Personal Finance Advice

[Jerrod Plotts]

Hi all. Wanted to get some advice and see if I’m on the right track.

Currently wife and I (43) make $220,000, MFJ, with ~$750,000 in 401(k), $300,000 paid off home with no debt. Currently putting ~$1,400 into cap ex and emergency fund each month with a ~$5,000 current balance. In addition, have $8,000 in a brokerage to save for a down payment for our first rental. We’ve saved ~$35,000 for our two kids college funds. We have also began opening Roth IRAs and want to start additional retirement savings. Goals are to purchase real estate and begin early retirement in the next 10 years. Also, we will be inheriting property and real estate in the future.

Questions/advice for others…..should we begin working with a CPA to maximize tax savings strategies?

If you were in this position, what would your next moves be to maximize these accounts to reach these goals and when would you begin purchasing rental properties?

Thank you all for any advice!

[Daniel Murphy]

Quote from @Jerrod Plotts:

Hi all. Wanted to get some advice and see if I’m on the right track.

Currently wife and I (43) make $220,000, MFJ, with ~$750,000 in 401(k), $300,000 paid off home with no debt. Currently putting ~$1,400 into cap ex and emergency fund each month with a ~$5,000 current balance. In addition, have $8,000 in a brokerage to save for a down payment for our first rental. We’ve saved ~$35,000 for our two kids college funds. We have also began opening Roth IRAs and want to start additional retirement savings. Goals are to purchase real estate and begin early retirement in the next 10 years. Also, we will be inheriting property and real estate in the future.

Questions/advice for others…..should we begin working with a CPA to maximize tax savings strategies?

If you were in this position, what would your next moves be to maximize these accounts to reach these goals and when would you begin purchasing rental properties?

Thank you all for any advice!

 First of all, congrats on your progress so far! I'm a fan of talking to a few sources until you can put together a more complete picture of options.  
Often times I see CPA's more focused on your current tax situation.  Some strategies may offer you greater "flexibility" or "options" but could be detrimental to your tax situation. Short term... 

For example... My guess is that you may already be plenty funded for retirement in your 401k. 

I would target keeping your taxable income below the ~$211k range to stay in the 22% bracket.  You could possibly decrease your 401k savings (which would increase your taxable income), and shift this savings over to your brokerage account.  This would be "less tax advantaged" in the short term because your taxable income would increase. But possibly more tax advantaged in the long term because it would allow you to buy a rental earlier, and implement those tax savings.  

You're in your 40's with a paid off home, a hefty 401k balance, you don't live on a crazy expensive coast, and you plan to inherit & buy RE for further income/net worth.  My advice would be to find the savings strategy that excites you the most or just seems to make the most sense for you.  You're probably already much closer to that early retirement than you may think... 

I think we tend to overcomplicate the planning sometimes.