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Old 08-05-2013, 10:19 AM   #1
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Hoping to join the class of 2016

Hi all,

It's been 3 years since I've posted. Here's the last one:
54, discouraged but hopeful in California

In June, my mom passed away, and left an estate. With the money we will be receiving, it makes retirement at age 60 possible. That chunk of money is effectively the "third leg" of the stool, the other two being our savings, and SS starting at 62 for me, and waiting til 65 for DH. No pension for either of us. 1.2 million total portfolio projected, combined with SS and a 35 year retirement gets me a 100% success rate when plugging into firecalc using a small (20%) stock allocation. If we sell our land in New Mexico, that will add at least another 100K to the pot. We paid off all debt. We've decided to stay in our paid for, modest, 1100 sq ft house in small town northern California-maybe splurge and add a second bathroom Property taxes are relatively low because of prop 13. No kids.
We are looking forward to having time to travel, hike, kayak, visit family and continue to pursue our hobbies-my husband plays drums in an instrumental rock band (all original) and I love to paint watercolor.

We will likely shift all our money to Vanguard (have some there now) and I am considering the Wellesley Fund, Admiral Shares. We have become more conservative with investments, and this seems like a good choice. I would love feedback on this, and any other suggestions. I like the all in one fund as it keeps things simple.HC premiums may not be as bad as I thought-we will see how "Covered California" shakes out next year, but I have included 12000/yr for premiums in our spending requirements-60K total, although we can live on less.
Thanks to all of you on this forum for the inspiration and information-you guys are awesome! Mango

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Old 08-08-2013, 05:42 AM   #2
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Join Date: Mar 2006
Location: Houston
Posts: 4,330
Congratulations on being where you are. I wouldn't overdo the "100%" success on FireCalc. It is still only based on historical returns and we never can know the future. The key is really doing what you appear to be doing which is being out of debt and controlling your living expenses. I personally have a three tiered system.

If things are going well I spend "X" and have a comfortable lifestyle and nice vacations. If things start to go down, I'll cut spending as necessary to "1/2 X" but still have a comfortable lifestyle. Further down the ladder, downsizing and spending reductions will let us get by on SS and my small non-COLA pension. Even with a paid for house, housing is the biggest living expense in our budget.

Many here like the stock/bond combo funds. I don't because I won't buy bond mutual funds. I was burned really bad back in the 80's and don't want to watch 50% of my principal disappear again. With individual bonds or CDs you know you will get the principal back at some point. I prefer a balanced stock index fund portfolio with the fixed income in laddered CDs.

You mentioned a 20% stock allocation. FireCalc may say you have a 100% success rate with that but at your age it's probably overly conservative. You probably should consider having 40%. You can increase your expenses to get your success rate down to 80% or so and have FireCalc look at the success rates at different allocations. There's an option for that. Inflation is you biggest enemy for a 35 year plan and 20% stocks doesn't cover that very well.

For health care, you could probably manage your income and get the government subsidy which will let you spend far less than $12,000 for premiums. Remember that spending after tax or Roth money is not counted as income.

The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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Old 08-08-2013, 08:13 AM   #3
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Here's a tip that could save you tax $ if/when you add the bathroom to your house. They reassess the value when you do improvements or add sf - so it can impact your prop 13 rate. HOWEVER - if you are retrofitting (or adding) to make it handicap accessible, it's exempt from the property tax increase.

We didn't know that when we built out in-law suite for my in-laws. Since FIL is in a wheelchair - it was designed to be 100% accessible. We have to pay increased taxes on the main space - but they deducted the value of the totally accessible bathroom and for the grading associated with getting an ADA compliant ramp for access to the dwelling. Knocked about 1/3 off the tax increase.

Just make sure the bathroom is ADA compliant. In our case we put in a roll in shower, and made great care to make sure it was large enough to accommodate maneuvering a wheel chair for access to the toilet, sink, etc.
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Old 08-08-2013, 08:25 PM   #4
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Join Date: Dec 2007
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Thank you for the responses! We definitely need to look at asset allocation going forward, and in retirement. We have the option of working part time doing stuff we love, too, and have no problem cutting back when times look uncertain. Re: the bathroom, that's a great tip, rodi! Thanks for that!
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