Can We Retire Early To The Beach?
We are Randall and Rhonda Cunningham, a married couple in our late fifties with dreams of retiring early to the beach. Rhonda is 58, and Randall is 55. We live in Charlotte, NC, and have always envisioned spending our golden years enjoying the ocean views and warm climate. We both have stable careers, and while we have been saving diligently for retirement, we are unsure if we can make the leap as early as we hope. Our priority is to make sure we can allocate $10,000 a year to go towards college for each of our grandchildren: Lily, James, and Emily. We also have other goals that we would like to fund, like vacations with the family, vacations for just ourselves, and individual goals (boat for Randall and Jewelery Shop for Rhonda). To address this, we turned to StartingOutPlan’s self-guided financial literacy software to help us build and analyze a comprehensive personal financial scenario, including an assessment of our retirement readiness.
Building Our Personal Financial Scenario
We started by entering our current financial information: our combined annual income is $160,000 (Rhonda makes $90,000 and Randall makes $70,000), monthly expenses totaling $5,500, and our retirement savings of $250,000. We also accounted for our mortgage payment of $2,000 per month, which we still have to pay for the next 10 years.
Baseline Scenario with Current Goals
What we saw
We are in a very good position now. We are in line to fund all of our goals, but things change in life and we want to see if we can afford to retire early and head to the beach. To model this on StartingOutPlan, we will need to go to the workshop and make some changes. First, we need to set a goal to buy a new house. The house will be costly since it is at the beach. Next, we need to enter financing for the new house and find a buyer for our current home. We will also need more expensive homeowner's insurance. We will increase the cost of Rhonda's jewelery shop since she will likely need it to be successful sooner in order to fund the beach house. Lastly, we need to adjust the retirement goal so that we can account for Randall and Rhonda retiring early.
Let's take a look at the same graph in the workshop with the new goals added.
What We Saw
Everything looks doable in this scenario except for our actual retirement. We need to find a way to make this work or make the decision that we can't retire early and move to the beach. Let's see what changes we can make and determine whether or not this goal is feasible after we have taken care of our other goals.
We will still retire early, but we will wait an extra two years. We feel that we can reduce our annual vacation budget with the grandkids since we will have our own beach house for them to visit. Lastly, we have reduced our budget for a new beach house by 10%.
Making The Decision
As you can see from looking at the Net Worth and Expense Comparison (compared to the current plan), we were able to find a way to make it work with the scenario where we work an extra two years and reduce the budget for grandkid's vacations and the beach house. This is still not perfect, so we will have top return to this at a later date before executing on anything. We may consider keeping our current home and renting it out or we could simply work anothet year or two. This is encouraging, however, so I do believe we will stay focused on this plan to retire early and get a beach house.
The Importance of Comprehensive Planning
This case study presents a simplified financial scenario. In a more detailed personal financial scenario, we would incorporate specific expenses, financial goals, and the details of all debts and assets to ensure a more precise and tailored financial plan.
The Role of Professional Advice
While we’re confident in the numbers we’ve run, we recognize the importance of consulting with a financial advisor. StartingOutPlan has given us a solid understanding of our financial situation, but having a professional advisor validate our plan will give us peace of mind and ensure we haven’t overlooked any critical details.
Welcome to FinLitYou Stories!
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While the cases we present are inspired by real-life scenarios, some details have been altered to respect privacy.
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