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59 Years old and sick of working!
Old 07-22-2019, 10:17 AM   #1
Confused about dryer sheets
 
Join Date: Jul 2019
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59 Years old and sick of working!

Another new member here - and pretty clueless too. I suffered a mild heart attack in June, and I am seriously rethinking my current life style...

Background: I am 59 years old, my wife is 62. We got married in 2013, and we pretty much keep out finances separate.
.
Me: Owner of a small business, pulling out a ~80K salary. Company pays for health insurance, car, (and all costs including gas), and other intangibles.
I have approximately $200K in IRA's, another $55K in investment accounts and maybe $200K in several REIT style investments that is paying 7% over 7 years.
I also have about $100K in cash. House has no mortgage is is conservatively worth $550K.
I have loaned the company about $600K and have not yet started collecting payments on the loans.
.
WIFE: Approximately $175K in IRA's, $25K in REITS (same ones I am in), and $75K in cash. She draws a salary from my company of $65K per year.

The house is in both our names.

PLAN: Not sure, but I am looking at the possibility of having my wife start collecting SS, and me going on reduced salary, and having the company start paying me the difference of mine and the wife's salary as loan repayment. I don't expect the company to ever be able to repay me the entire amount for quite some time, so I figured I can reduce my personal tax base and improve the company books at the same time. My daughter has been taking over the company operations so it will remain a family business in perpetuity.
.
We currently reside in NJ, but are planning on relocating to Florida within 5 years.
.
I KNOW I need some kind of financial planning, but I hesitate to seek out a FP, because of the costs associated with it.
I have done minimal research into this subject, because the business has consumed way too much of my time, so I am hoping for some pointers on what I should be looking into.
This is actually the first time I have actually written down my list of assets and goals, so this forum is helping me already!
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Old 07-22-2019, 10:28 AM   #2
Recycles dryer sheets
 
Join Date: May 2013
Posts: 279
Welcome! Next up:

1) Analyze your current annual expenses in some detail
2) Research how you would maintain healthcare until age 65 (each)
3) Think about what your expenses would be in five years in a different place
4) Same for your assets in five years (ex: would you downsize and bank the profit from selling your current home?)

Again, welcome!
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Old 07-22-2019, 10:31 AM   #3
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Quote:
Originally Posted by LeeGH View Post
I KNOW I need some kind of financial planning, but I hesitate to seek out a FP, because of the costs associated with it.
I have done minimal research into this subject, because the business has consumed way too much of my time, so I am hoping for some pointers on what I should be looking into.
A huge mistake.

Hire a fee-only fiduciary financial planner for a few hours. It doesn't cost all that much.

A good planner will learn your wishes and goals, analyze your assets and help you come up with a real plan.
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Old 07-22-2019, 10:33 AM   #4
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A health scare can change your priorities (fast). All the saving, working, planning does no good if you are dead (sorry dead people).

Simply spending time here and Boglheads.org and reading threads that interest you is a start.

You need to understand your spending, health insurance and sources of income. You get the spending and income to match and you can work less or retire.

Downsize the house, SS, part-time income, interest/dividends, business repaying you.

Bogleheads.org has some good "getting started" topics.

Welcome! Spend 30-60 days reading up and plans will start to form. First step, take care of your health. Make time to exercise, eat better, quit smoking, reduce stress.

Good Luck!
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Old 07-22-2019, 12:20 PM   #5
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Welcome to the forum.

While you may ultimately want/need a financial planner, I would start doing a plan for yourselves in Quicken Lifetime Planner... an intuitive and easy-to-use retirement planner included in Quicken Deluxe or higher versions. At worst, it will help you think through everything as it is pretty comprehensive, at best you may find that is all you need.

Big questions are, how much do you need to live on once you are retired and relocated? If you need $20k a year then you probably can retire now, if you need $200k a year then you need to keep working. And obviously a lot of in-betweens.

You may have an opportunity to have loan repayments for a few years that should put you in a low tax bracket and you can use that time as an opportuny to convert that $375k in tIRA money to Roth at low or no-tax cost.
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Old 07-22-2019, 12:34 PM   #6
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Your number are cause for concern. Your family income comes from one source. I'm guessing with your tax-free intangibles you don't have a real handle on how much cash you need to live the lifestyle you have now. Remember you will have to add taxes to your number because at some point you will have to pay them.

It might be better for you to remain on the company books indefinitely to capture HI and other bennies. Is there a minimum hours worked requirement to qualify for bennies.

OTOH if you expect your daughter to buy out you need to work on reducing company debt load so she can handle equity payments to you and keep the company solvent.

You most likely need to talk to your DD about a possible 10 year plan to sell. That will take you and DD well past Medicare age and expensive insurance premiums.

I'm editing to add the comment it seems from your OP that you need all your current income to get by. If you draw a little less from your company with a lower wage plus partial payback of your investment, why is it necessary for your DW to start her SS? Do you need that cash?
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Old 07-22-2019, 12:38 PM   #7
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Welcome to this wonderful group. I live near you, 2 towns away. As others said, you need to take a hard look at your expenses, first, to start the process of seeing if you can retire now.....or where you may have to cut back to retire now.
I generally don't give specific financial advice, but one thing seems obvious to me: why not take a pay cut and have your company start paying off your loan? Presumably it would put you in a lower tax bracket with no real change in your net income (I am not an accountant).
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Old 07-22-2019, 01:44 PM   #8
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Welcome to the forum, Lee! The obvious question is, can/would you be willing to sell your business, and if so, how much do you think you can get? Can your company pay back your loan? If so, I calculate your joint investable assets at $1.430M. At 4%, this would only provide ~$57K income. Have you determined how much SS/pension you'll be eligible for? Have you determined your actual needed budget in retirement? Assuming $80K income, plus car costs ($10K/year), plus 'intangibles', and I'm guessing your 'needs' are north of $100K per year.

The 'red flags' in your situation that I see is that your joint income ($80K + $65K) comes from your company that owes you $600K and hasn't started repaying the loan. Not only are 'all of your eggs in one basket', but the stability of your company seems to be in question. You don't indicate what percentage of your and your wife's salary are currently being saved, so my guess above regarding spending is likely way off.

Before a FA can help you, you need to get a real handle on your income, company worth, and SS/other income. Then, you might want to hire one, fee only, for an hour to a few hours. Best wishes!
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Old 07-22-2019, 02:48 PM   #9
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You may also want to reconsider your wife taking SS at this time:

Prior to reaching full retirement age, you will be able to earn up to $17,640 in 2019. After that, $1 will be deducted from your payment for every $2 that exceeds the limit.

So, depending upon what her reduced salary would be, she may end up receiving exactly $0 in SS until she is full retirement age. At that time, SS would recalculate and she would no longer have any restrictions on her salary/wages.
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Old 07-23-2019, 04:32 PM   #10
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I think investing a few hours with a CPA to determine how to best structure income/repayment of debt from your business would be a huge win.
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Old 07-25-2019, 10:17 AM   #11
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Quote:
Originally Posted by LeeGH View Post
Another new member here - and pretty clueless too. I suffered a mild heart attack in June, and I am seriously rethinking my current life style...

Background: I am 59 years old, my wife is 62. We got married in 2013, and we pretty much keep out finances separate.
.
Me: Owner of a small business, pulling out a ~80K salary. Company pays for health insurance, car, (and all costs including gas), and other intangibles.
I have approximately $200K in IRA's, another $55K in investment accounts and maybe $200K in several REIT style investments that is paying 7% over 7 years.
I also have about $100K in cash. House has no mortgage is is conservatively worth $550K.
I have loaned the company about $600K and have not yet started collecting payments on the loans.
.
WIFE: Approximately $175K in IRA's, $25K in REITS (same ones I am in), and $75K in cash. She draws a salary from my company of $65K per year.

The house is in both our names.

PLAN: Not sure, but I am looking at the possibility of having my wife start collecting SS, and me going on reduced salary, and having the company start paying me the difference of mine and the wife's salary as loan repayment. I don't expect the company to ever be able to repay me the entire amount for quite some time, so I figured I can reduce my personal tax base and improve the company books at the same time. My daughter has been taking over the company operations so it will remain a family business in perpetuity.
.
We currently reside in NJ, but are planning on relocating to Florida within 5 years.
.
I KNOW I need some kind of financial planning, but I hesitate to seek out a FP, because of the costs associated with it.
I have done minimal research into this subject, because the business has consumed way too much of my time, so I am hoping for some pointers on what I should be looking into.
This is actually the first time I have actually written down my list of assets and goals, so this forum is helping me already!


Hello and welcome
Like you I am from NJ, mom still resides in Clifton. I am 59, and DW is 66, and we plan on retiring the end of next year. I left NJ because of the high taxes,... etc. Retired from the military and moved to VA where there were lower taxes. Opened a few small businesses and sold them after 6 years because of all the stress associated and wound up in he hospital for just that related stress. Best decision I ever made besides serving this great country of ours. I say all of this because when I read your situation it sounds eerily familiar. After a few months I took a government position with a 9-5 work day and life changed for me. Just saying!!!!!!!! In any case...Welcome, and I am sure you will get most of the information you will need to make the right decisions.
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