Natasha thinks she and her husband have saved enough to retire early, but they’re scared. Are they ready or are they delusional?
Should Krista tap into the equity from one of her rentals to rebalance a portfolio that is weighted heavily in real estate?
Anonymous is a savvy investor who wants to retire early. She wonders if she should hire a financial advisor, or if she can manage her investments herself.
Amanda is worried that her recently diagnosed health condition might force her to stop working. How should she financially prepare her family?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Here are the details:
Anonymous asks (at 05:26 minutes): When do I know I should work with a financial advisor?
I’m 25 and make $70,000 annually with a 10 percent bonus. I’m hoping to retire early, in my forties.
I have approximately $9,000 in cash. One percent of my salary goes into a traditional 401k and 9 percent goes into a Roth 401k, with a 3 percent employer match. I have about $18,000 in a robo advisory account with Ellevest Roth IRA.
I also have other investment accounts: an account at Fidelity with $15,000, about $500 in an Ellevest account and about $600 across a bunch of different IRAs at Fidelity that are all self-managed. I use a robo-advisor with some of these accounts, as well.
I also have a whole life policy that my dad bought for me when I was a child. I plan on turning that into a charitable contribution at the end of my life.
I have about 40 years until I need to draw on some of those retirement accounts.
I’ve read all these books on fire and everyone seems to be DIY. I’m concerned that I’m missing something that an advisor might be able to bring to the forefront.
Natasha asks (at 27:35 minutes): I’ve reached early retirement and think we’re ready. My husband and I would like to travel extensively. But we haven’t come across real-life examples of people retiring in their fifties. This feels scary.
I’m 53 and my husband is 57. We’ve worked for over 37 years, with part-time jobs along the way as well. We don’t have any kids or pets, so we aren’t worried about leaving a legacy behind.
We have a $150,000 mortgage that we’re going to pay off by the end of the year. We’ve saved $230,000 in a Roth IRA. We also have $900,000 in a brokerage account, $400,000 in our 401k’s, $120,000 in RSUs, and $250,000 in cash.
We plan to take Social Security at 62, and plan on working part-time when not traveling. Starting next year, we’re budgeting our expenses for $70,000 to $85,000 a year.
Are we nuts to want to retire early?
Krista asks (at 40:22 minutes): I own a marketing business, and rental properties are my side hustle.
Is there a better way to leverage built-up equity in a rental home?
As far as the numbers go, the home rents for $2,095 a month, it’s worth $385,000, and I owe $109,000 at a 3.75 percent fixed interest rate. I also have a $125,000 HELOC on this house that carries a $25,000 balance. I have really great, easy tenants.
Over the last few years, I’ve used the HELOC to buy five other rental properties, and as a safety net to cover emergencies.
But most of my net worth is in real estate and I’m considering either rebalancing or finding a way to move the equity so I can make more money.
What are my options? Should I sell the house and put the money in the market? Should I better leverage the HELOC? Keep the house and be good with what I have? Or something else?
My goals are financial independence as soon as possible and easy, hands-off investments. I have some money in the market, but there’s this big chunk of equity sitting there.
Amanda asks (at 57:10 minutes): I was recently diagnosed with a condition that has a high chance of disabling me to the point where I won’t be able to work anymore.
My dad also had this condition. He was on disability by the time he was 35 years old, and I turn 35 later this year.
I have a job that I love with good benefits, a fair salary, and long-term disability insurance.
I’m married and my husband works, but my salary is two-thirds of our household income and we get our health insurance through my job.
I’m still able to do my job with the occasional use of Family and Medical Leave Act time, but I’m a planner.
My husband and I clawed our way from $180,000 in student loan debt, and then saved for a down payment on a home. We were starting to get our retirement accounts where we needed them, but now I’m focusing on my health and being able to work as long as I can.
I have a 401k with a 5 percent match and a Roth 401k option within that. My husband has a simple IRA with a 3 percent match. We both match our employer contributions and try to max out our Roth IRA.
For the first time, I’ve invested in I-Bonds this year, and I hope to continue.
If I go on disability, will they take my assets into account and could that lower my benefit?
Are there accounts that are better protected from that calculation that I should be focusing on?
My current strategy emphasizes Roth accounts so that we can withdraw our contributions if we need them. However I’m not sure what the rules are with the different retirement accounts when it comes to disability.
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