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Our Current Retirement Preparations

Ever since we started attacking the rent house mortgage with a vengeance, we sort of put our early retirement plans on auto-pilot.  We’re nearing the end of that goal (yay!), so now we have to take another look at our retirement planning.

Our Current Retirement Savings Vehicles

Okay, so I just turned 30.  When I started this blog 3 years ago, we were aiming to retire at age 52.  That is still the goal on paper, but we are honestly trying to reach financial independence as soon as humanly possible since self-employment only has one huge downside in my opinion – not knowing for sure when it’ll be a big month and when it’ll be a lean one.  Financial independence would give us the freedom to do our jobs without worrying so much.  Here is how we are saving for retirement so far:

  • 401k – I still have money growing in my old 401k in a target date mutual fund
  • My Roth IRA - We fully fund this every year and use a different target date mutual fund
  • Hubby’s Roth IRA – We fully fund this every year too and he selects individual high yield dividend stocks
  • Scottrade account – Hubby invests this money in high dividend yield stocks too.  He makes sure to diversify the investment niches though.
  • Rental property – We rent out our first home and plan to do so into retirement.

Future Plans

As of right this second, this is where our retirement planning has ended.  Hubby is already a varsity sports official and plans to continue until he physically can’t do it anymore.  I would love to blog or do whatever replaces blogging in the future.  I also love volunteering for charities, so I will at least have a free hobby.

But, good enough doesn’t help my brain turn off the worry train.  So after we do pay off the rent home’s mortgage, we will be looking at other options like a self-employment IRA and/or seeing how much more we can squirrel away for possible other rental properties.  Rental income is pretty dang addictive.  ;-)Overall, the possibilities may be endless, but we’ll choose a path when we know what we have to work with…isn’t that always how it is?

How are you planning for retirement?  Any suggestions or questions?

This post was inspired by Genworth, but I just ran with the topic since I needed to update you all anyway.  :-)  All of this is 100% Crystal.

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25 comments to Our Current Retirement Preparations

  • Oh wow, sounds like a nice plan! I haven’t figured it out yet: when I want to retire, how much money I want to have until that time and where I want to live. But I started working on that by monthly payments. Numbers are still quite small but I hope that when I’ll be employed on a regular basis it’ll be easier to contribute more :)

  • With how you feel about debt, I understand why you’re eager to pay off the mortgage on the rental, but if I were in your shoes, I’d think about getting the lowest mortgage rate I could on that place (anything less than 3.5%), and then paying it off slowly for the sake of funding a self employment IRA.

  • It must be exciting to have an asset that generates cash!

  • Have you considered rolling over your old 401(k) to Vanguard or Fidelity and plopping it in a target date fund there? You never know what will happen to the plan since you are no longer with the company.

    I’ve calculated how much I need to retire based on my current expenses and am tracking towards that number. I’m maxing out my 401(k) and my Roth IRA if I can and paying down my mortgage with any extra funds. Once that’s gone, I’ll invest in taxable index funds. I would guess that I’m about 10 years away from retirement, so by age 35.

  • Sounds like you guys should be fine. After we get rid of my fiancée’s student loans we are going to revamp our retirement contribution plans as well.

  • Happy Birthday! My Roth IRA is also 100% invested in a target date retirement fund. Simplicity and diversity all in one neat package. I think you’re on a smart trajectory.

  • I noticed there was no mention of your advertising business in “retirement”. Do you plan on quitting that after you declare financial independence? You could become a serial entrepreneur. Starting businesses and building them up to profitability then selling. Rinse and repeat.

  • Happy belated Birthday. Since you guys are self employed, why not start a self directed 401k? I don’t have one so I’m not really the right person to ask about them. But from what I hear, you can use them to stash away a lot of cash just like a regular employee would.

  • @Shovellicious, it’s awesome to just start somewhere, so congrats. :-)

    @Mrs. Pop, refinancing $23,000 just seems silly to me (a lot of work for something that can just be off my plate completely this year). But we may be refinancing our current home’s mortgage next year and may not rush to pay it off if we can use the cashflow somewhere else more efficiently…

    @SavvyFinancialLatina, it is. :-) I know why people on Property Wars own like 60+ properties each, lol.

    @Leigh, my old 401k is in a Fidelity target date mutual fund. My old company helped keep the fees really low, but they moved us all to Fidelity a few years before I quit. Congrats on a target date of 35!!! I don’t know if 35 is very possible for us anymore (only 5 years away), but maybe 40-45 if we really hustle…

    @Lance, good luck!

    @Hunter, thanks. :-)

    @HappyFund, no plans to quit, I just don’t know if blog advertising will even be around in 15-20 years, so I don’t want to make plans that include it just in case. Thanks for the suggestion for serial entrepreneurship though. :-)

  • I always thought being a travel agent would be a fun retirement gig. One of my old retired teachers is a part time travel agent, and she loves it.

    You could also open a bed and breakfast, but I know that might be a lot of work to get off the ground. You already have the marketing knowledge though.

  • retired

    Good plans.
    We retired already. No debt, fully funded IRA’s, 401K, and dividend stocks. Paid for the prepaid insurance premiums with company before we retired. Have an average income from rent, pension, and dividends. Hubby went back to work part time, because he likes his work and was needed. I have always wanted a farm, but land prices here have just soared these past couple years. For now, I am staying busy trying to get a bioponics system going in the backyard, planted 14 fruit trees around our perimeter, and am enjoying my pets. We have one more teen to get through college, then a farm. Trying to make it a profitable farm plan, using aerobic treated waste from the animals/fish to fertilize the hydroponic crops. With trees for fruit, container cropped veggies, tubers and flowers (for the soul). Experimenting with all of that now. Have potatoes coming up in old garbage can, should make getting them all easier. Have hanging baskets of coconut fiber and parsley and petunias, being watered with fertilizer, …seeing if we can make our house “pay” for itself more. Figure we don’t use all the resources we already have, maybe using our housing better could help maintain independence. Good luck with all your plans. Putting dreams into action really is awesome! We had family, retired in our 50′s, and have no debt we couldn’t pay off tomorrow. Still working to keep cost down and fun level up, lol. Debt can be useful to make more money, as long as the loss potential is factored in. Trouble multiplies when you are using debt to pay bills. Its all a strategy game. Keep your eye on the ball, you will be fine.

  • Great plans there Crystal!

    We’re way behind you so congrats on being where you are at 30…. I hit 50 this week, and am quite honestly scrambling.
    My advice would be to keep an eye on the cost/benefit ratio of keeping the rental.

    I had a post earlier this week that I could use some advice from your readers..

  • Retirement at 52 sounds wonderful. We don’t have any investment properties yet but are seriously thinking about buying on in the next year or two. I think property rental is a great retirement strategy/income producer and we’re excited to get on board.

  • ODWO

    Rental Income sounds like a great way to get others to pay for your retirement. Plus, once your 1st home is paid off, you have an asset to use for collateral on the next one. (has me thinking) We’re thinking of our next home and renting this one. Our area is growing significantly (Energy Corridor) sooooo … the people are coming.

    As far as other “things” done for retirement, I use our Roths to trade with. Not just invest. There’s some good opportunities (higher %’s) in options strategies. Might be a little over some peoples head unless you’re an advanced trader of such. For most, just better they stick to what they know. Like they say, the teacher will arrive … when the student is ready. ;)

    Dividends are nice … and one being young enough to enjoy the slower growth in the beginning, as they start compounding more and more over time. For retirement to appreciate with the COL (cost of living) these days, one needs to be getting at least 8% on their money. In some cases … 12% depending on their expenses, and the rising (current and future) COL. (Yes. Really)

    Someone mentioned a Bed n’ Breakfast. My wife thinks that would be great, and it sounds rewarding too … altho’, I keep seeing it as work. Ha! I could probably retire now and just trade part time … but I choose to work (and still trade PT). I’m not greedy. Or lacking resources. I thought I’d be retiring early …. some years ago. Instead, I “now” do something that isn’t really work (to me).

    If one can create a real estate “empire” … I think that is a great way to do it. many have. Kind of like owning a motel (on a beach in a warm locale would be nice) … and get people to pay your mortgage for you. One day … cash out your land, and have your own special place paid for with the appreciating proceeds. If one is lucky enough (health is #1 w/some wealth of some sort), they can still do the things you are talking about doing. If we live into our 80′s and beyond, you have 30+ years to not get bored (assuming @52 yrs retired), or die of boredom like some do (after retiring). All plans can and will change. Some people just have a knack for making money and enjoy working at it (instead of what people call true retirement).

    Maybe it’s more like … instead of calling it retirement, it’s more like “stop working to make ends meet.” You will have already connected the dots. And a sum of cash, liquid, at your disposal.

    From what I see/hear, I think you are well positioned to make it happen. :)
    Good Luck.

  • DJ

    Rental income does seem like the way to go, but I know from my parents, and a few of their friends however that this really depends on the state you live in. In South Carolina, for example, it is virtually impossible to evict a tenant if the need should ever arise. My parents had a non-paying tenant stuck in their house for 6 months, and they legally could not evict them. The headache caused my parents to sell their rental property because they lost so much money on it, and were simply fed up with it.

    Rental properties are an excellent source of wealth, if you are willing to deal with the hassls that come along with it.

  • You are certainly doing some great things to plan for retirement. Since you see rental properties as part of your plan, I suggest you consider setting up a self directed IRA and start buying rental properties within the IRA. I have been doing this for several years and have built up a nice portfolio of properties, all tax free. Another advantage: no matter how bad the economy gets, my IRA increases in value. Best of luck!

  • ODWO

    Leslie -

    Do you have any links about that? (Real Estate via IRA?)

    We “were” member is a RICH club here in Houston. (Real Estate Investment Club).
    We never pulled the trigger on such, and the bubble burst about the time we were getting very interested. They (in the meetings) used to talk about such … Setting up an IRA and using it for real estate. All profits tax free (Roth, right?) I imagined it to be something like …. drop $10K to $50K into the IRA … use it to flip or anything else that comes your way. Similar to my trading accounts for retirement (both Roths). Anything you make is tax free … and these guys were kicking some fine profits too. At the time of us going to the RICH club meetings, we were not set up properly, and did not want to use straight cash.

    If I’m right, you can even use it for rental properties? Sounds like you are?

    I agree … self directed is the way to go. Otherwise, it’s just sitting there. We’ve considered this in the past. Just never followed thru ….. unsure of exactly have it works. (how do you buy the property, or just put out the money for the investment?)

    Thanks for the post about such. :)
    And any info you might provide. I’ll be hitting google after this post.
    I do think Real Estate is one way to make it happen.

  • I think rental income is very addictive and hopefully that will be how we can become financially independent. That way we can save our tax deferred accounts until we are over 59.

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