If you have read the About Me section of my blog, you already know that I am getting a late start at building retirement income. Because of my past setbacks, I am implementing a supercharged retirement strategy encompassing, 401k, Roth 401k, Roth IRAs and brokerage accounts. I am confident this will provide steady income in retirement through my Investment Hunting portfolio. It will be tough, but if I stay committed to adding a large amount of capital annually, I may just make it to a wealth retirement.
Why The Delayed Retirement Strategy?
2008 was a tornado for my finances. I was in the eye of the storm and when the storm cleared I was financially wiped out, 100%; in fact, I was broke and owed over $2M in mortgages, credit card charges, business expenses, etc. I do not make excuses, I own the mistakes of my past. At the age of 43, I am pushing hard to rebuild my family’s net worth and building a new retirement portfolio.
My Supercharged Retirement Strategy
Time is one of the few things you can not get more of. In the investment world, time relates to compounding. Compounding is the single biggest factor to a successful retirement strategy. I have 27 years working years left. Realistically, I probably only have 20 working years left at a peak salary. Because of this I needed to form a supercharged strategy; a strategy that is extreme, but not foolish. My plan is to over-fund my Investment Hunting Portfolio every year from 2015 to 2043.
I plan on adding $50,000 in new money every year. I will invest $50,000, distributed across my 401k, Roth 401k, Roth IRA and brokerage account. I am very lucky to earn more annually than the Roth IRA limit allows. However, workarounds exist that allow high earners to legally own Roth IRAs. Roth IRAs should be open to all investors, sadly they are not, but in three easy steps a Traditional IRA can be converted to a Roth IRA.
Each year I will invest $18,000 split across my 401k and Roth 401k. Additionally I will add $11,000, $5,500 each to IRAs for my wife and I. To ensure future tax savings, I will convert both IRAs to Roth IRAs the same day I open them. Lastly I will add $21,000 to my personal brokerage accounts, which are currently spread across Capital One Investing, E*Trade, and Schwab.
To keep myself honest, I am declaring that $50,000 a year is a big undertaking. I have a 17-year-old daughter in college and a son in high school. If you have kids, I don’t need to write anything else, but for you single and childless folks, newsflash: kids are expensive. I intend to add $50,000 a year, but it may end up being $35,000 on year and $70,000 another, averaging at $50,000 a year. College expenses will definitely make my path to retirement more difficult.
My strategy in retirement for these accounts is to never touch my principal. I will stop reinvesting dividends by 2043 and start paying myself with monthly dividends. Of course I will sell some securities if life dictates, but ideally my principal will outlive me and fund my family bank. I want my children and their children to never need to rely on lending institutions. If after my death, my offspring manage this gift wisely, all of their major financial needs will be funded by my Investment Hunting Family Bank.