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Welcome to this episode of The Doctor’s Bill (Can You Afford It?).
Wonder if you should buy that big ticket item or not?
Well here’s your chance to have a wealth management expert, Johanna Fox Turner, of Fox & Company Wealth Management analyze your overall finances and make a final verdict on whether or not you can indeed swing for the fences and splurge on yourself or whether you should just walk away.
[Johanna and I have no current financial relationship]
Disclaimer: This is not meant to be a substitute for paid professional advice but only meant to serve as a suggestion/guideline.
The following are the details from our submission form:
Keep Current home
On A Happiness Scale of 1-10 (10 Being Happiest), rate what this item/experience will do for you A) Short Term and B) Long Term:
A) 9 B) 8
How Many Years Till Planned Retirement?
10 to 12
What is your total household income?
What is your % Annual Savings Rate? (savings/gross income)
50%. Savings rate includes the employer matches.
Primary Home Equity (Market Value-Debt) [For Renter =$ 0]
Additional Real Estate Holdings Equity (Market Value-Debt):
Current Liquid Asset Value (Savings, Checking, Etc.):
Retirement/HSA Combined Value:
Miscellaneous Asset Value:
Student Loan Balance:
Future College Plan Funding Needed (Today’s Dollars):
Unknown – expecting child in March. Don’t know that we’d pay for its full college.
Future Parental Support Funding Needed (Today’s Dollars):
Don’t know. Four living parents.
Additional Future Obligation Support (Today’s Dollars):
How do you plan on paying for this item/experience?
Our salaries. But I don’t want to be 68 when we finish paying for it. That scares me. So we have been looking to downsize but can’t find the same value.
Any other pertinent information not addressed?
My wife is 29. She is fully vested in her pension. It is currently worth $34,165.
I would like to transition to another line of work where I don’t have pressure to bring in six figures as soon as possible. Or know that I only have ten years of this type of work left.
In ten years, I would like my income not to matter. So I would like to have the option to stay at home full time or take on a new career where it doesn’t matter if I make $20,000 or $200,000.
My wife makes $150k with about 20% bonus. I make $115k at a W-2. I also currently make $120k at a 1099 consulting gig. That will end sometime within the next two years. I expect my income at the W2 would rise as high as $140k when I tell them I no longer have the consulting gig.
Expecting child in March. Not planned.
Johanna had some follow up questions (this submitter left an email):
1. Does your wife contribute to the pension or is it all employer-contributed?
The employer only contributes to the pension. It is a European company.
2. Are the pension contributions included in the 50% savings?
No. We do not include it in our net worth or savings rate.
3. Does the 50% savings rate include employer contributions to any plans or are you saving a total of $202,500/yr?
Yes, the savings rate includes the employer matches. I don’t think we are saving 50% of gross compensation. That looks like after tax savings.
4. When your income goes down in the next 2 years, will you still be able to save 50%/yr?
No, our income would potentially drop by ⅓.
There are two likely scenarios:
- Stay at my current job and go from $115k to $140k. Lose the entire $120k consulting (plus ability to contribute to Solo 401(k)
- Work for the consulting client as a W-2. Make ~$185k with bonus. Lose $115k W2 job and access to Solo 401(k).
I worry about #2 because it takes me off a career path and is not work I am interested in or would be busy doing.
My current W2 job is in cancer advocacy and I like doing it for the most part.
5. How long does she have to work at her job to receive pension?
If she left today, she’d get ~$34k or an annuitized amount.
The longer she stays, the bigger the pension gets.
6. When does your wife plan to retire?
We don’t know.
Our goal was to get me to stop working and then work on her.
She is so young, only been in the workforce 7 years.
I figure she has at least 15 more.
Based on this submission what do you think? Does he get to keep the house or is he forced to downsize?
Click on the Doctor’s Bill Image and find out the verdict:
After you see the verdict please come back to this page and comment whether you agree or not with the decision (and no cheating by looking at comments first!)
If you would like to submit your own Doctor’s Bill request please fill out the submission form (and remember email subscribers to XRAYVSN will get priority)
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