $18k/yr for the tax shelter.
The big question is how should we allocate the $275k in home proceeds to meet our goals? Assuming we save for retirement at our current levels plus the annual $18k, is our timeline realistic? Can we shelter both contributions of the $18k and to a college fund from our annual taxes? Since we rented out our home in Seattle for two years prior to selling it, I am open to putting a portion of the funds ($80-100k) into an investment property we could rent out in our current town. Additionally, I am very leery of putting everything in the stock market in the short term, as I feel it is significantly out of whack with the current economic reality - but I am open to other views on this.
We saw a financial planner a few months ago, but he was mostly interested in “managing” the home proceeds rather than providing a comprehensive plan for us. I think I could put together a somewhat coherent plan but would really appreciate perspectives. Thank you!
Submitted August 18, 2020 at 11:35PM by tcbham https://ift.tt/2Q5VOPM
