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Hello everyone! My husband (58) and I (56) are starting our journey toward financial independence, and I’m excited to learn from this amazing community.

I should also add that his plan is to retire in 9 years.
Here’s a little about us: we live in Massachusetts, and I’m a registered nurse currently not working.

My husband is a partner in a company, and we’re proud parents of four grown daughters, all of whom have graduated college and are out on their own.

Financially, we have some savings in a traditional account and a 401(k), but we’ve never worked with a financial advisor.

While we feel like we’ve come to this a bit later than we’d hoped, I’m determined to take control of our financial future. With the help of this group’s knowledge and support, I’m confident we can make real progress and catch up.

I’d love to hear any suggestions or advice on how to get started. Here’s a snapshot of our current financial picture:

Monthly take home pay (net) =8,100.00 – $120,000. Base salary due to bonus every year

Yearly bonus (varies) – 2024 – $150,000. 2023 – $248,000 (last years bonus went towards paying off college loans and car loans),

Emergency fund – $30,000 in a traditional savings account
Traditional savings account (separate from emergency fund account) – $113,000.

I am disappointed that we have this amount of money sitting here not making any money, but truth be told, I don’t know what to do with it.

Mortgage – $212,000. (3.5% int) – P&I – $1,010.
T & I – $486.

Value of home on the low end, just to be safe is $500,000 (townhouse in golf community)

1 parent plus loan left – $7000. (7% int)
Car loan – $18,000. (8.45%int)
CC – $7000.

Husbands – Company 401K John Hancock Retirement account – $694,000. (we contribute the max every year)
My 401K from my previous job at Harvard University – TIAA – $45,000.

~ both accounts are 100% in vanguard Target retirement 2035

I also have $10,000. In a MTRS account
Here is the sticky part. We purchased a home in Venice Florida, with my husband’s brother and his wife back in 2015.

It is a 2,700 sq ft home in a golf community. It is completely paid off.

My husbands brother just told us he wants out of his half this year.

The value on Zillow is $465,000. I know that Zillow is not an accurate assessment, but I feel it is close to that, if not a bit less (due to the interior being quite dated – early 90’s).

It is in need of a new roof (survived both recent hurricanes, but due to the age, insurance will drop us if not replaced), quote for $40,000. Everything else in the home is structurally sound.

We have had many great years with our kids and grandkids there.

Yearly operating expenses – $19,000. (which we split with my brother-in-law).

I would like to buy him out of his half, but I am unsure of how we could do it, or if it is even feasible.

Is it wiser to sell it and take the proceeds to pay off all debt and possibly mortgage on our primary home?
Invest it?

Purchase something in Florida in a few years? Even if he asks us for $250,000., it is still less than trying to buy another property.

Rent for the 2 or 3 months that we like to be down there?

[Amy]

I’ll comment on the non-real estate portion.
1. You may be cash heavy if the $113K in cash doesn’t have a specific purpose.

You could consider investing some or all of that depending on what the cash is for.

It’s often recommended that each dollar be given a job. A dollar whose job is to be spent in the near-term (emergency fund, down payment, sinking fund) should be kept liquid and held in an interest-bearing account.

A dollar whose job is to be spent 10+ years from now (retirement) can be invested to maximize its growth potential.

2. Instead of keeping cash in a traditional savings account which earns little interest, the recommended approach is to hold your savings in a money market fund (MMF) in a taxable brokerage account at your brokerage firm.

You’re already familiar with Vanguard so open a taxable account there if you don’t already have one and keep your cash in one of their MMF. VMFXX for example is currently yielding 4.27%.

High Yield Savings Accounts (HYSA) are another popular option but you’ll get less than market rates from banks so MMF are the recommended approach.

3. Target Date Funds (TDF) aren’t ideal because they’re almost always too conservatively invested and are more expensive to own than index funds.

If you think you’re too conservatively invested, you could look into swapping the TDFs for low-cost, broad-market index funds.

4. Other than that, the key to success is to create more space between your income and your spending so that you can invest the difference.

You have a high income so the place to look for saving opportunities is your spending. Housing, transportation and food are The Big Three.

If you can get those expenses down that will have a big impact on your savings.

[Kaj]

Key points:
age husband (58) and I (56). Retire in 9 years.
Monthly take home pay (net) =8,100.00 – $120,000

Yearly bonus (varies) – 2024 – $150,000. 2023 – $248,000
Emergency fund – $30,000
$113,000 cash
Home $500K

Mortgage – $212,000. (3.5% int) – P&I – $1,010.
T & I – $486.

1 parent plus loan left – $7000. (7% int)
Car loan – $18,000. (8.45%int)
CC – $7000.

401K $694,000.
401K $45,000.
MTRS $10,000.

home in Venice Florida, $465,000. Roof quote for $40,000.
Yearly operating expenses – $19,000.
SOLUTION

I’ve been to Venice so I’m biased. Keep the snowbird lifestyle.
I agree we need to know your monthly expenses for long term advice but I think you are on track.

I’d use your $113K cash to pay off your debt & fix the roof, will your BIL pay half?

You might need the new roof before the mortgage so you need to decide on a price, lock that in, fix the roof, then transfer title. Or else, you are close to having enough home equity in your primary to get a HELOC to buy out the brother.

Any chance your kids want to be partners on the Venice property?

If your bonus is $150-250K the HELOC could be gone in 2y. But depending on the interest rate you might want to invest.

Even going slow I’d pay it off in 9 years so the debt is not an expense in retirement. ($19K a year is enough.)

Your 401K should grow to $1.5M if untouched. Adding $100K a year in bonuses and you could easily have $3M in 9 years.

To get this growth 8% you might need something a bit more aggressive than a 2035 target date fund. With $3M, can you live off of $120K/year?

I think so, but double check your numbers. Also max your ROTH if eligible & anything beyond the 401k can be invested in a taxable brokerage account which is actually more tax efficient than a traditional IRA.

With healthy bonuses invested in VTI or similar you might even hit your FIRE number in 5-7 years.

[Scott]

From a financial perspective the FL home seems a bit of an extravagance and given that you have only maybe 3x hubby salary w/bonus in financial assets indicates either (a) he has been earning that pay a very short time or (b) you have an expensive lifestyle. And probably 4 kids in college was a drain.

The obvious financial decision is likely to sell the money-draining FL property, invest, and when you retire you can decide if you want to be a snowbird or sell MA and move to FL (or go somewhere else…’somewhere else’ probably will be highly correlated to where the 4 kids and grandchildren land).

You should be fine if you focus on saving a good chunk of bonus from here out but keeping the FL place is likely to stretch that out a couple years.

That said if the FL is important to your lifestyle and hubby enjoys job and plans to go well into mid 60s maybe it is worthwhile but that is more a lifestyle decision.

Another option is to cash out the 2700 ft home (seems large!) for a smaller place to keep a foot in the market (I am not familiar with FL real estate at all so that might not be a realistic option).

[Rick]

Tough thing is eagle eye hindsight. Especially when real estate has just been through a valuation super cycle and we seem to project that continuing creating FOMO from that feeling.

I would not buy nor hold a second home before my retirement finances are as strong as a Sherman tank.

I would get all my finances, my asset mix, my asset location, my decumulation plan, etc all in place and then start looking for that second home or better yet one main home in another location.

Double mortgages are something I would avoid like the plague. Close behind it is two paid off (unleveraged real estate) I would also avoid.

I would personally prefer to play offense for years until it this decumulation time. Shovel money as hard and fast as you can into any and all investment accounts. Grow baby grow.

And then at or a year before decumulation, then start planning on your future housing needs. And here is where eagle eye hindsight can get you.

If Florida’s housing goes bonkers for more and more years, you would have been better off keeping that second home.

But that would be judging today’s decision on a dozen or more things completely out of your control and that is no way to judge a decision.

Either way good luck with your plans!

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