[USER]

48 and 46 years old couple. My salary $150k his $125k
My 401k & 1 IRA totaling $450k
Hiis 401k $250k

Mortgage $300k left Equity $600k, 7 years left..rate 2.5% ~$4k per month payment since we refinanced to a 15 yr so it’s paid off by the time retire @ 55.

2 high school (soohmore teens) and have 2 529 acct totaling $60k

We have no other debt..my husband wants to work until retirement..my question is could I retire in 7 years at 55 if he is still working!

Obviously there is no social security until retirement age and there will be penalty to withdrawl from 401k, could I use my IRA at 55 until i get social security and 401k? If not, what are my options?

I live in an expensive area and our monthy expense now is $10k per month!

Some suggest to open a brokerage acct..all my accts are managed by others and i am not familiar with stock market..shouldd i start with VOO & VTSAX & thinking about contributing $500 per month!

Last, at this age would you take a chance and use some of the house equity to buy an investment property for extra cash to retire earlier?

[Jule]

Why not open a taxable brokerage or HYSA to live off of in early retirement?

I personally don’t plan to touch retirement funds early, even if there are creative ways around penalties.

I plan to use dividends and savings until I can tap into our 401ks.

[Robert]

Here’s how I look at it… As a female, your life expectancy is 88 years of age; with a good chance you’ll be living into your 90s.

As far as your husband is concerned, his life expectancy is 79 years of age with a good chance he’ll be living into his 80s.

Granted, at this point, your retirement savings total 700k; and will grow between now and the time both of you retire.

But given the uncertainty of the stock market; I myself would not want to be retiring at the age of 55; unless I had a defined-benefit pension (which are increasingly rare these days) that I could immediately fall back on.

Additionally, I’m not sure the two of you are factoring healthcare costs into your retirement budget. Given the numbers you have thrown at us; I myself would be wary of returning until I was in my early to mid 60s. But that’s just me.

As far as using some of the house equity to buy an investment property for extra cash to retire earlier… before doing so I would make sure you had located a “B” property in a “B” area; and also found a killer property manager to manage the property- that way it is not your job.

That that would be the first step. Then I would get with a good CPA and run the numbers – expected (current) cashflow; future cash flow; and whether it makes economic sense to do so.

A good CPA will also clue you in on the numerous tax advantages that come with owning residential rental real estate.

If you search the threads here you’ll find out that I am an unabashed proponent of residential rental real estate; as that has been an indispensable component of my own journey towards FIRE. But it is not for everyone.

There will be lean years and there will be fat years with residential rental real estate; but bear in mind that once your investment property is paid off; you and your children will have a stream of income that you cannot outlive. Do the necessary research before jumping in.

[Elaine]

I’m curious to know why $10k per month. You have small mortgage with very low rate and no debt.

[Author]

Posts