Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 08-11-2011, 05:15 PM   #21
gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Originally Posted by ERD50 View Post
I assume you go from SSDI to SS?
SSD "converts" to SS at your FRA without changing your monthly benefit.

The name is changed, but the important thing as you are not "income tested" and allowed to earn more than SSD will allow, without loss of benefit. The current earnings test is just over $1k/month (adjusted every year) before you may lose benefits.
rescueme is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-11-2011, 05:26 PM   #22
gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
As far as the annuity discussion, I would agree with the consensus so far, even though I have an annuity (SPIA - or Single Preimum Income Annuity).

Your mentioned annuity is a fixed-term indexed annuity (e.g. tied to return of the market) with variable payouts over the 10-year period, which also tend to have high expenses.

I'm not about to start an annuity discussion (even though many know I can ) but my personal opinion (FWIW) is that in your case, with the level of liquid/invested assets, it might not be a good option for you.
rescueme is offline   Reply With Quote
Old 08-11-2011, 11:53 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
Join Date: Oct 2006
Posts: 7,560
Nana a few more thoughts, and a bit of tough love.

My sympathies about having a disability that caused a large drop in income. That said a pension/plus SSDI of 5K month is actually quite a lot. I think it is probably more than most retirees on this (affluent) forum have. This income level is more than 2/3 of US families (many with more than one earner) make.

Your retirement saving of 210K can generate additional income but it won't be all that significant. The general rule of thumb here is 4%=$8,400 or $700/month. However, this assumes a large investment in the stock market which I guessing your aren't comfortable with. Furthermore this is a lousy time to be an investor, with no good options.

Certainly taking on a renter is an option. I've had mixed success with renters in my house but sometimes it works out.

Quite frankly your problem is not your income but your spending. The cost of living in Bakersfield is pretty much average for the country. If you are having troubles meeting your bills I'd urge to carefully examining your expense, and keep your MM and 401K for future capital needs.

First and foremost pay off any and all loans,especially credit cards. There is no point having money earning basically 0% interest in money market and than pay even a low interest rate of 3%.

Next scrutinize all expenses. No need for life insurance for a retired single woman, without a car loan you can probably raise the deductible on your car insurance. I guess the iPhone is your allowed luxury, but kill the land line.

I'd also shop around for medical insurance $650/month while not super high is probably worth shopping around for since I see Kaiser's offer $500/month plans for 60 year old woman in Bakersfield.

Finally the big expense is housing. Your housing expense if roughly 1/2 your income which is too high a ratio. It seems to me given that you have retired with a disability that you are a prime candidate for a loan modification and would qualify as a hardship case.

One thing to consider is that between your 401K and MM you can actually purchase a home for cash in you same neighborhood. You can walk away from your existing house and suddenly your housing expense drops to insurance, HOA, and taxes which is probably in the range of $400-$500/month. At which point you should be easily able to make ends meet. Now I am not advocating you walk away from your mortgage since your are only moderately underwater.

Armed with this information I would contact the bank and ask that they reduce your interest rate to the current levels of around 4%. Tell them that they have two options, work with you to make your existing payments more affordable,or risk you stop making any payments on your house. It will take them probably a year to evict and which point you simply buy another house for cash.

Good luck.

By all accounts working with banks is extraordinarily frustrating but I think it should enable you to cut your expenses hundreds of dollars a month.
clifp is offline   Reply With Quote
Old 08-12-2011, 05:07 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
I didn't notice your location when I first looked. California explains the home value loss.

+1 on clifp's response.

There isn't much I can add to what other have stated other than getting down to the nitty gritty details.

Hopefully you can restructure your debt and get a one of the low rates currently available... i would stick with fixed loans on a refi. Plus, it looks like you are paying PMI... I would ditch the PMI... IMO PMI is just a waste of money if you have the money to pay down the debt so you have 20% equity in the house. You cannot earn a return on an risk equivalent basis with the assets you hold!!! example: house worth 150k. 20% is 30k. PMI is lets say $125/mo. So you are financing 30k at lets say 6% on the mortgage paying another 5% for PMI and your fixed investment today you are getting 3% at best... but in reality your money market is probably yielding 0%. While the real numbers may be different... you get the picture.

Aside from the home issue and your debt... You also have a general spending problem. It is not a criticism, just an observation.

Create a budget and stick with it. Trim spending by eliminating things you do not really need or use, and look for substitutes that are lower cost. A couple of examples: shop P&C insurnace every few years to see if you can get a better deal. Consider ditching the iPhone and the data and phone plan... use a prepay cell phone and get a home internet line with a home phone using a cheap voip solution... look around there are some really low cost ones available). Just some ideas. Remember $20/mo here and $50/mo there adds up!!

For your long-term budget and planning... If your pension is a nominal pension (no cost of living adjustment)... remember at 3% inflation the spending power will cut in half in roughly 20 years. This means you will have less to spend in the future (in effect)... plan accordingly!!!
chinaco is offline   Reply With Quote
Old 08-13-2011, 04:27 AM   #25
Thinks s/he gets paid by the post
obgyn65's Avatar
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Hello nanaS - I would be cautious about this.
Originally Posted by nanaS View Post
I have been speaking with a fin. advisor who is encouraging me to take my money out of my 401K and get a Aviva annuity which is 7.25%. .
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 08-13-2011, 06:33 AM   #26
Dryer sheet wannabe
Join Date: Jul 2011
Location: Orange
Posts: 13
An annuity is probably not a good idea. They are excellent for making money for your financial advisor.

Talk to your lender about the house -- they are apparently a lot more flexible now than they were at first. They don't want to be stuck with any more houses. We moved for my husband's job in 2005 so I feel your pain although the money is not lost until you sell. A straight re-fi should drop your payment. We already did it once and are thinking about doing it again since rates are even lower. You could look at a 20 year fixed or a 10/1 ARM. With the 10/1 ARM and a point on the loan you could get your payment under $1K. In 6-8 years you will have recovered the price, I suspect, and then you can sell before the payment adjusts since rates now have no where to go but up. Perhaps you could downsize into smaller place and rent out the current house?

You can get an idea about rate:
Stella_Barbone is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
family member asking for money - domestic violence issue :-((( simple girl Other topics 80 09-08-2015 09:05 PM
Money Market funds in potential danger. clifp FIRE and Money 22 07-06-2011 06:10 AM
A History Of Money mickeyd FIRE and Money 0 06-28-2011 02:10 PM

» Quick Links

All times are GMT -6. The time now is 06:50 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.