Hi everyone! I want to thank all who read & replied to the post "
Layoff ahead!" that I wrote 14 months ago. A lot has happened since then and it seems time for an update. I'm posting this in "Hi, I am…" because I never really introduced myself before. Mea culpa.
Note that all income & expense numbers are monthly. I am now 56.5, DW is 55.5
DW's layoff did happen in Jan 2014 and her company was wonderful about everything, keeping every promise we had been given. She was able to start taking a $450 pension plus $490 medical retirement late 2014. Both are joint & survivor, but don't have COLA. Her severance was a year of salary and she got leftover accruals and a couple of small bonuses. She still meets with some cow*rkers for lunches and leaving on good terms was healthy for both of us. She has determined that she couldn't go back to 40 hr weeks although PT might be possible.
I'm continuing to operate my small business, a hotel gift shop / convenience store plus wholesaling to several other hotels that have self-service kiosks. I take a salary of $3600 but have lots of extra withheld for taxes as DW's pension doesn't have withholding. The bad news is that while we had a full cash offer to sell the business, it fell through because the hotel wouldn't write a lease for the new buyer. I'm still exploring selling the wholesale part but it isn't worth much without the brick & mortar location. It still only takes about 20 hrs per week, but requires attention almost daily so does not fit with plans for more travel & leisure. Planning to close down at end of April this year, we will probably walk away with $5-10k cash plus a good deduction from the final K1. After 11 years on my own I couldn't handle full time again, but would consider a PT j*b if we get into a bind.
The good news is that DD is in her last semester of college and graduates in May! Yippee! We achieved our goal of getting her through 4 years at a reasonably priced state school without any loans. Last tuition payment sent 4 weeks ago! We've also matched part of her earnings to start her a ROTH now worth $26k.
We've been working hard to get our financial house in order. Here are the numbers as of today:
ASSETS:
$860k Traditional IRA's (DW's 401K through Vanguard didn't allow partial withdrawals via the out-at-55 rule, so we rolled it over to be able to do conversions.) Overall these are 90/10 AA.
$179k ROTH IRA's (starting slowly on conversions this year, faster if we get a large K1 loss for the business). These are 80/20 AA.
$149k After tax investment account which gives off $560 / mo dividends. 100/0 AA. We stopped DRIP'ing these late 2014. Mostly in utilities, REITs and telecom to get this level of income.
$17k HSA. This is in a 0.5% interest account. I'm nervous about reaching for higher income with investments as I look at this as part of our "emergency fund".
$80k Cash…large stack of crisp $100 bills under the mattress…just joking!
$1265k Total, up 19% since previous post. Almost all at Fidelity so our account guy now sends occasional invites to lunch or dinner. Nice perk!
Townhome ($150k), cars ($20k) & CC's fully paid. No debt!
EXPENSES:
$1800 Essential costs - HOA fees, utilities, insurance (including Health Insurance), cell phones etc. Not much room for cutting here.
$1600 Variable costs - gas, groceries, wine, dining out, etc. We could crunch this by 50% if we had to, and some should drop after I close the business.
$700 budget for 2-3 longer trips per year while we're still healthy & able, and we are at about $50k total spending next year.
The expenses are firm numbers, based on past 3 years of data from Quicken. We've been banking the pension, medical and dividends to build after-tax cash account while living off my salary & reimbursements.
With $450 + $490 + $560 = $1500 passive income we have most of our essential costs covered. Getting to 59.5 without raiding the investment account will be a challenge, but I think we can. I've looked at different options for SS and we plan to file at 62 to prevent having to deplete our TIRA's before FRA. At 62 my SS will be about $1000, DW's about $1200.
Our near-term goals:
4-5 wk trip to Europe this summer. Estimated total cost $8k. we have friends to revisit and are experienced in traveling the continent so we should be able to keep it in this budget.
4-5 week trip to South America in early 2016. Never been there, want to explore some new things. Also want to get out of MN for part of winter. Estimated total cost $6k.
New flooring, kitchen update, and other fix-ups on the townhome. Nothing is urgent and we're fairly handy, so total budget of $20k could be trimmed and certainly will be spread out over 1-2 years.
I know there are some gaps in this plan - if we burn through cash at $2000 per month plus trips plus remodeling our $80k of cash will be gone before we reach 62. That could prompt some PT w*rk for a few months each year, something we're OK with.
Alternately, DW could now qualify for unemployment 6 months @50% salary and after closing the business I could qualify for 5 weeks @50% salary (special rule limits owner's unemployment from their own business!) Since she isn't really looking for FT j*b, would this be a bad thing to do? It would certainly help! Moral dilemma.
Whew! This got to be longer than I thought but much of the progress we've made this past year is due to the GREAT people who give their time & experience on this forum. I hope our story gives others some ideas.
As for comments & criticism: Fire away!
BrianB
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