[USER]

Current status: I’m 35, husband is 36. We will be empty nesters at 37 and 39 (mind blowing I know-we started young! Lol) My 401K balance is 103,000. I have 2 different Roths I need to combine, balances of 8500 and 17500.

Husband has a 401K that has 10,400 in it. Our income is about 125,000. We live pretty modestly, have 2 daughters ages 18 and 16 (cars and insurance are a killer!).

Looking at 4 years of college for daughters-oldest will be done in 2 years (got associates degree in HS) and youngest plans to do a 2 year trade.

We owe 45000 on our home, it’s a 2.6 interest rate so I’m not focused on paying that off early. I’d like to retire at 60. Is this possible?!

All advice welcome! I followed Dave Ramsey for a while when I was younger-but just haven’t been able to keep up contributing 15% raising these teen girls.

[Russ]

It’s possible. You have to put in the effort though. Mid 30’s. You have about $150 in retirement fund.

I would consider paying off the home early with biweekly payments if allowed by your mortgage broker and if the numbers make sense.

I know you stated you aren’t interested in paying it off early. Just thinking of freeing up cash flow without really allocating a lot of extra cash to the payment schedule.

I’d see if daughters are interested in state schools instead of private universities. Should be a lot of savings there if they are as opposed to private institutions.

Look towards scholarships and grants. I’m in line with others about maintaining retirement contributions.

IFFFF you can’t continue with the ROTH types of contributions, see about regular pretax contributions with potentially employer match.

You’ll pay for it on the back end, but you still get roughly 25-30 years of growth.

I’d consider each year upping the contributions by a percentage or two.

I’m going to assume that you’ll be getting raises that should offset any increases. I know that financially it is hard. I’m banking that your daughters will be out of the house completely within the next decade.

Those expenses should decrease significantly (with the exception of any student loans you may be contributing to).

This MAY increase cash flow. Plus, the slight annual increase in retirement contributions will have had 10 years to work its magic of compounding along with any increased contributions you make.

So, I’m guessing conservatively at an 8% return on $150k (what I assume you and your husband have combined in retirement funds NOW), for 25 years will return you will have just north of $1million dollars without adding another cent.

You live a modest lifestyle and that contributes more than you know without taking any of my above advice.

[Christine]

You both are young enough that you can do it but you are probably going to have to cut expenses to max out your ROTHs and 401ks.

Is there any way to have your teens pay for their own cars, and college expenses?

Do you know what your FIRE numbers are?

[Rochelle]

You’re off to a good start!
Max out each of your ROTH IRA’s every year and then pick dividend paying ETF’s which mimic the S&P 500.

Be sure to reinvest the dividends

Next, see if your company has a ROTH 401k at work and contribute to that so that your money will grow tax free.

Make sure to put in enough to get the company match (usually 6%) and do more if you can afford it.

The interest rate on your house is awesome, however, I would still try to make extra FOR PRINCIPAL ONLY payments to your mortgage company every month.

You can find an amortization schedule online and put in different amounts to see how fast you can pay off your mortgage, just by making extra PRINCIPAL payments every month.

Once your mortgage is paid off, you will really feel a sense of freedom and then you’ll have extra money to put towards your retirement.

Sounds like you are living pretty thrifty, but be sure to get rid of any subscriptions you aren’t using (cable, streaming, etc), as well as cell phone plans (a family of 4 can easily get a plan for $100/month total ~ Cricket, T-Mobile, etc).

With young drivers, shop around for the best auto insurance and combine it with your Homeowners insurance for a better rate.

Also, many insurance companies will give discounts if your kids get good grades (sounds like they do).

See if your kids can get scholarships too! There are so many available, but they have to find them.

[Leslie]

Are you planning to pay for their college yourselves? If so, age 60 retirement might be out of reach based on current income and savings.

In state schools, available scholarships, grants, and financial aid for your daughters.

Have them take out student loans in their names. Many people don’t want to burden their children with this, but many of my parents friends fell into this and are still having to work while mine were able to retire at 65 with 4 children that all went to college and they had a modest income.

We all took out student loans and paying it back ourselves and I wouldn’t want it any other way if it meant them working any later.

I might do think contrary to most, but I always advise people to focus on paying off their mortgage first as it takes that burden off your plate and allows one to take more risks with investments.

We paid off our first mortgage, which led us to feel comfortable enough to start buying rental properties, and then to build a custom home worth quadruple the first in cash. We have since bought more rentals.

You both start contributing 15% starting today. There will never be a good time to start and before you know if, you will be years down the road and have lost out on compound interest.

Congrats on being close to being empty nesters!!

[Nikki]

I would keep maxing your Roth for sure and your 401k as much as you can. I personally feel the market will be volatile this year, so my plan is to Max my 403 b and Roth IRA.

I am hoping it pays off after 5-10 years.

I would also think about starting a brokerage account that you can put a little $ into here and there to bridge you to retirement age if you are thinking 60.

[Lisa]

Yes, keep investing! Open an S&P 500 Index fund and invest as much as you can every month! Max out 401k’s

[Author]

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