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Early Retirement/Disability
Old 08-14-2011, 11:27 AM   #1
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Early Retirement/Disability

I am a 57 year old married male. I recently had to take an early retirement due to a sudden disability. My new monthly income will be a pension($2400), SSDI ($2400).This alone will not allow me to meet my expenses. I also have a annuity fund thru the IUOE ( New York Life) of $850K, which is doing terribly ,less than 1% earnings. I also have cash assets of $100K in a savings account.
My children are grown and out of the house,I have about $30K left on my morgage,a $600 truck payment ,etc.
All I am really looking for is help as to where I could rollover my $850K where I could safely realize 4% on my money that would help on my monthly income and leave a little room for new growth. Any advice would be appreciated. Thanks again Lacawac.

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Old 08-18-2011, 02:38 PM   #2
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Bump--Sorry for moving myself up, but I am still looking for some advice. The $850K annuity I have thru work is doing terrible, and since I will be retiring very soon(brain aneurysm), I will have the option of rolling it over to something else. Looking for some interest on the money to generate monthly income. HELP!!!!!!!!!

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Old 08-18-2011, 02:47 PM   #3
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You would probably do well to take a look at some of the offerings at Vanguard or Fidelity for a relatively conservative mutual fund portfolio to roll your current account to. In your shoes, I'd also be looking at getting rid of that truck, downsizing the house, and cutting other expenses where you can to bring your monthly expenditures more in line with your monthly income.
I don't think that an investment exists that can offer you "safety" and a guaranteed amount of income as well as growth. If it were, it surely would be flooded with new investors this week.
Welcome and best wishes for your health and recovery.
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Old 08-18-2011, 02:55 PM   #4
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Originally Posted by Sarah in SC View Post
In your shoes, I'd also be looking at getting rid of that truck, downsizing the house, and cutting other expenses where you can to bring your monthly expenditures more in line with your monthly income.

You have much greater control over your expenses than over your investment income, especially in today's low-interest, highly unstable market. Were I in your shoes I'd prefer to bite the bullet now on reducing expenses rather than be forced to eat a cannonball a few years down the road...
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Old 08-18-2011, 03:21 PM   #5
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Sorry about the sudden disability.

Here are links to some recommended reading that might help you: FIRE Recommended Reading List and An updated FIRE recommended reading list (with a military twist)

As posted above, I'd sell the truck to get rid of that payment, and pay off the mortgage balance for the same reason. Then see where you stand in terms of expenses and income.

Do the annuity's terms allow you to roll it over into something else?
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Old 08-18-2011, 03:49 PM   #6
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I believe I can rollover to another account, its in a tax free account now until I withdraw on it. Looking for the same type with some return. thanks
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Old 08-18-2011, 07:43 PM   #7
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Reduce the expenses.
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Old 08-18-2011, 08:39 PM   #8
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Hi lacawac. Welcome to the forum, and sorry about your disability. The advice given by the others is good. If you cannot sell your house, one option is to rent a room to generate some extra cash.

Regarding investments, two good options to keep in mind are Vanguard Wellesley fund (1/3 stocks 2/3 bonds) and Vanguard Wellington (2/3 stocks and 1/3 bonds). Wellesley has a yield right now a bit above 3%, Wellington a bit less. More stocks mean greater growth potential but higher risk, and more bonds mean less risk but less growth potential.
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Old 08-21-2011, 09:16 PM   #9
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If your investment money is in a 401K consider leaving it there so you can withdraw before you are 59.5 then later roll into an IRA.

Since your fixed income is only 4,800 a month consider if your wife can get a job. Reducing expenses will be a big help. Pay off the mortgage or refinance to a HELOC so you can pay interest only if the rates are good and no cost to do the refinance. Since you have 100K in savings paying off debts with rates over 1% seems reasonable since savings don't pay much.

You can probably live on 4,800 without a mortgage if you tighten the purse strings. If your wife isn't working you don't need two cars so can save on car insurance.
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Old 09-08-2011, 06:07 AM   #10
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Upon reading your post, I'm a bit confused on a couple of things.

First of all, the SSD award of $2400/mo. is above the normal maximum SS income for 2011, which is $2366/mo. and assumes you retire at FRA age and have contributed the maximum to SS over a 35 year period per the following reference:

This amount may be increased if you have minor children, but that was not stated in your post. Remember, SSD benefits are computed in the same way as a person who gets normal SS; you get no "bump" under SSD, but since you are not starting to draw at FRA age but much earlier, your benefit would be reduced.

As a side note to whatever SSD benefit, remember that it converts to normal SS at your FRA age, but the amount is not discounted before that date unless you earn (based upon 2011 rules) of around 1K/mo. outside the SSD payment. That means upon FRA, you can earn (from whatever legal means) income and not lose benefits - somewhat like someone taking SS at age 62 but still having a j*b, but different that they do get a recalculated SS benefit later on.

Secondly, you state you are married but don't speak of any possible income from your spouse and the possibility of increasing income on that side of the equation.

Just wondering...

BTW, I do agree with other comments about reducing your monthly (debt) payments - especially the truck. The note/mortgage is small, and I assume most of your payment goes toward principal at this time so there would be very little "saved" by paying that off early.
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Old 09-08-2011, 06:54 AM   #11
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Your challenge is your annuity......what CAN you do with it, what penalties of taxes will you incur if you move it. I would get ahold of New York Life and ask what your options are to cash it in, to turn it into a monthly income etc. Too many annuities are very expensive, hard to cash in without paying penalties or having them suggest another product that may or may not be worth it or fit your needs.

After you get your options, find a good planner and base your plan on the options you have. I'd buy a high dividend ETF or mutual fund. You can get 2 to 3% on average although some stocks pay 4 %.

I'm not sure I'd sell the truck, if you need it you'll have to replace it with something and let's face it, you buy retail, sell wholesale and you probably won't come out ahead unless you just don't need the truck and won't replace it.

I would look, overall, at cutting expenses. You've got a fairly good income; well over 5 k per month and that's healthy unless your home is high end and you have huge house taxes and insurance as well as high maintenance and utilities. I moved to smaller but nice digs and saved a bunch, don't miss the big house at all.

Good luck, take care of your health and enjoy all you have worked for.
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Old 09-08-2011, 10:38 AM   #12
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This article just popped up on my FIDO account, FWIW:

5 retirement tactics in a low-interest-rate world - Personal Finance Daily - MarketWatch
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Old 09-08-2011, 12:43 PM   #13
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Sorry about your disability retirement.

I had to do the same thing when I was 57. Fortunately I had a good disability income policy from my company that just stopped when I reached 65. Do you have a disability income policy from your company? If you are not sure then check with your HR dept.

One of the hardest obstacles to overcome is getting SSDI but you have already cleared that barrier. As other have said check with the annuity co. to find if there are and penalties to roll it over to your own IRA.

Assuming your want to stay in your current house, if you paid off the mortgage and the truck would you have enough income to meet monthly expenses? If not you could take some withdrawals from the IRA using IRS reg T guidelines. Vanguard is an excellent mutual fund company with many suitable retirement funds.

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Old 09-08-2011, 12:52 PM   #14
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I believe I misspoke because if you are on long term disability then all withdrawals from your IRA would be penalty free.

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