Using the Retirement Freedom calculator from Keep Thrifty, we found we have enough saved in our traditional retirement accounts for traditional retirement. What a revelation!
How in the world is this possible? We were a mess! It was just a couple of years ago that we had more than $200k in debt. We spent all of our money since we graduated college (and then some).
But we didn’t really spend all of our money, did we?
By some miracle, we’ve been making pre-tax contributions to traditional retirement accounts. Both of us started making contributions when we started our first full-time jobs after college, enough to obtain the employer match. FREE MONEY!
Anticipating increased healthcare and travel expenses, we need to save more in order to increase our spending upon retirement.
In addition to traditional retirement, we need to save for financial independence. We’re not deploying any advanced strategy, like Roth conversion ladder, to fund financial independence. Instead, we plan to use real estate to fund a portion of our FI life.
Thus, we set two perennial investing goals for ourselves: one for traditional retirement and one for financial independence. Keep it simple, right?
1. Contribute the maximum to our traditional retirement accounts.
For the first time ever, Garrett has his contributions set to the annual max of $18,000. His employer contributes 3.5% of the $18k.
As a self-employed person, I moved my retirement savings to a SEP IRA. I can contribute 25% of whatever I pay myself. However, this is not as straightforward as I would like it to be. It’s a little complicated, so I’ll make my contribution at the end of each year. (If you’re self-employed, you might know what I’m talking about.)
Annual Contributions: $18,000 (G) + 25% (me)
2. Save for the purchase of a manufactured home park.
These last two years, we’ve invested tons of time into learning about various types of real estate investments. Between podcasts, books, and blog posts, it became pretty clear what type of REI works best for us: manufactured home parks (MHPs).
There are lots of reasons why this type of investment is perfect for us. But more importantly, MHPs serve as one of the only truly affordable housing solutions. Assuming an individual owns his/her own MH, lot rent is $200 to $300 on average across the US. I also feel passionate about preserving, protecting, and advocating for mobile home parks. Having spent some of my childhood living in a MHP, I know the value they provide. We need quality, safe, well-maintained MHPs!
Once our emergency fund is funded, it’s time to turn our attention to this bucket. MHPs are expensive and we’re debt averse, so it remains to be seen how (and when) we go about acquiring this asset.
Anticipated Investment: $500,000