Where else should my husband and I (both 38) invest besides 401k, HSA, 529s, and our Roths, which we fully fund each year?

I'm a stay at home mom and my husband works. We have a mortgage on a rental property for $225K but, we intend to sell it this spring. We will use the proceeds to buy a new primary home and rent our current home. We have two other rental properties that are fully paid for. We are looking for tax advantageous vehicles to invest in so we can semi-retire by 45 and live off of the rental and part-time income. We estimate that we need a $250K mortgage for the new home we plan on buying in 2017.

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Answered by Michael Hoffman, RFC, CLU, ChFCPRO+ in Grass Valley, CA
It sounds like you have filled up the "traditional" tax advantaged buckets. This then leaves things like, Muni Bonds, Tax Deferred Annuities, Cash Value Life Ins, Alternatives (Oil & Gas, Equipment Leasing, Real Estate). Due to the short term until you retire, the Cash Value Life Ins does not work, the Muni Bonds are subject to decline in value should interest rates rise, the Annuity or Alternatives is what I would lean towards. Due to your young ages, the annuity would create a potential tax on distribution, so the best bet may be the alternatives. | 02.04.15 @ 02:04
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
Answered by Arsen Marsoobian, Insurance Agent in Fresno, CA
I congratulations on your excellent moves with the rental property and your long-range plans. In my opinion one of the best tax advantage products is an indexed Universal life insurance policy. This kind of policy will allow you to select an index in which the accumulated cash will grow i.e. the S&P 500. The policy also protects you from any downside lose has no money is ever taken out because the index drops. This interest added to your value is taxed deferred. You also get the benefit of a death benefit to pay off the mortgages in the event of an untimely death of either of you. Now here's the best part.. After having the money grow tax-deferred when you get ready to retire with the proper structuring you'll be able to get your money back income tax-free. This product in the last two years is fastest-growing life insurance policy sold in the United States. It is projected that it will continue this trend through 2015 and near future. There are several major reputable life insurance companies with index universal life contracts and more getting in the field every day. Ask your Life insurance professional to show you the alternatives. There are many alternatives and decisions that need to be made in the selection of a policy that works best for you. This is not something that can be purchased easily or quickly. | 02.04.15 @ 02:10
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
Answered by Christopher Nesbitt, Insurance Agent in San Clemente, CA
You're definitely ahead of the game for your age range - well done! What you appear to be lacking is an indexed strategy, such as an IUL or a FIA. A properly structured IUL, for example, can generate tax-free income that you cannot outlive, and is used by many as a 401k look-alike plan, but with tremendous advantages. Take care! | 02.04.15 @ 07:42
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
Answered by Francisco Ramirez, Insurance Agent in Round Lake Park, IL
You have to be very careful with IUL as to how it gets structured. There are a lot of fees involved which come out of the money that is eligible to be indexed. So, don't get too excited when you hear that the policy has a 20% or some other crazy CAP on the index as only a portion of your contributed funds will actually be eligible.

I'd take a real close look at annuities or look into a hybrid LTC/Life policy that may be useful for protecting all that you have achieved. | 03.04.15 @ 16:36
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
D
Answered by David
I am a proponent of Indexed Universal Life Plans with a Living Benefit Rider. This type of Life Insurance gives you the best of all worlds for the following reasons:

1. It's like a 401k in that you can chose the amount you want to contribute monthly

2. Because the plan is "Indexed" you have ZERO downside risk when the stock market drops, and an upside potential of 13% annually when the market is climbing. In other words, your gains are locked in each year when the market is rising, and you avoid portfolio killing down years when the market is falling.

3. Based on your age and monthly contribution, a life insurance policy is established for an amount that is within the IRS guidelines that allows you to withdraw your money TAX FREE at any age.

4. The Living Benefit rider is a no cost option, and allows you to access your life insurance face amount should you experience a critical illness like cancer, heart attack or stoke, in additional to chronic illnesses as well.. This tax free cash is available to use in any way you see fit, including paying bills, mortgage, college fess for the children, should your income suffer at work due to your illness, or even use it for life saving treatments that may not be available in this country.

5. When you are ready to retire, you can turn on a guaranteed lifetime income stream that you can not out live, and it's Tax Free cash.

6. Upon your passing, you will pass on a death benefit to your heirs that is estate and inheritance tax free.

Please feel free to contact me for an illustration of exactly how this all works.
| 03.04.15 @ 17:12
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
Answered by Charlie Donaldson, MBA in Newark, DE
Great question

1. Do you own your properties in your own name or in an entity? There are great benefits you can use by owning them in an LLC and thus potentially reducing your tax liability. So for starters, make sure you're using a good accountant who can get you the deductions you deserve. If you don't have one, I'm happy to recommend one.

2. "my opinion, blah blah blah, ... life insurance" Really? That's the best anyone can do? OK, so I walk into my doctor and tell him I have a headache and he hands me a prescription for blood pressure medicine without any further tests. How's that make you feel? Nope, I'm finding a new doctor.

3. The bottom line is that you need a solid income plan. Step 1 is to determine how much income you need in early retirement. Then step 2 is to identify where will that money come from. You've given us some hints as to where the money could come from (401k & Roth). I suspect you have positive cash flow from your rentals, though you didn't state that nor did you tell us the equity / value. I also assume you have some savings.

Please know that I don't think you should give that info in a public website!!!!!!

So it boils down to this: How much income do you need to live? How much are you getting from the rentals? How much is left over? Where can we cover that from?

4. Ok, for some advice: You have 7 years or so until you want to start drawing on your money. Any money you're setting aside needs to be accessible (no fees or penalties to get it). A typical 38 year old is 25+ years from retirement so they can be somewhat aggressive in their choices.. You can't. You need to be looking for something that won't lose money. Yet, the risk of outliving your money is much greater than average (this rules out any type of universal life insurance).

Unfortunately, you need a comprehensive plan. AND, you need a good team working for you. That can't be done in this forum. Call or e-mail me and I'm happy to walk you through this discussion and help you get the team you need in place.

Sincerely,
Charlie Donaldson

| 08.24.15 @ 18:21
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
Answered by Dave Bradley, Investment Manager (Financial Advisor) in North Charleston, SC
With all those property investments- Why are you paying a mortgage? Why not do equity financing with cash flows? We have lots of folks who either buy their properties with cash or pay off the mortgage in half the time or less. With a 30 yr mortgage, you should be able to pay it off in 15 years using efficiently invested cash flows. Then, pay yourself for the next 15 yrs.

Couple of suggestions:
1). Use the the Schedule C (as a Business Owner) , You can use the employer match for greater tax deductions on your retirement plans. Many of our folks use a self-directed plan.

2). Saving money is good. What about the other side of your retirement plans? What are they giving you in return? Meaning what is your MARR- Minimum Acceptable Rate of Return. Certainly, you want your hard earned $$ to work for you just as hard as you worked for them?

Contact us directly to discuss your situation in greater detail. No obligation
It's not what you make, It's what you keep that determines your lifestyle

| 04.04.16 @ 02:11
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:31
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