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Yes but due to inflation by the time you are ready to retire at your target age you'll probably need at least $10 million in investments to retire comfortably for the following 30 years.
Agree- at least 10 mil especially with kids and what about healthcare? I wouldn’t dial it back at all.
You can easily access retirement funds before the age of 59, so there’s no reason to contribute to taxable accounts at the expense of your 401k if that’s what you’re considering.
Also, 4% is not a high mortgage rate. That money would be better put in the market. If you want to pay it off in a lump sum right before you retire, you can do so with the earnings you got from the money you invested and you’ll still be ahead.
https://www.madfientist.com/how-to-access-retirement-funds-early/
This really depends on what you will use the money for. Opinions will vary, if it was me, I would not accelerate payment on a 4% 30 year fixed. What would be the driver to do that?
I never contributed more than the match amount for 401-k (though eventually the max was under the match). I think legit reasons for not maxing tax deferred accounts can include (a) building more easily accessible / liquid market investments, (b) investing in RE or other asset classes, (c) if needed to not make lifestyle too draconian, (d) paying off high interest rate debt. Probably a few others. Just make sure you are creating and following a plan that gets you where you want to be.
Obviously a lot of people do things like that so it isn’t crazy. I dislike losing that rate and cutting off the optionality. I look at it this way. If you keep investing, at any point, including at retirement, you could take those assets, liquidate them and pay down your mortgage. If you pay down your mortgage, right now you couldn’t get a four percent mortgage again (ok w/o lots of points). Note this doesn’t consider tax issues which you should think about and doesn’t hold if you aren’t long term bullish on the market.
Community Builder
Won’t say crazy, but risky. Your $509k retirement nest egg is solid for 27/31, but dialing back 401k contributions to just the match , I think it slows your compound growth, which is crucial to hit $5M by 45/41. With $1.35M total invested, let’s assume 7% annual returns, you’re on track for ~$3.8M by then, not $5M, unless you keep maxing out contributions.
Down payment of 4% mortgage is less urgent—historically, markets outpace that rate. Redirecting funds to mortgage or kids is fine, but prioritize maxing Roth IRA and HSA for tax advantages and flexibility. Kids’ costs are unpredictable, so build a separate taxable account for near-term goals. Keep 401k contributions high if you can; time is your biggest asset. Reassess at 35/39.
Coach
Paying down a below market rate mortgage is giving away your most valuable asset. In case you don’t realize it, time is your most valuable asset. Save more money in broad based etfs. I would choose the taxed advantage accounts if I were you.
Dave Ramsey would scream "yes!" at the top of his lungs, but I don't think I agree. 4% over a time horizon this long is pretty low and I think it's smarter to keep pressing the market.
That said, it's not, like the worst idea. It's almost definitely suboptimal, but that doesn't mean it's not viable (and there are other reasons to make decisions than pure finances). You two are doing well. Though 5m in the timeframe you spell out isn't a sure thing without continuing to push.
Do whatever you need to to prepare for kids of course. But remember that financially secure parents are a blessing to children. Youll serve as a model and (excuse the term) you won't be a burden.
Am I understanding that you have 1.3m invested total? If so, you would only need to contribute about $1000/month until that age and you’d hit your $5m number. If you max Roths and HSAs plus 401k match you’d be well ahead of that.
Would not stop maxing 401k if the choice is between it and either taxable investment or a 4% mortgage. The 401k is categorically better than the former and better than the latter unless you have an extremely low risk tolerance.
So, you are asking if you should dial down your equity investments earning +10% (tax protected) in order to invest in an asset that earns 4% on 30 year money. Kind of dumb.
Also, ignore the insurance salesman that posted above.
I wouldn’t do that, especially if you’re doing a traditional 401k because not only are you losing out on compound growth, you’d also be paying more taxes. Add extra payments if you want to your mortgage for peace of mind if you have money to spare (you might not now but you’ve got a lot of time to advance your career and salary with it, and this is not urgent). Build a bigger emergency fund that can absorb childcare costs (valid reason to contribute less if this is urgently pending!).
Subject Expert
Under this scenario would you still be contributing to taxable? 401k contributions are strictly better than taxable.
And you can outperform paying off the mortgage with no risk using just bonds. Or continue accumulating the same portfolio you have now.
Subject Expert
Or gradually in the years prior to retirement. Just not on an accelerated basis when you are still just 29 years old on average.
If planning to retire early in the US, I’d consider thinking how you will cover non-employer sponsored healthcare and health expenses (ideally just for you and your spouse and not an entire family) so perhaps funding up an HSA will definitely help there. Also agree with others regarding not needing to prioritize the mortgage payoff at 4% over larger returns you can be getting now from the market.
Wow, so young and doing so well. It is good to be thinking like this now. Under your current retirement contribution schedule there are a few things that you could easily do, that matches $3 to every $1 invested with no IRS limitations. It is not well known (been around for 13 years with verifiable results) because it is targeted to physicians, attorneys, and business owners. Unlike your current other investments, there are no IRS limitations on contributions, creates 100% tax free retirement, and can be utilized for your children's education without early withdrawal penalties. If interested, I am happy to have a casual discussion with you both and show a comparison to your existing strategies. Initial investments are minimal and would not require you to pull from your existing strategy. Please feel free to reach out to me. If not, best of luck. You are off to a fabulous start for your age.