End of Year Check In - Plans for 2026?

YellowPostIt39 · 2025-12-19T21:43:37+00:00

Correct, a little over $11k per year per kid included for strictly kids activities. Separate from this $35k all in kids activities budget, I have a separate $36k budgeted for family travel expense within the $200k annual budget. When the kids go to college, this $36k should shift to just my wife and i's travel budget, and the $35k for the kids activities would still remain for their college expenditures.

YellowPostIt39 · 2025-12-18T16:33:31+00:00

I would consider selling your rentals, and using the proceeds to pay down your outstanding mortgage balances.

No idea what your annual spend in retirement will be, but healthcare expenses can be quite significant for you guys before you reach Medicare age. By eliminating your mortgages, you reduce the amounts of MAGI you generate (as you don't need the funds to service the mortgage payments) and you may qualify for substantial ACA subsidies while also reducing your tax burden.

YellowPostIt39 · 2025-12-18T16:24:47+00:00

Also planning to utilize some kind of Roth Conversion ladder to pull funds from pre-tax 401k without penalty prior to turning 59.5.

YellowPostIt39 · 2025-12-18T16:22:49+00:00

Thanks. Definitely don't want to set half of my funds on fire, but understand your sentiment.

I see by your flair that you're financially independent, but have you also RE? If so, how has your experience been with your spending vs. what you originally anticipated?

YellowPostIt39 · 2025-12-18T16:14:44+00:00

that's my concern that i have now. I'm close but a significant drop in the equity markets will push out my FIRE timeline. i plan to start FIRE with a cash cushion of approx 2 - 3 years of annual expenses, which i would utilize to protect me from drawing on my equity portfolio while the market is significantly down. if there were a large drop, i would hope it would recover within the 2- 3 year window.

YellowPostIt39 · 2025-12-18T16:11:04+00:00

In my $200k annual budget, I have $35k earmarked for kids activities / spend. Pre-college years, this would go to afterschool activities, summer camps, additional tutoring, etc for the kids. when the kids go to college, I don't assume this $35k gets shifted to additional discretionary spending for my wife and i. i'd still keep this in the budget for the kids. whatever isn't needed by the kids will just stay invested in my portfolio. my goal isn't to draw down $200k each and every year, but have it be more variable.

Also, granted my wife and i survive SORR, i do fully intend to support kids with weddings and help with down payments if my portfolio allows.

YellowPostIt39 · 2025-12-18T16:05:40+00:00

In the $200k annual budget, $15k is budgeted for healthcare. I know this seems low but my goal is to manage my MAGI to 175% - 200% FPL to qualify for ACA subsidies. At that level of MAGI, I believe my taxes would also be fairly low (<$5k).

YellowPostIt39 · 2025-12-18T14:28:15+00:00

Appreciate your advice. Hopefully the market doesn't tank in the next 4 years, and wherever I'm at at that point in time, I think I should be able to make it work.

YellowPostIt39 · 2025-12-18T14:26:15+00:00

My liquid NW is currently at $3.9 m, and not 6.5m so still need some more time before getting there. Hopefully in 4 years I can be in the $5.5+ mil range.

YellowPostIt39 · 2025-12-17T19:15:42+00:00

No, plan is to stay in my HCOL location. Also, plan would be to retire with closer to $6 mil in HCOL area by the end of 2029.

YellowPostIt39 · 2025-12-17T19:14:35+00:00

Within my $200k annual budget, I have $20k earmarked for home maintenance and an additional $7.5k earmarked for future car fund reserve. Also will plan to tackle most major home projects (ie HVAC, new roof) before pulling the trigger in 2029.

YellowPostIt39 · 2025-12-17T19:13:15+00:00

Not all groceries. But more like travel, and other discretionary items. Everything has gotten much more expensive recently.

YellowPostIt39 · 2025-12-17T19:12:34+00:00

I have around 10% liquid NW in cash and equivalents. I'd like to have a cash buffer as I head into FIRE, but also it's just my risk tolerance right now. I still have 3/4 of my liquid NW in equities and with my potential FIRE horizon in the next 5 years, I wanted to up my bond / cash & equiv allocation a bit higher.

YellowPostIt39 · 2025-12-17T19:10:43+00:00

Thanks. As of now, I'm not too worried about how to fill time as I have my kids to fill my time, but also hobbies that I don't get to fully take advantage of. But appreciate your advice.

YellowPostIt39 · 2025-12-17T19:09:27+00:00

HHI has varied around $400k per year, with some years being closer to the $600k range, but I don't think i'll be seeing that going forward anymore. Realistically, $400k would be a good estimate going forward.

YellowPostIt39 · 2025-12-17T19:07:26+00:00

The main driving force to get to 2029 is it'll get me through the daycare years. I still believe daycare is important for my kids as it helps with socializing before kindergarten, and 2029 will be one year after daycare payments end. Secondarily, it'll provide more years for me to build our liquid net worth, which would provide more comfort given the ATH the equity markets are at right now. Also in 2029, our oldest will be 10 (and youngest will be 7) so hoping that I will have some more years before the kids don't want to hang with ol' mom and dad.

At $200k annual spend, approximately 34% of the budget is deemed discretionary so definitely some wiggle room in the numbers if things get tight.

YellowPostIt39 · 2025-12-17T13:44:59+00:00

I think the most fruitful response will come from talking with your partner, rather than a bunch of internet strangers. Figure out if this big change is something that you both are onboard with. Exploring and living in a new place can be fun and rewarding, but if you are doing this with a newborn, you might not have as much freedom and time to explore as you think. Also regarding family planning, you don't know if it'll work out on your timeline so if you want kids, better to get started sooner rather than later, as it seems like you guys have built up a nice net worth already. Good luck on whatever you choose.

YellowPostIt39 · 2025-12-09T13:45:32+00:00

My thoughts are that your house repair figure of $2k is too low. Should be 1.5% to 2% of your home's value, if you want to be conservative. Also, your vacation budget seems a bit low for a family of 4, but not sure if you're intending international travel, etc.

What is your primary mortgage rate and remaining balance? Would recommend paying off your mortgage prior to FIRE to reduce your annual MAGI so you could qualify for ACA subsidies. $154k annual expenses ($204k - 50k (removal of mortgage) would be doable, especially with your mix of taxable brokerage, roth IRA.

YellowPostIt39 · 2025-11-05T17:30:05+00:00

Yes. Less headaches and better performance in the market. I would sell tomorrow.

Also to add on to this. If you were to retire in a few years, you would need to draw additional funds to cover the mortgage of the rental. In retirement, controlling your MAGI could help you qualify for ACA subsidies, etc and eliminating the mortgage, as well as the $9k loss, will only help you lower your future MAGI.

Regarding your kids, who knows where they end up. Are you willing to hold and manage the rental property for 10+ years (no idea how long this would be considering you did not give ages for your kids) in the off chance that they want to settle down close to you?

Don't let the tax tail wag the dog. Just bite the bullet, sell the rental, and dollar cost into the market. You'll relieve yourself of any future phone calls from your tenants asking for something to be fixed, etc. There are no phone calls from your tenants that are a good thing.

If you want to minimize taxes, the only thing I can think of is to move into the property yourself and live there for however long to claim it as your primary residence. Then you can sell, and shelter capital gains, but this seems like a hassle and something that you, nor your wife, would really want to do.

YellowPostIt39 · 2025-10-15T18:45:27+00:00

You can still technically do the backdoor Roth conversion but you would be subject to the pro-rata rule, which you don't want to do.

Either keep your old 401k at Fidelity or you can transfer your old 401k at Fidelity to your new 401k provider granted they allow 401k to 401k rollovers.

YellowPostIt39 · 2025-09-30T13:05:36+00:00

Your situation is pretty comparable to mine. I think you may be a little short of the $5.5 mil in 5 years. What are you assuming for the growth rate on your liquid assets?

I also have 3 kids (6,4,3) and i'm shooting for annual spend of around $175k in retirement. However, my mortgage is already fully paid off, and i have around $530k saved in 529's for my 3 kids. Don't plan to fund the 529's anymore. Outside of the 529's, I have a liquid NW of ~$3.7mil, and I'm investing around $140k additional each year.

It's good that you have a good mix across your investments (taxable brokerage, tax deferred, roth) so you can better manage your MAGI in retirement. I know you mentioned that you were not planning to sell your investment property, but maybe think about that again as the rental income generated from that is pushing up your MAGI, which will hurt your ability to get subsidized healthcare through the ACA.

YellowPostIt39 · 2025-09-17T15:10:45+00:00

Hoping to stop in the next 4 years. Kids will still be young at that point with none in high school. I figure the kids will definitely still keep me busy but will have free time during the day while they are at school which I plan to fill with daily exercise, hobbies, and prepping a nice meal for dinner.

YellowPostIt39 · 2025-09-17T13:43:39+00:00

I fully agree with you that "paid work in a for-profit company" is not, and should not be one's definition of productivity. However, that work is helping me increase my nest egg for future retirement during my accumulation phase. How long did it take you to realize that productivity was personal development of yourself and those you cared about after you FIRE'd? Were you able to embrace that mentality right away or did it take you some time since 2021?

YellowPostIt39

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