Looking for "retirement" advice

14 Replies

My husband and i are trying to leave our careers in the next two years to "retire" early. What that means for us is passive income from 3 SFHs that are fully rented out, in addition to a small pension. We are wanting to defer SS and any 401K/IRA funds until later when we're the appropriate ages.

I hired a financial planner to take a look at our facts and figures (which she did, for a fee, and told us we "looked great") but I did not really get the information I was hoping for. Maybe I need a CPA instead? We will be living on rental income (approx $5300/month) plus a pension of about $1500/month. I have so many questions about tax implications and ROTH conversions and the 4% rule and living outside the US and how that may affect things... I don't want to screw anything up leaving our well-paying gigs at 50.

We have a CPA who does our yearly taxes but he's never been great with questions outside of tax season, and he's gearing up to retire anyway. I don't feel like he's going to be our person moving forward.

Our rental properties are in CA and ID, we will be based in ID but are in CA now. Can anyone weigh in on what it is I should be looking for and how to find that person? TIA

Originally posted by @Margot Baldwin :

My husband and i are trying to leave our careers in the next two years to "retire" early. What that means for us is passive income from 3 SFHs that are fully rented out, in addition to a small pension. We are wanting to defer SS and any 401K/IRA funds until later when we're the appropriate ages.

I hired a financial planner to take a look at our facts and figures (which she did, for a fee, and told us we "looked great") but I did not really get the information I was hoping for. Maybe I need a CPA instead? We will be living on rental income (approx $5300/month) plus a pension of about $1500/month. I have so many questions about tax implications and ROTH conversions and the 4% rule and living outside the US and how that may affect things... I don't want to screw anything up leaving our well-paying gigs at 50.

We have a CPA who does our yearly taxes but he's never been great with questions outside of tax season, and he's gearing up to retire anyway. I don't feel like he's going to be our person moving forward.

Our rental properties are in CA and ID, we will be based in ID but are in CA now. Can anyone weigh in on what it is I should be looking for and how to find that person? TIA

 Yes, you need both professional. Information you provided does not even scratch the surface of what needs to be discussed. 

Do you have a risk management in place?  What about basis estate planning documents? Your Financial planner should give you and connect you with right individuals. 

Your CPA should help you with the tax questions you have. If you have some specific question. Feel free to ask here and we can try to help you, if you need a holistic financial planning done, you need to hire a professional. 

@Margot Baldwin

It seems that both of you and your husband are in a great financial shape to have a comfortable retirement, however, to answer your question, I would suggest to find a financial professional who understands your unique situation, and help you plan your retirement properly, and your estate planning needs.

It is a good idea to deferred SS as much as possible, as far as 401k and IRA's the closer you get to being able to access those funds the more conservative you would want those investments to be to make sure you have capital coming your way for many years to come.

I listen to a Podcast called "The Money Guys". They're a financial advising firm in Georgia and the two partners have their CFA/CPA and could help you out. I'm not sure on the price they charge but they're fiduciary fee only advisers that probably won't try and sell you on investments/insurance/other stuff you don't need.  They know what they are talking out. 

Like Ashish said, you haven't even come close to providing enough information for someone to run a full retirement projection with tax implications here. 

Thanks @Harrison Sharp . I was not looking for someone to run a full retirement projection here, I was asking about what type of professional I should be looking for and how to find that person. I thought I needed a financial planner, turns out I was wrong... is a CPA the person who can help me sort through all of the issues ahead?

No you still need a financial planner - Just one that is also a CPA and can help you with the tax side as well. The company I recommended should be able to get you both. Just let them know you want to know about the tax implications as well as the financial planning aspect.

@Margot Baldwin

As mentioned earlier, you are leaving a lot of information out for people to make an informed decision.

i am not even sure how people are already commenting that you are in a great position without knowing all the facts.

If we are talking about retirement, at the very least, we would need information such as the living expenses that you plan to spend on a yearly basis(living, food, entertainment, gym, travel, etc).

Rental income of $5,300 a month appears to be gross. I doubt you are making $5,300 a month positive cash-flow from 3 SFH's.
I would have to guess this number to really be $300 to $900 a month depending on how lean the properties are.

With that said - it appears that you need to gather a couple more rentals unless you both have massive amounts in retirement accounts.

@Margot Baldwin

It may not be ONE person who helps you for all that you’re looking for. Oftentimes a team is helpful in this situation because each person has their area of expertise. This is especially since you also mentioned something about living abroad, and international tax and law are pretty complex that a typical CPA may not be well versed in international consequences. You may want to look for a financial planner who has their CFP designation. The CFP designation requires courses in basic tax and estate planning that financial planners with their CFP may be a little better suited to what you’re looking for than just an ‘ordinary’ financial planner/insurance salesperson.  For the most part as a major generalization, CPAs will understand the tax consequences to a situation and cash flow but not the intricacies to things like social security or required minimum distributions; a financial planner will understand what options you have available to you for cash flow and the rules, but less about tax consequences and how what they’re doing interacts with the rest of your tax planning and other items. What area of California are you in?

*this post does not create an attorney-client or CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Originally posted by @Margot Baldwin :

I have so many questions about tax implications and ROTH conversions and the 4% rule and living outside the US and how that may affect things... 

What did the financial planner say you used say when you asked her those questions?

@Katie Lepore , thank you! This is the kind of information I'm trying to learn. We've never had a "team" of anyone, so are trying to learn who we need! Hiring a financial advisor did not do the trick. Our tax man is down in San Diego, we are from there (I see you live there too). We're up in the Bay Area the past 12 years but still travel to SD for tax time. Also, being that we are not planning to work abroad but really just travel, do we actually need someone well versed in international law or can we settle for a CPA who is an expert in real estate? Thanks for your response.

@Paul Allen , she said the questions were better suited towards a tax advisor. The problem is, our tax guy has never been a year round "advisor" in any way. He does a great job on our taxes, but no other service from him. And as I mentioned, he's on his last years for sure.

@Margot Baldwin , well that must've been frustrating! 

Screening financial planners to find the right one is a rare skill, because most people don't do it that often. They usually wait until they have a spear in the back (a burning issue they want help with) and then they sift through a couple websites until they find someone who seems like a good fit.

I think a better way is to interview 5-7. Even if you really like the first one, keep interviewing. It would be time consuming, but getting the right fit is (as you've discovered) very valuable. 

You want to make sure they have the skills, knowledge, and/or resources that fit your needs. 

I think the XY Planning Network is a good place to start a search. (Disclosure: I'm a member!) They are a nationwide community of fee-only planners, and their online search tool lets you pre-screen for the knowledge areas most important to you. (I'd post a link, but I'm not sure if it's allowed.)

I hope you get all your questions answered!

Best of Luck on Your Early Retirement!