u/Adorable-Diver-1919

Based on some of the comments on my previous post asking about validating my annual expense/budget, I want to ensure I am not missing anything in my retirement budget plan for 2 of us. Please provide inputs, if I am under/over estimating or missing something. This is for Bay Area. Link to previous post - https://www.reddit.com/r/fatFIRE/comments/1sygoe4/retire_early_or_continue_for_12_years/

Category |Current Expences |After Retirement (with Mortgage) |After Retirement (without Mortgage)

Mortgage |$44,000 |$44,000 |$0

Property Tax |$23,000 |$23,000 |$23,000

Utilities |$6,000 |$6,000 |$6,000

Phone/Internet |$2,400 |$2,400 |$2,400

Insurance (Home/Umbrella/Auto) |$10,000 |$10,000 |$10,000

Auto/Cars (Maintenance only) |$6,000 |$6,000 |$6,000

Food |$15,000 |$15,000 |$15,000

Healthcare (Out of pocket) |$2,400 |$2,400 |$0

Home Maintaince |$6,000 |$6,000 |$6,000

Electronics |$1,500 |$1,500 |$1,500

Misc |$4,000 |$4,000 |$4,000

Clothes/Shopping |$6,000 |$6,000 |$6,000

Home Cleaning Svc |$6,000 |$6,000 |$6,000

Kids Activities |$6,000 |$6,000 |$6,000

Kids Tutions (Not high school or college Tuition, this is tuition classes during high school ) |$6,000 |$6,000 |$6,000

Personal Care |$6,000 |$6,000 |$6,000

Gym |$1,800 |$1,800 |$1,800

Eating out |$6,000 |$6,000 |$6,000

Hobbies |$6,000 |$6,000 |$6,000

Travel |$40,000 |$40,000 |$40,000

Healthcare Insurance for 2-3 persons |$0 |$35,000 |$35,000

Total Annual |$204,100 |$236,700 |$192,700

Tax Assumption (15% of next row) |$34,500 |$40,500 |$33,000

Rough Total Including Tax |$240,000 |$280,000 |$230,000

Cars Budget - New car every 10 years ($50000-$75000), roughly $6000 per year

Overall final budget in all three categories above (with $20000 extra buffer per year)

$260000 | $30000k | $260000k

(Hope with increasing some of the categories spend based on comment/feedbacks and updates below, and along with this extra $20000; total overall budget should be able to cover new cars and some other expenses like more healthcare or travel spend?)

Updates: 1. This budget does not include car changes budget as I count them for one time expenses, should I included them in yearly expenses (after deciding by 10 as we change the cars in 10 years).

2. Eating out and some other similar items like food budgets may be low as I had these numbers from 3-4 years back and did not checked how much we are spending now even though number of times we out is still almost same.

3. I did increased my Umbrella Insurance and that did increased my annual insurance by 2-3000 and I forgot to add that earlier and updated the numbers.

4. Currently I have some of the entries at $5000 and they may be $6000 now (auto & home maintenance, Clothing), reason I added $4000 as misc was to cover them. Also the money we are spending on tuition classes (not school tuition fee), will reduce in next couple of years and that should cover the increase in some of these other categories). I still updated all those entries to $6000.

5. I am assuming $35000 as health insurance and deductible/co-payments for 2 (3 for first couple years until younger kid gets a job), should I assume some extra amount for deductibles and co-payments assuming $35000 will just cover the premium after retirement? Ki

50M, 49F, Husband make ~$500K/Year (Non FAANG Tech) and wife make ~$1M/Year (FAANG), Highest Tax Bracket (Both Federal and CA), two kids - one out of college, another in high school, Wife plan for work for at least 1 more year.

Asset	Amount	Comments
Liquid Assets (Taxable)	$10M	$4.9M Capital Gain - $2.5M gain in tech stocks, Mostly Long Term, Tech heavy portfolio - roughly 60% in 4 tech stocks (40% in GOOGLE, remaining 20% in other 3, which are SaaS companies), rest 40% in index funds - US and Non-US
Commercial Real Estate (National Restaurant Chain e.g. Chick-fill-A, Chipotle etc)	$1.5M	6.25% Cap Rate on NNN, leased for next 12 years and then possible extension
Tax deferred/free	$2.4M	~$600K in Tax Free, all investments in index funds (US and Non-US) and BND
Primary Home	$3.4M	~400K Mortgage remaining at very low rate, 8-9 years left
2nd Kids 529	~$180K	Enough for 4 year state college, can take out from Tax free if needed for private college or if kid decide to go for a Master degree

Till end of this year, we will save another $500K.

So, Income producing assets ~14.5 M. We've built it the slow, boring way and got lucky in tech. No inheritance, no company sale, no crypto or business etc. Just W2 Income and living below our means and saving aggressively.

We assume roughly $1M will be needed for 1 years worth of expenses and some other one time expenses (kid's masters education, our contribution to their wedding expenses).

Income producing Assets (after reducing $1M one time expenses) ~13.5M

Annual Expenses with current home (include and assume 15% Taxes): $225-250K (without mortgage), $275-300K (with mortgage, 8-9 years left). This is close to 2.2% of income producing assets (excluding primary home).

We do plan to sell existing house and buy a bigger house in next 1-2 years (roughly $5M, not big mansion, just little more comfortable as parents and/or one kid may stay with us for couple years) as our current home is small. That will increase annual expenses a bit (assuming $50K per year which include extra property tax and increased expanses due to bigger size home). More than than we would need to sell some equities as bigger home will need another $1.5M and will result in some capital gain tax payments as well (roughly $500K). This will reduce "Income producing Assets" to $11.5 M and will make retirement annual expenses as 3% of that.

Now, due to possible market correction, if my portfolio goes down and lets say it become $8.5 M, then retirement annual expenses (with new home) will be 4.12% of that.

If we do (or one of us) retire early, we have not yet figured our what we will retire into (other than taking care of aging parents or spending time with them for next couple years). Possibly first 1-2 years will go into travel and figuring out what to do next. One of us took a long vacation recently for couple weeks and one observation was that all our friends are still working and its hard to make deep connected friends in this age so we surely need to find something which will keep us intellectually busy during retirement.

Questions:

1. As US overall market valuation is very high, there may be possible market correction. Should we wait to retire early till market recover after a possible correction? Number wise things look fine and we seem be prepared to handle sequence of return fine (except concentrated investments in tech), but psychological barrier is hard to overcome.
2. We are planning to get rid of concentrated investments in tech through (a) diversifying them in index funds after retirement each year by some amount (b) using them for expenses. Even after this, it will take couple years (5-10) years to fully diversify and that is a risk. We have explore some of of the options to reduce risk of concentrated investments through exchange funds, direct indexing etc. but feel all those are too complex and feel paying the tax is better option. We are trying to reduce that capital gain tax by not selling them now but sell them after we retire but not sure if that even is a right strategy?
3. Our jobs are not very intensive but it is also not something which we are enjoying. Husband is unfortunate stuck in his career in his company and there is no excitement/drive or career growth in his company. Changing job in current AI driven tight market is very hard without strong links which we do not have. Should he keep on working for for next 1-2 years (half of his $500K goes to taxes) as it is less stress job he have but not anything exciting in his job (non existing work, bad boss and OK co-workers) OR he should leave and explore what we both can retire into (some small business or solopreneur or some other hobby). Advisor will be best role with reduced hours and using our tech experience but it seems that too depend on links. He did tried coasting for couple months and no good at that.