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URL:  http://boards.fool.com/a-few-thoughts-someone-elses-opinion-of-the-30922576.aspx

Subject:  Re: Retiring @ 55 Date:  10/14/2013  6:16 PM
Author:  Rayvt Number:  73566 of 75794

A few thoughts:
*) Someone else's opinion of the size/price of your house is something that you should pay no attention to.
*) Hopefully you have a *smart* (financially) mortgage. 30 yr FRM that you refi'ed into when the rates were near 4%. And you do NOT make extra principal payments.
*) If you *are* making extra principal payments, you need to drop what you're doing and find out why that's a bad thing if you plan to be FIRE'd (Financially Independent, Retired Early).

*) You cannot "save" yourself into becoming a millionaire. You can, however, *invest* your way to millionaire status. At a minimum, put enough into your 401K's to capture the entire employer match.
*) There's nothing wrong with having a big mortgage in retirement -- as long as it's a "smart" mortgage. If you pay 4% while earning 8.5% (average) on your investments, then you're making a net 4.5%

*) Figure your current effective net income -- subtract out the things that you pay now that you won't after you retire. FICA, 401K contribution, income tax, etc. If you are maxing out your IRAs and 401Ks, that's a few 10's of thousands of dollars of outflow that will disappear at retirement. Your income taxes will go down a lot, too.

*) I echo what RAD said. Moreover: Wouldn't you have the same taxes if your retirement income matched your pre-retirement income??
No. Not at all. Working income is all taxable. Retirement "income" isn't. A lot of it is return of principal, which isn't taxed at all. Most of the rest is LTCG, which is lightly taxed. And if you manage to stay in the 15% bracket (which isn't hard when you are retired) -- both LTCG or dividends is 0% taxed.

*) We really need to get with a financial planner.
The *only* advice you should get from a F.A. is "Keep doing what you are doing -- you don't need me."
If they say anything else, that's de-facto evidence that you haven't yet learned to invest successfully. And *that* is what you need to get -- educated.
In particular, do NOT buy anything or "invest" in anything that a F.A. wants to sell you.

*) make $130k....have $160k in 401k
You have your work cut out for you. That's a good start, but you're closer to the beginning than the ending.
The first $100K is the hardest.

When we had our little chat with a FA [one that we met via a "free dinner] before we retired, when we were discussing our liquid net worth [aside: After the dinner they -- very low-key, low-pressure -- set up appointments to meet one-on-one with a FA from the firm. You want to be in the category of "Oh, with that much money, your meeting will be with Mr/Mrs X, the head of the firm." If you aren't in that "[gasp, OH!]" category, you probably don't have enough to FIRE on. /aside]
she said, "And the bulk of that is in IRAs & 401K's, right?"
My wife & I looked at each other with a puzzled look, shrugged, turned to her and said, "No. You can't really put enough in IRA & 401K to get rich. Most of it is in taxable accounts."

*) When I had my "little chat" with each of my kids when they turned 21, I said to them that there is no reason that they couldn't have a $1,000,000 net worth in 25 years.

"Everything you need to know about successful trading and investing is on the web, gratis. There are no secrets. The rules of the game are known for each of the major market approaches – momentum, value, and statistical arbitrage. Most people simply lack the discipline to follow the rules." -- Ivan Hoff

*) When you retire, get out of Dodge. Move to a lower tax, lower cost-of-living state. On my last day of work, I came in, said goodbye to everybody, and they walked me out before noon. We hopped in the car and 3 hours later we were no longer Illinois citizens. (We had already sold the house a few months before.) My real-estate tax in Illinois for 2 months was more than my annual RE tax here.
The people who own my old house pay more in annual RE taxes than my total annual mortgage payment here.

*) Finding a financial advisor:
Don't. Refer to the above Ivan Hoff quote.

A poor FA will just rip you over without even a kiss. A good FA will supply the education and discipline for you that you should have for yourself. Needless to say, when somebody does something for you that you really should be doing for yourself, they will be charging you a hefty fee.
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