[USER]

Hi everyone,
I’m seeking advice on how to better prepare financially for retirement and my children’s education.
My wife and I are both 50 years old and have five kids aged 17 to 8.

Our household income is around $1M annually, but I made the mistake of not contributing to a 401(k) or IRA early in my career.

Here’s where we currently stand:
IRA: $300K
Residence: $5M, paid off
Brokerage + Cash: $300K

I’ve recently started reassessing our financial situation due to some health concerns.

Looking at our current savings, I feel we’re underprepared for retirement and covering our children’s education costs.

I’d appreciate any advice on catching up on retirement savings.

Any insights or strategies are welcome.

Thanks in advance!

[Tyler]

Oh man. You have a paid off home worth $5M. (When) you need the cash just do a cashout refi for enough to cover a few years of expenses.

When you need more, likely the home will have gone up even more in value so you can rinse and repeat.

Anyone saying sell the home and invest the funds… why???

Use your paid off home as a tool the rest of your life!

[Lana]

Impressive house value, congrats on paying the house off.
I find it concerning that all your eggs are in one basket, and that basket isn’t liquid (your home).

If you’re planning to stay in this house at retirement, you may be in trouble.

The first thing I’d do is calculate your retirement number. The easiest way to do so is take your annual all-inclusive living expenses, subtract guaranteed income that you expect to receive (social security, pension, if any) and x25.

This will give you the absolute minimal number you can consider retiring with.

Then do the math on how much you need to set aside annually to get there.

[KJ]

as soon as they’re legally able in your state, kids can start working and saving for college.

Certainly you can (and will likely have to these days) supplement that, but the concept of parents paying 100% their children’s college is alien to me.

I am the youngest of 11 kids (farm family), and it was understood immediately that if we went to college, we paid for it ourselves — ideally through scholarships but also working our way through school.

One of my brothers ran out of funds his junior year so he left school to work full-time for a year to save up and then went back and finished.

Honestly it truly started us out for “real life” a lot faster than our peers who went solely on their parents’ dime.

We all went to college, not all finished, several went on to grad school.

[Michelle]

A lot of law enforcement are prior military. Is he? Could his terminal condition be related to his military service?

[Toy]

First, calculate your FIRE #. Try using your estimated annual expenses after retirement x 25. How soon do you want to retire?

You are a bit behind so I would prioritize retirement savings over your children’s education, but if you are able to cut back and aggressively save, open a 529 for them.

You always have the option of downsizing your home and put the money towards retirement too.

Open a mega backdoor roth. You should be saving at least 300k/yr

[David]

That annual income is a good problem to have. It is an old book, but “The Millionaire Next Door” might help you wrap your mind around some adjustments which may help you get your retirement back in track.

But despite your income, there might need to be some back to basics moves. Emergency fund (6 months expenses) in a HYSA.

Your income might make contributing directly to a Roth impossible, so the idea to explore the Mega Backdoor Roth is a good one to get you some tax free retirement fund growth. Do this for both spouses if possible.

For the kids, it might make sense to invest heavily in the young children’s 529s.

For the older, it might be best given the time horizon and risk just to pay cash for college. Otherwise, put as much as you can in a brokerage.

[Lee]

Maybe downsize and sell your 5 million home. Your retirement should greater than the value of your home if you are looking to retire in 10 to 15 years.

[Jennifer]

Sell the house- downsize- and put that $ in college savings, retirement, and brokerage.

A rainy day will come, and with what you have stated above, you are not prepared. You cannot eat your house.

[Julie]

Just keep saving. Figure out your expenses and budget. Now that your house is paid off, apply that money to brokerage and retirement accounts.

Consider a cheaper house so you can buy some rental property or something to get cash flow.

Children can go to state schools to maximize instate tuition discounts.

[Rebecca]

What does your budget currently look like? With no mortgage, where is the money going and how deeply can you cut that? Because that makes a huge difference in suggestions.

[Caroline]

You’ll need to drastically cut back and start saving at least 50% to get remotely close to getting 50% of your income in retirement, thats also with 500,000 already invested at a generous 9% return yearly by 60.

The best way to reach your needed amount by 60 and be able to spend 75% would be by selling your house and investing at least 10% yearly until 60. That would allow you to stay close to your current lifestyle.

Time is most important for compounding interest and with the expenses of paying for college that may be the best option.

I’d talk with a financial advisor that has a fee instead of one that takes based on percentage.

[Lauren]

Research Megabackdoor Roth and use that method. Make sure you both have substantial term life insurance and disability insurance to protect the family in case illness or death causes your income to drop.

[Yuri]

Well, I agree that you don’t look “prepared” for retirement
You have to save more. What’s your annual spending?

Analyse where you spend 1m annually and find ways to cut it down.

For kids education consider 529 accounts

[Marc]

I would sell the house and move to a $1-2MM house (or maybe plan to do it in the next few years), and put the difference in a brokerage account.

That would immediately fix your situation

[Mark]

Simple, save $600k per year, then in 10 yrs you will have $6million saved, $10mm if invested wisely and market grows.

[Donna]

Your annual salary and current net worth is higher than most of the people here. Never seen that salary before.

Honestly, I think you are set if you sell your home and buy a cheaper house in the Midwest for $300k you will be able to retire now and also pay off your kids college at $100k each and will still have a left over of $3-4M.

[Author]

Posts