55 - Will I have enough?

[jmzf1958]

Hi. This is a great forum - I'm glad to have found it! I'd like to get some opinions on my financial situation. I believe I have enough to last me through the years, but I always second guess myself on this. I'm single, kids are grown and self-supporting, mortgage is paid off, no debt. I have been on disability retirement for a number of years.

My financial situation is as follows:

Income:
$2575/month net - NYS disability pension - 1% - 3% cola on first $18,000
$1733/month net - NYS workers comp - lifetime benefit - no cola
$2325/month net - SSD - cola
$1550/month net - private disability insurance until age 65 - no cola

Total monthly income: $8,183 (Monthly income at age 65 is reduced to $6,533.)

Monthly expenses: $5,000

Savings:
$200,000 - Traditional IRA
$20,000 - Emergency Fund

Projected savings at age 65:
$300,000 (This will come from monthly NYS disability check put in
savings account from now until age of 65.)

Rental Property:
$125,000 - Plan to sell this when it's paid off (13 years) and put money in retirement accounts. $100,000 left on mortgage. Interest rate is 3.5%.

Land:
$65,000 - This is paid off and is currently for sale. Proceeds will go in taxable retirement account.

House Value:
$180,000 - paid off

Total assets: $490,000

I have medical coverage through SSD and NYS, so that is not a concern for me.

One of my main concerns is inflation. I have tried to run firecalc, but I can't seem to get through it for the final result.

Any opinions/suggestions/reassurances are welcome! Thank you.

 

[REWahoo]

The first place to start is to run your numbers through FIRECalc. See a link below.
Do yourself a big favor by spending a little time reading "How it works" first.

 

[REWahoo]

One of my main concerns is inflation. I have tried to run firecalc, but I can't seem to get through it for the final result.

Sorry, missed this on my first read.

FIRECalc results are displayed in a separate window after you hit submit.

 

[MDJO]

Welcome jmz. Ditto Wahoo's comments. Firecalc is a great resource. There are other calculators on the web at various financial companies or even Money's web site. Not as detailed as Firecalc, however.

 

[jphripjah]

Wow, that's a lot of disability money.

 

[Bluetrekrider]

You're in like flint. No worries.

 

[Rustward]

I made a lot of assumptions, but here is a very quick FireCalc run.

FIRECalc: A different kind of retirement calculator

For firecalc input, the two cola pensions are combined into one (didn't bother to try to figure out how to handle the partial cola'd one), and the two non-cola pensions are combined into another.

For portfolio value, I used current value and just entered the NYS disability pension as a pension rather than savings from now to 65 -- let FireCalc figure out how it will affect success rate.

I added some to spending for Taxes, but probably not enough for NYS.

Says 100% success, but look at this carefully and understand every input parameter, and tweak as necessary. Again, lots of assumptions, but maybe this will help you get started.

Edit to add: I just noticed that the private disability payments end at 65!

You can subtract the yearly amount of that ($18,600) from the non-cola pension (the second pension line) and add it back in somehow, for example, as three lump sum additions to the portfolio spread over ten years, or something like that (on the Portfolio Changes tab).

 

[heeyy_joe]

I also think you are in good shape, but since you are concerned with inflation you should consider placing a portion of you investable assets into "TIPs". Hope your disability does not shorten your life...enjoy!

 

[jmzf1958]

Thanks for all of the replies. I ran the numbers through Firecalc and also came up with 100%. Makes me feel better! Rustward, my workers comp and private disability to age 65 are tax free. I pay about ten percent in taxes a year. The income that I listed are net, so as far as taxes, I should be okay.

As far as investing in tips for inflation purposes, I'd like to get some ideas of how to invest the money I have ($190,000 in my IRA). I have been out of the market since the end of 2010 - very nervous since the crash. I ran the numbers in Firecalc with zero percent expense ratio and zero percent annual return and still came up 100%. Should I get in the market or stay out, and if I get in, what should my allocation be?

As far as the $300,000 that will be added to my portfolio in ten years, I will be saving $30,000 a year. I am considering buying one or two more single family homes for rentals, keeping them for 13 - 15 years until the mortgage is paid off, then sell them. Or keep them longer if all is going well with them. This will add to my portfolio.

Any suggestions?

As far as my disability, it's nothing that will shorten my life, luckily. I just am so glad I had the foresight to buy private disability insurance and was able to collect on my disability pension and ssd.l Since it was a work accident, I can also collect workers comp. My life and my children's lives could have been very different. Financially, working would have been better, but so far, it has all worked out.

 

[jmzf1958]

Just thought I'd bump this up. Any opinions on my last post? Thanks.

 

[LeavingOhio]

Thanks for all of the replies. I ran the numbers through Firecalc and also came up with 100%. Makes me feel better! Rustward, my workers comp and private disability to age 65 are tax free. I pay about ten percent in taxes a year. The income that I listed are net, so as far as taxes, I should be okay.

As far as investing in tips for inflation purposes, I'd like to get some ideas of how to invest the money I have ($190,000 in my IRA). I have been out of the market since the end of 2010 - very nervous since the crash. I ran the numbers in Firecalc with zero percent expense ratio and zero percent annual return and still came up 100%. Should I get in the market or stay out, and if I get in, what should my allocation be?

As far as the $300,000 that will be added to my portfolio in ten years, I will be saving $30,000 a year. I am considering buying one or two more single family homes for rentals, keeping them for 13 - 15 years until the mortgage is paid off, then sell them. Or keep them longer if all is going well with them. This will add to my portfolio.

Any suggestions?

As far as my disability, it's nothing that will shorten my life, luckily. I just am so glad I had the foresight to buy private disability insurance and was able to collect on my disability pension and ssd.l Since it was a work accident, I can also collect workers comp. My life and my children's lives could have been very different. Financially, working would have been better, but so far, it has all worked out.

You're not completely out of the market right? Is any of that IRA money in stocks? With all of your guaranteed income, if I were you I would put ALL of that IRA money in stock mutual funds, and then just let it sit there. I would then take all but a year's expenses of the $300,000 you plan to save over the next 10 years and put that in stocks too. In retirement take from it when the market is going good (but only if you need it), and just live on your other guaranteed income when the market is bad. Maybe you're a real estate person and love that, but that's to much work for me...dealing with renters, arranging repairs, etc. I'd rather that my money just make money.

 

[heeyy_joe]

Regarding inflation protection:

Exchange Traded Fund, symbol TIP
Mutual fund at Fidelity: smbol FINPX

 

[jmzf1958]

Thanks for the responses. Yes, my money is out of the market. I know I need to get it back in, but I've been kind of nervous about putting it back in. Probably not logical since I won't this money for ten to fifteen years. I took it out the middle of 2010, so I missed a year and a half of gains. I keep thinking I'll put it in after the next big drop, but I could be waiting a long time. In the meantime, I'm missing out on gains. My risk tolerance was not as great as I thought.

I do like real estate. I already have one rental property and would like to buy one or two more, single family homes, using my money for a down payment and financing the balance since the interest rates are so low. If I sell the land soon, I will use that money as a down payment on the properties instead of putting it into savings. And it does make more sense to put the money I am saving from my nys pension into the market and some TIPS and let it make more money.

I appreciate your input.

 

[Pauline RFIndependence]

Tangible investments

Like you, I enjoy real estate. This is a great way to adjust your rents every year with inflation and know what to expect.
Why would you want to sell it if you like that class of assets?

 

[jmzf1958]

I'm just going to sell the land. There is no house on it. I thought I was going to build on it, then changed my mind, so it's not generating any income, unfortunately! I'll use that money as a down payment on a couple of other single family homes.