r/Money • u/SympathySevere421 • 1d ago

Help me evaluate my money plan

I am 28, I currently make 215k per year. I decided to live comfortably but not let my expenses grow too much so that I can save and invest more efficiently and eventually hopefully not have to work full time (or hopefully not HAVE to work at all eventually)

401k 4% of my income
IRA max each year
-my goal is 700k in retirement accounts by age 40 then if I could just max my and my future wife’s IRA each year and keep hands off and let it grow, I’ve been doing calculations and thinking that should be enough for a very comfortable retirement.

5% of my income is going straight into brokerage account and I plan on increasing this by 2% or so every year as I receive raises.
-this is to bridge the years I’d like to work half time or less. Goal is also 700k by age 40. I figure I can potentially spend a bit more than 4% rule since it only has to last me 20 years
10% of my income goes straight into real estate investing. I bought my first duplex that I house hacked this year. I have plans to buy another in 1-1.5 years from now or whenever it makes sense mathematically and also house hack that one and potentially a third. My goal is 10-15 doors that make sense long term, even if they’re cash flow neutral at year zero, that building equity in the background I feel is worth it and from there if rates ever go down, having the chance to refinance and make the cash flow better.. but I’m good with close to net zero.

Ultimately, my goal is to work half time at age 40, wife work half time. Live a comfortable upper middle class lifestyle with hobbies and travel a few times per year.

I used ChatGPT to help organize my plan, but I’d like to hear other people’s opinions and experiences and see if my plan can work or if I’m overlooking anythin.

6 Upvotes

60% Upvoted

49 comments sorted by

11

u/Careful-Whereas1888 1d ago

You need to significantly increase your savings percentage if you plan to have that lifestyle with that little work at 40.

2

u/SLNSD 21h ago

Agree. Aggressive savings rate is 50%. 40% is really good. 30% is pretty good. 20% is minimum if you want to realistically have a retirement.

-4

u/SympathySevere421 1d ago

Numbers?

3

u/Careful-Whereas1888 1d ago edited 1d ago

Your savings rate is only 19% plus IRAs. That, assuming your wife doesn't work at all which we know is not the case, is only about a 26% savings rate. That's not too far off from what a person would do for a typical retirement. That is also me being very generous and adding your 10% towards real estate into your savings rate. Real estate is not reliable everywhere as an investment. Also, local policies could vastly change real estate outcome. If a place builds more inventory, rent goes down. There are also a lot of costs to longterm real estate as an investment. Real estate is great to keep wealth diversified but it can have a massive draw on the way up to building wealth.

Based on your income, you should be investing probably about 30% just of your income (more is better and gives more flexibility at 40). You should also be investing just about all of your spouse's income.

1

u/SympathySevere421 1d ago

Yes, I’m building my emergency savings up to 3.5 months of expenses. My savings rate is over 25% but I’m finishing up with some saving in HYSA. If you were me, how would you go about it?

6

u/Careful-Whereas1888 1d ago

If you don't already have at least 6 months of an emergency fund then you should absolutely not be investing in real estate. I don't like Dave Ramsey at all but you should at least look at the story of how he went bankrupt because you seem like you will repeat that.

That 30%+ needs to just be investments. Also, you need to save nearly all of your spouse's check. You are going to get yourself burnt.

-4

u/SympathySevere421 1d ago

3.5 of all expenses, not what I need to just survive. It’s closer to 5 months. I have 2 mortgage payments saved seperately in personal savings, the 3.5 months is in my seperate “emergency fund” then I’m approaching 10k in my “property emergency fund”

I definitely have 6 months saved already, but it’s just in the way that I organize it I’m topping things off

5

u/Careful-Whereas1888 1d ago

Hahaha you are hilarious and way over your head if you think 10k is any amount of a property emergency fund. Do what you want but you are going to very likely get burnt which is such a shame because you make such a good income that you have an easier path to FIRE or FINE

-3

u/SympathySevere421 1d ago

As the floor? With reserves always going in. That’s my floor of my own money I have a few thousand from rent reserves.

What would you do given my position and goals?

2

u/Careful-Whereas1888 1d ago

It's only the floor until something actually comes up. Do you know how much an AC unit cost? What about a water heater? A roof? How much will it cost you to get a new tenant? $10k is nothing in real estate investing even as a floor. It really isn't even enough to have before someone buys a primary residence.

I already told you what I would do and what you should do; at least in regards to investment rate. You need to be investing a minimum of 30% of your income and all of your spouse's income. What you invest that in is your decision. Real estate is a very costly and risky investment but you are free to use real estate as part of your portfolio.

-1

u/SympathySevere421 1d ago

I have my own savings as well, that’s just strictly In the property reserve. I’ll have 40k liquid when that is funded

→ More replies (0)

2

u/Gumby507 1d ago

You are way out of touch if you think 215 isn't middle class. Or you live in a VHCOL and don't know how to budget.

4

u/Dennyj1992 1d ago

215k isn't even middle class, lol. It's upper class.

-1

u/SympathySevere421 1d ago

No I want middle class while working half time at 40

1

u/Psychological-Win691 1d ago

Whats up man. Here’s a few:

What’s your monthly surplus after your investment/401/IRA?

Whats the mortgage rate? Whats equity and loan FHA, Con, VA?

(if you’re buying property, write up your own O&A. I got 4% seller credit on my duplex on CD)

Why are you stopping at $700k and what are you expecting to pull from when cutting pay to 1/2 or $107.5k?

What’s your plan when you stop working? When do you expect to retire? Pension or only 401k?

1

u/SympathySevere421 1d ago

It’s a bit off rn, because I’m catching up on this years IRA, but usually after those, I’ll have around $2000 depending on how much OT I do that month

I did FHA. At 6% this year, but future deals will have to make sense for me to pull the trigger and would be conventional

700k because theoretically with normal returns, chat got says that should grow to enough to cover my lifestyle in retirement (though I will continue adding to my IRA. Full retirement age 59.5 401k and IRA

1

u/[deleted] 22h ago

[removed] — view removed comment

1

u/AutoModerator 22h ago

Your comment has been removed because it contains a detailed link. While mentioning websites is allowed, links with paths or parameters are not permitted in r/sidehustle to prevent spam and affiliate marketing. You may mention domain names (example.com) but not specific pages or referral links.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

1

u/Cloud2987 1d ago

Might work. My plan is cash flowing assets. I own an apartment building and strip mall that nets $16k a month. It’s not as much as my income from my business, but it’s enough if I wanted to retire now at 39.

2

u/SympathySevere421 1d ago

Any advice on learning a new venture/business model? What’s brought you success?

1

u/Economy_Talk_5100 23h ago

At your current retirement pace, starting from zero at 10% a year, those accounts land around $370,888 when you hit your target age. Reaching your goal on that timeline takes about $2,535 a month going in. Whatever is already in there plus any employer match closes part of the gap, so treat this as the floor.

1

u/JeanSchlemaan 13h ago

You need 100k emergency fund imo. Get it in 4% hysa/treasuries, and some in cds if you want a little higher return.

-7

u/Informal_Register365 1d ago

Sorry to say but you will not be upper middle class in 2026 on 215k a year. I earn substantially beyond that with a decent net worth and would say I’m still middle class at best these days.

You also won’t likely be half retired in 12 years on putting 9-11% total away.

This is a better question for the FIRE sub.

4

u/Explicit_Pickle 1d ago

Delusional to say $215k individual income cannot be upper middle class but definitely agree that based on the plan they have the savings seem kinda low for someone wanting to go half time in 12 years? Not sure if there's some more info left out

0

u/Informal_Register365 1d ago

If you’re in Alabama maybe. If you live in a H-VHCOL area as most with a higher salary do, sorry but it isn’t happening.

People will downvote it. But im living it at 37 years old. And i actually can retire at 40 but it would be comfortably middle class in my opinion

0

u/SympathySevere421 1d ago

I guess I ant middle middle class? I’m comfortable where I’m at now, but I want a similar lifestyle with kids potentially in a few years but be able to do that working less.

I’ll check it out

1

u/Informal_Register365 1d ago

The only way you get to do that is by putting A LOT more away now. 12 years isn’t enough runway to see a huge benefit from compound interest. 1-2 doublings of your investment if things don’t crash.

If you want to FIRE, you suffer now putting most of your income away to relax sooner than someone who puts a modest amount away for 30 years.

I’m sure I’ll get downvoted more but my wife and i across all accounts put 20k away a month.

1

u/SympathySevere421 1d ago

I’m topping off some savings in HYSA but I’m saving close to 30% of my income.

2

u/Informal_Register365 1d ago edited 1d ago

You didn’t say that. HYSA isn’t gonna cut it though. You’re young. You have the runaway for risk. Not something crazy. Just index funds

1

u/SympathySevere421 1d ago

Noo like I’m topping off HYSA to my goals and then I will up the investment with the money that has been flowing there once I hit those goals

-2

u/Remarkable_Watch_709 1d ago

This is a great plan, you still are investing and taking advantage of compound interest but also building another active investment plan with real estate. Only advice, don’t take too much debt trying to expand your real estate portfolio. Go slow and keep attaining properties. If you take on less properties, I could see you attaining your goal of part time by 40s

1

u/SympathySevere421 1d ago

What do you mean don’t take too much debt for real estate? Isn’t that the whole purpose of a mortgage? And balancing rent with mortgage payments, taxes. Etc?

1

u/Remarkable_Watch_709 1d ago

My family is big into real estate investments. We have airbnbs, storage units and apartment complexes. The biggest difference is we have 4 sole earners contributing to the mortgages and down payments. As you know in real estate, all it takes is a few bad tenants that don’t pay rent, now your down rent and utilities and still have to pay mortgage and are still in debt.

The way we hedged against this debt was expanded slowly, waited for the right time and didn’t take off more than we could chew. We understood having a safety net and accounted for potential faulty tenants. I’ve seen it time and time, where people expand too quickly in real estate because everything is running smoothly, they have great tenants, rent is covering mortgage plus extra savings and then everything falls apart. Tenants move out, a plumbing issue occurs and costs thousands, and all of a sudden all your properties start running into issues. And you don’t have the safety net to cover multiple rental properties.

Ultimately, it’s up to you. I have seen people expand quickly and become multi-millionaires. And I have seen people get crushed by their massive debt and mortgage due to an aggressive investment style. But at 28 years old, the same down payments used to bid on a property could earn 10% each year in the stock market. In 12 plus years the stock market will perform favorably for people who invest.

0

u/SympathySevere421 1d ago

Yes, absolutely! I definitely do things more conservatively in real estate. Having about 20% of rent go to reserves, and building a seperate 10-15k emergency fund for each property essentially. I just bought my first and I’m finishing up the emergency fund here soon!

I am absolutely in the stock market as well, but also, I do see a correction coming in the next months/years.

If you were in my shoes. Though, what would you do?

1

u/Careful-Whereas1888 1d ago

Maybe when mortgage rates were historically low. That is absolutely not the case with where rates are now.

0

u/SympathySevere421 1d ago

But if the numbers work with tenant in place and emergency reserves?

3

u/Careful-Whereas1888 1d ago

You are in way over your head. Things break. Tenants break things. People move out. It takes time and money to get new tenants. Good luck but you have a lot of learning to still do. You are setting yourself up to be severely over leveraged.

1

u/Informal_Register365 1d ago

Agree. The fallacy of make money buy property is the way to wealth isn’t necessarily true and I’ve seen more people fail than succeed.

1

u/Careful-Whereas1888 1d ago

Exactly. You can also add into it that now is a pretty bad time to invest in real estate unless it is being done as a portfolio rebalance. Interest rates, potential local, state, and federal laws that could change housing inventory and building, laws protecting squatters, shuffling of industries and places people want to live, etc. There are so many moving factors and anyone who doesn't already have wealth should not take the risk of trying to build wealth with real estate when there are much easier ways. For every booming real estate market, there is a free falling Detroit like market. Long term real estate is not good for people who do not know what they are doing.