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Old 12-10-2019, 08:35 PM   #1
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Just joined, eager to learn more from FIRE community.

Hi

I'm a 54 y old medical professional just joined your community today. I'm always try to learn how I can retire early and what I need to do to achieve my goal. Thanks for this site and all the people involved with this community. I've a question that need to get a answer.

1. I've my retirement and taxable accounts with vanguard with a savings of 2.5 mln - 1.5 mln in retirement accounts and 1 mln in taxable account with an asset allocation of 65/35. Planning to retire by 60.

I have a traditional life insurance of $275K with a yearly premium of $3,350, with a cash value of $60K at this time. I have another term life insurance for 1 mln upto 65 y of age. Now, considering my asset, do I need to keep my traditional life insurance and putting the premium yearly or just withdraw cash value portion and invest in my taxable account ?
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Old 12-10-2019, 09:57 PM   #2
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Welcome from another CNY'er.
Introduce yourself in the Hi, I am section.
Not familiar with how to value whole insurance but my feeling on insurance is to not have any since I have no one depending on my income. When I did I had enough that they could have lived ok.
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Old 12-10-2019, 10:13 PM   #3
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Cancel the insurance.
Put the $3K into a retirement bucket. Or, read the Blow That Dough thread.
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Old 12-11-2019, 12:31 AM   #4
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Hold on... belay that advice.... don't be so quick to dump the whole life. But you can dump the term life with your assets.

On your whole life, calculate the growth in the cash value year over year.... so [end of policy year cash value/(beginning of policy year cash value + premiums paid/2) -1]... that tells you your cash value growth rate. If that rate is 3% or more then I would keep it as a bond/CD substitute.... you're earning over 3% with no interest rate risk and negligible credit risk. If the growth is attractive you might inquire about getting the policy converted to paid up status so you'll no longer need to make premium payments.

Also, IF you do cash out your whole life policy, you will probably have a taxable gain and tax at ordinary rates to deal with... so at the least it might make more sense to wait until you are retired and in a lower tax bracket before you cash out.
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Old 12-11-2019, 07:16 AM   #5
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I would say to keep the whole life insurance, but have it pay for itself from the dividends, rather than laying out the $3350 initially. You could always pay yourself the $3350 in a ROTH IRA to create another bucket.
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Old 12-11-2019, 07:37 AM   #6
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Hi

I'm a 54 y old medical professional just joined your community today. I'm always try to learn how I can retire early and what I need to do to achieve my goal. Thanks for this site and all the people involved with this community. I've a question that need to get a answer.

1. I've my retirement and taxable accounts with vanguard with a savings of 2.5 mln - 1.5 mln in retirement accounts and 1 mln in taxable account with an asset allocation of 65/35. Planning to retire by 60.

I have a traditional life insurance of $275K with a yearly premium of $3,350, with a cash value of $60K at this time. I have another term life insurance for 1 mln upto 65 y of age. Now, considering my asset, do I need to keep my traditional life insurance and putting the premium yearly or just withdraw cash value portion and invest in my taxable account ?
Not enough info. We don't know what your living expenses are, who depends on your income, etc.

First step: make your best guess at what your living expenses will be in retirement. Then visit firecalc.com and see if you'll have enough.

Let us know the results.
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Old 12-11-2019, 07:42 AM   #7
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Not enough info. We don't know what your living expenses are, who depends on your income, etc.

First step: make your best guess at what your living expenses will be in retirement. Then visit firecalc.com and see if you'll have enough.

Let us know the results.
Did he ask if he had enough or are you reading that into his OP?
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Old 12-11-2019, 07:43 AM   #8
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Are you debt free? Or in other words is the reason for the policies now moot, like the mortgage is paid off and with no other liabilities your wife could live on the 2.5 million comfortably should you die or become disabled suddenly?
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Old 12-11-2019, 07:45 AM   #9
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Did he ask if he had enough or are you reading that into his OP?
If he has enough, he doesn't need life insurance.
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Old 12-11-2019, 08:18 AM   #10
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Just joined, eager to learn more from FIRE community.
Welcome
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Old 12-11-2019, 09:07 AM   #11
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Welcome! Our forum will analyze every which way to evaluate a financial or other situation/decision. You'll get a wide variety of well thought out responses. You've come to the right place.
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Old 12-11-2019, 09:09 AM   #12
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You'll get a wide variety of responses, many of them well thought out.
Fixed it for ya!
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Old 12-11-2019, 10:17 AM   #13
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If he has enough, he doesn't need life insurance.
Agree. From the OP it was unclear if he was single or had dependents... but with $2.5m unless he has dozens of dependents or spends like a wild man he doesn't need life insurance coverage so the term can be jettisoned.
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Old 12-11-2019, 10:38 AM   #14
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Agree. From the OP it was unclear if he was single or had dependents... but with $2.5m unless he has dozens of dependents or spends like a wild man he doesn't need life insurance coverage so the term can be jettisoned.
My family consists of my wife, me and 2 daughters of 21 and 11. But I've secured 250K into my 529 plan for their education which I didn't touch yet.
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Old 12-11-2019, 10:46 AM   #15
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My family consists of my wife, me and 2 daughters of 21 and 11. But I've secured 250K into my 529 plan for their education which I didn't touch yet.
You don't say how much you expect to spend in retirement, but in most cases with $2.5m in assets you shouldn't need life insurance in most situations. An exception might be a special needs dependent as an example.

The key question is if you get run over by a beer truck on the way home today, will your DW and daughters be able to live well on the $2.5m you have amassed and and SS benefits without life insurance? I'm guessing yes, but only you can answer that.
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Old 12-11-2019, 11:02 AM   #16
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I'm thinking that life insurance sufficient to maintain the current standard of living for the next decade (until the 11YO launches) has merit. Should the beer truck get you, hopefully there will be enough $$ to allow your survivors to focus solely on that loss, and not have to make other adjustments due to financial worries. Once the daughters have launched, the asset level should be sufficient to provide for the widow.


But that likely will not happen and you appear well on your way to FI, IMHO.
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Old 12-11-2019, 02:39 PM   #17
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The key question is if you get run over by a beer truck on the way home today, will your DW and daughters be able to live well on the $2.5m you have amassed and and SS benefits without life insurance?
If the OP were to be run over by a beer truck, I'm guessing a substantial settlement would follow, based on the OP's earning potential to age 65 or so. So, $2.5M might not be all there is to live on.

On the other hand, if the OP were to have a heart attack...
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Old 12-11-2019, 04:00 PM   #18
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Ok, ok...add...and it is not the beer truck's fault.
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Old 12-11-2019, 05:47 PM   #19
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Ok, ok...add...and it is not the beer truck's fault.

...or it and the driver are uninsured and flat broke.
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Old 12-11-2019, 07:22 PM   #20
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Welcome to the forum! This is a great group of people.

You sound like you will be ready. You have a 21 year old and have not touched the 529 yet? Wow. More for the 11 year old.

In the next few years youíll probably accumulate quite a bit more. You should have enough. Check your expenses though. Physician lifestyles can be extravagant (newly retired MD here). Do you have a mortgage? Ready to shell out $$$ for health insurance?

BTW, you listed your retirement year as 2030. Shouldnít it be 2025?
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