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An Entrepreneurial Couple Wants To Retire At 50

An Entrepreneurial Couple Wants to Retire at 50. Can They?

An adviser says Brad and Arita Bohannan should prepare for higher health-insurance costs in retirement.
An adviser says Brad and Arita Bohannan should prepare for higher health-insurance costs in retirement.

Brad and Arita Bohannan, 44 and 42 years old, want to retire by the time Ms. Bohannan is 50. Are they being realistic?

Ms. Bohannan is a lawyer in New Orleans with her own private practice, specializing in divorce, custody and succession planning. She and Mr. Bohannan jointly own a 50% stake in two bars in the French Quarter and a music-publishing company. They also own commercial real estate.

Their combined annual income is about $630,000, including net income of $300,000 from the law firm, $166,000 from the rental properties, $148,000 from the bars and $14,000 from music and book royalties. Ms. Bohannan has a published novel.

Their retirement plan: Sell the businesses and live off the proceeds and income from their real-estate holdings. “We watched other people and realized the best way to build wealth was through real estate,” says Mr. Bohannan.

Their home is valued at $1.2 million, with a mortgage of $260,000. Their commercial real estate is collectively worth about $3.4 million, but has mortgages totaling about $1 million.

The shares of the two bars they own, Turtle Bay and Spirits on Bourbon, are worth about $375,000 and $1 million, respectively. The law practice is worth about $350,000. The music-publishing company is valued at about $250,000. The royalties it pays fluctuate.

They currently pay $6,000 monthly for their home mortgage; $50,000 annually for private-school tuition for their two children, in seventh and ninth grade. Their cars are paid off, but insurance is about $2,000 a year. They pay $1,100 per month for health insurance through a plan from one of their bars. Other annual expenditures, including groceries, clothing and entertainment, run about $50,000 a year.

The couple want to help their children avoid some of the big risks they have taken. Ms. Bohannan says that on four separate occasions she and her husband spent their last penny to acquire a business or property.

They hit a particularly rough financial patch after Hurricane Katrina hit.

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