Getting ready to retire has made me scrutinize our plan and our finances. I got a CFP colleague to look at it as well. Does it look great? Absolutely. Could we have done it better? Yes.
Paying Rent and Not to Ourselves
We just realized the other day that we should have bought the building that housed our business. We paid rent to someone for twenty years. If we had thought about it, we should have bought a building and paid the rent to ourselves.
My husband has tried to talk me into getting into the rental house business for years. Once or twice during our marriage, we rented a house we couldn’t sell. I hated it, and did not want to do it again. My husband is far too nice to deal with renters- he’d cave in to every sad story about why the rent is late, etc. But an office- that would probably be different. Should have done that. Cost of error- at least $100K
Not Saving Strategically
When I was putting together our portfolio to be reviewed by a CFP, I realized we have far too much in our Roth and cash accounts. While this is not a problem per se, We could have saved a lot of money in taxes if we had contributed more to a pre-tax 401K and less to the Roth IRA.
I thought we’d be retiring earlier than we are going to, and would need more access to our money- which our cash account and Roth accounts would have provided. What has actually happened is that my husband will only be a year out from being able to access his retirement funds when the paychecks stop. Cost? Probably $50k in excess taxes paid. Ouch. At least our kids will benefit from that.
Business Error
My husband started a business before we got married. He didn’t ask for enough money in his original loan application from the bank. Some competitors colluded and sold their products at below cost to drive him out of business, and it very nearly worked. An acquaintance offered him a deal- more operating capital for a share in his business. Cost of error? Half of his business profits. Don’t even want to know.
Divorce
What seems like a million years ago, I married someone who wasn’t on the same page as I am financially. He loved stuff, credit, and never thought about how much things cost. He wasn’t motivated to find a job and I ended up supporting him for most of our (mercifully brief) marriage. If we’d stayed married another year, I’d have owed HIM alimony. I was angry for many years about the money I spent getting out of that marriage, but it was money well spent. If I hadn’t, I wouldn’t be retiring in 74 days…
