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Hi from Jack in Austin, TX
Old 02-25-2017, 12:55 AM   #1
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Hi from Jack in Austin, TX

Hello to all,
I am 52, my wife is 49. I am disabled, but she works. Between the two of us we bring in about $5k a month. Our children are grown and have money that was left to them from a deceased family member, so, they are okay and we don't need to help support them. We own a home, 2 cars outright, have a small nest egg that was left to us as part IRA and part investment portfolio and we draw from the IRA as required and from part of the earned interest - in short, it is growing slowly. I have no choice about working (full time anyway) as my disability is permanent, but, I do get benefits from the government (I don't like it, but, there is nothing else to be done in my situation but take it and try to make something out of it) - I can make a little, if I can get it. If you don't know the rules, if I make more than about $1200/mo. I am considered "able bodied" but, I have not been able to and believe me, if I could, I would as I made significantly more working. The point is, our expenses are about $3k +/- a month, so I guess the question is if she wants to retire at 60, and the brings in about $2k/mo., live where we are (in other words no new house, which is okay, the one we live in is only 8 years old) , where is the best place to put the remainder to keep us going until we shuffle off our mortal coils? Thanks.
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Old 02-25-2017, 01:10 AM   #2
Confused about dryer sheets
 
Join Date: Feb 2017
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Hi again,
BTW, I've read the early retirement FAQs the income is NET income and is very real over the last 5 years, we have real IRAs and investment accounts that we can liquidate, but won't, of more than $200k. I know this doesn't sound like much, but, we do well and don't spend money (I do all cooking, minor home repairs like plumbing and electrical) we don't drive much, so the cars are low mileage and mine is old and I don't care. I probably won't survive much past 70 and see no reason why my wife won't live to be 85. As long as she can get by with things the way they are financially (less half she won't get from the gov when I expire), she says she'll be fine.
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Old 02-25-2017, 07:18 AM   #3
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Can you provide more details about exactly what you're asking? I can't quite understand the question.
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Old 02-25-2017, 07:51 AM   #4
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I undestand the question, I think, but the information is a bit jumbled. You have a net monthly income currently of 5k and expenses of 3+k. When you're wife retires you expect a monthly net income of about 2k. Where shall you put the extra money until you die - after you retire? What are your anticipated expenses after you retire? Will you have surplus after you retire until you shuffle off this mortal coil?

If you're asking about what to with your current excess income, that also depends. Does your wife have a 401K that matches her contributions? 401k's are often inexpertly set up, and can have high high ERs, but the matching contributions can make up for that. Otherwise, being a Boglehead, my suggestion would be a Vanguard or fidelity account of low cost mutual funds. At her age most would recommend a 50/50 split of total bond/total stock funds, though I've always been a bit more aggressive. $1000 a month would provide about 131K invested by the time she retires at 60. That doesn't include returns. Vanguard also offers a blended fund of 65 stock/35 bond which would be easier and not require rebalancing, but the cost is slightly higher. (Rebalancing, if you're unsure, is selling off one asset class to rebalance back to your 50/50 ratio - or asset allocation, as it's called). After retirement, you may not be in a situation to continue investing, but that's a decision down the road once you know how the economy, and your personal situation, fares. Any excess over that $1000 a month can be used to eliminate debt. Once that's accomplished, you can boost your fund investments using money you were applying to the debt. (I assume you have a mortgage). Of course, if you're comfortable with your debt level, and it's at a low interest rate, you may want to maintain it until you retire, and put all your excess money into a fund where, over 11 years, it will most likely earn a higher return than you are spending on the mortgage. Plan to be debt free before she retires, is my personal advice. Good luck.
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Old 02-25-2017, 07:54 AM   #5
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Having as many of your bond funds in a tax deferred account reduces capital gains taxes each year. I'm a big fan of tax deferred accounts, though many prefer Roth style investments these days. Tax deferred accounts worked well for me, as I'm in a low tax bracket now (being retired)
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Old 02-25-2017, 08:04 AM   #6
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When do you guys expect your wife to stop working?
When your wife quits working what will your sources of income be?
-- Her SS: Amount:
-- Your disability check: Amount:
-- Any pension for her or you? Amount, and is it COLA'd?:

-- When your wife quits working, how much will you guys have saved up? If she works for 15 more years (to age 65) and you invested that $2K per month (difference between your present income and your expenses), you'd be putting away $360K over that time. Given a conservative rate of growth, that might grow to $500K or so, and your existing $200K might grow to about $400K, for $900K total. If that comes to pass, and if we use a 4% annual withdrawal rate, that would produce about $3K per month in sustainable withdrawals. The bad news is that inflation is very likely, so that $3k will probably not buy nearly as much as it buys today.

- What will your annual expenses be when your wife quits working? House paid off? Any break on your property taxes?
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Old 02-25-2017, 08:07 AM   #7
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Reread your question and realized I may have missed a part of it. If you save as above, with your current investments, you should have at least 330k in investments. A general GUIDELINE is a 4% safe withdrawel rate will last 25 years in an investment account of approximately 60% stock and 40% bond. Your investments would provide about 12K a year additional income, as a working estimate. Morningstar.com offers a great online class (self-paced) if you open a free subscription. Wouldn't bother with a premium (pay) subscription unless you really get into things lol. Morningstar also offers the opportunity to track all your investments in one spot, offering a great overview and analysis of your portfolio. This is also free, I believe. MS does not sell investments, they sell data and analysis so people can make their own choices. They do rate funds and stocks. A lot of good information daily as well. But the 'classroom' is invaluable. Basically a college education presented in 10 minute bites. Vanguard has something similar, which I think is available to the general public free as well.

Just saw Sam's post. I always estimate low lol. Fewer surprise that way... but his scenario is very likely, given a 2k monthly investment, and if we make certain assumptions about how your current portfolio is invested. The more info you provide, the better we can respond.
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