Hi, I'm Katoslake and I'd appreciate advice

K

Katoslake

Recycles dryer sheets
Joined
Oct 4, 2020
Messages
116
Location
San Antonio
Family
Me- 59
DW- 57
Children: 1 on his own (grateful), 1 in college (2years remaining fingers crossed) 1 in high school (keeps us young)

Income
DW – 250,000 Total monthly income, gross= 20,833
Me- Retiring 12/1/2020
Assets
House- 500,000
Lake Lot- 176,000
Taxable Cash- 233,000
IRA Cash- 1,718,811
IRA-Bonds- 1,677,933
IRA Domestic Stock- 481,337
IRA- Intl Stock- 85,257
IRA Annuity- 555,835
RSU’s – gain 11,712 can’t cash out until April 2021
MegaCorp Medical Subsidy- 211,000
Total Investible Assets= 4,763,885
Total Assets= 5,650,885

529’s and Prepaid Tuition- NOT LISTED IN ASSETS
529 - $98,000 total
Prepaid Tuition
19,000= 2 years remaining for one student.
38,000 = 4 years for the other student.

Liabilities
Lake Lot- 105,000

Net Worth= 5,545,885

Expenses Per Month


Lake Lot- note payment- 950
Property Taxes primary home- 1,075
Property Taxes Lake lot- 300
Insurance- 275
Internet- 125
Electric- 320
Water- 125
Septic- 70
Home Warranty- 120
Pool maintenance- 160
Yard- 200
Mosquito Spray- 120
Food- 1,700
Total = 5,540

Medical Expenses and Insurance
Family Health Insurance- we pay 850.
Medical Copays- 600
Disability Ins- 375
Life Insurance (Term)- 275
LTC- 350
Glasses, Contacts- 225
Total= 2,675

Lifestyle and Quality of Life
Charity- 1,200
College Cash- 800
Cars and Car insurance- 815
Pets- 600
Cell Phones- 5 people- 510
Holidays and Birthdays- 950
Travel- 250
Clothes, Beauty supplies, sundries- 1,250
Youth Sports- 500
Hair, nails- 100
Computers, Cable- 420
Theater Tickets- 150
Total= 7,545
Total Monthly Expenses= 15,760

Holding more cash because of a large bonus and lump sum pension payout.
Plan to go in at approximately 30-35% FZROX, 55-60% FXNAX and remainder in cash.

Waiting to see 2020 IRS bill to make sure we don't get surprised.

A few questions I have are:
1) 401k vs IRA as it relates to protection from litigation or lawsuit ?
(nothing pending, just the only reason I can think of to stay in 401k)
2) Pay off Lake lot
3) Build on lake lot while still living in current home (I'm a little leery of having two houses for any length of time)

Any other advice, thoughts or feedback would be greatly appreciated.
I'm sure I've omitted something.

Thanks in advance !
 
strobot said:
Why are you on this forum? Lol.
Click to expand...

We are absolutely blessed and very fortunate. I'm not trying to brag, so sorry if it may seem that way. I've read a lot of really smart commentary on this site !
So many great ideas ! I can barely create a spreadsheet, so I need all the help I can get !

Thanks for your comment ! It reinforces our gratitude.
 
Katoslake said:
We are absolutely blessed and very fortunate. I'm not trying to brag, so sorry if it may seem that way. I've read a lot of really smart commentary on this site !
So many great ideas ! I can barely create a spreadsheet, so I need all the help I can get !

Thanks for your comment ! It reinforces our gratitude.
Click to expand...

Haha, there are many people who would love to be in a position that you are in (including myself). In response to your questions, it sounds like you already have a good idea of what you want (or should) do. Having two homes does tend to complicate things, but not always. If it's just a vacation home try to build small. Agree with ^ comment. You have a lot in cash that you could put into a taxable account and earn more interest. Other than that, you should have fun! Spend some of that money!
 
Great presentation of information, and congrats on where things stand for you. It was helpful to see the budget broken into categories like that; half of your budget seems to be discretionary, and the numbers should go down when the last two are launched.

You might consider ditching the life insurance at this point.

Some of it I didn’t understand, likely because I’m not very smart or never worked for MegaCorp. I don’t know what you mean by “IRA Annuity,” for example. I also don’t understand the lump sum for “Medical Subsidy.” One of your questions pertained to a 401k, but I don’t see that itemized (again, I likely just missed it).

Does your budget include paying for the anticipated build of the lake house? In our experience, endeavoring to build on an undeveloped parcel can be complicated and more expensive than one might expect. Even if you sell your primary and use those proceeds for that purpose, will it be enough?

Are you going to get a boat? Are lake-related living expenses in your budget?

As others have noted, and as you have noted, too, you seem a bit light in equities, but AA is a preference. We favor broad market ETFs at Vanguard. We are similar in age; our AA is 65/30/5. Again, YMMV.

From a back-of-the envelope view, it looks like your anticipated SWR is about 4%. Yet you don’t seem to have an investment mix that might support that in future decades. And your burn rate is high (though swaths of it are discretionary).

On to your Q’s:

1. 401k v IRA re liability

I never really thought of this, but I guess it is an issue. https://www.investopedia.com/articl...-retirement-funds-are-protected-creditors.asp. We are Vanguard fans, so basically just rolled everything into an IRA there so we could reduce fees, manage our own money, and get a better selection of investment options. We don’t have that liability risk covered. Maybe with a future lake house, boat and the like your risks are greater. You likely have looked at umbrella insurance policies.

Bottom line: I have no advice here because we have not addressed this risk ourselves. Maybe we should be doing so. Thanks for flagging it.

2. Debt on Lake Lot

I think we need more info about your life plans here. I have inferred that you intend to relocate to the future lake house at some point.

3. Build on Lake Lot (timing)

See thoughts on #2 above. There are also tax considerations (which house is primary, etc.), I think.
 
Does your budget include setting funds aside for lumpy expenses such as replacing vehicles, and home repairs/appliance replacements not covered by the home warranty?

Does the budget include income tax expenses?
 
WyomingLife said:
Great presentation of information, and congrats on where things stand for you. It was helpful to see the budget broken into categories like that; half of your budget seems to be discretionary, and the numbers should go down when the last two are launched.

You might consider ditching the life insurance at this point.

Some of it I didn’t understand, likely because I’m not very smart or never worked for MegaCorp. I don’t know what you mean by “IRA Annuity,” for example. I also don’t understand the lump sum for “Medical Subsidy.” One of your questions pertained to a 401k, but I don’t see that itemized (again, I likely just missed it).

Does your budget include paying for the anticipated build of the lake house? In our experience, endeavoring to build on an undeveloped parcel can be complicated and more expensive than one might expect. Even if you sell your primary and use those proceeds for that purpose, will it be enough?

Are you going to get a boat? Are lake-related living expenses in your budget?

As others have noted, and as you have noted, too, you seem a bit light in equities, but AA is a preference. We favor broad market ETFs at Vanguard. We are similar in age; our AA is 65/30/5. Again, YMMV.

From a back-of-the envelope view, it looks like your anticipated SWR is about 4%. Yet you don’t seem to have an investment mix that might support that in future decades. And your burn rate is high (though swaths of it are discretionary).

On to your Q’s:

1. 401k v IRA re liability

I never really thought of this, but I guess it is an issue. https://www.investopedia.com/articl...-retirement-funds-are-protected-creditors.asp. We are Vanguard fans, so basically just rolled everything into an IRA there so we could reduce fees, manage our own money, and get a better selection of investment options. We don’t have that liability risk covered. Maybe with a future lake house, boat and the like your risks are greater. You likely have looked at umbrella insurance policies.

Bottom line: I have no advice here because we have not addressed this risk ourselves. Maybe we should be doing so. Thanks for flagging it.

2. Debt on Lake Lot

I think we need more info about your life plans here. I have inferred that you intend to relocate to the future lake house at some point.

3. Build on Lake Lot (timing)

See thoughts on #2 above. There are also tax considerations (which house is primary, etc.), I think.
Click to expand...

Good questions. Thanks for making think.

We thought we'd consider ditching life insurance when our terms expire in 2024.

IRA Annuity is just a 2 year - 2% annuity inside our IRA.

Medical Subsidy is money my former employer provides to pay approximately 2/3rds of our insurance premiums since I'm still on the company plan. That will flip ratios once we reach full medicare age.

No boat. You can rent them at the marina and I've found that's cheaper with far fewer headaches.

Life Plans- evolving. Get kids off our payroll. Appreciate things that we took for granted pre-pandemic and enjoy those things when they return post.
 
Lewis Clark said:
Does your budget include setting funds aside for lumpy expenses such as replacing vehicles, and home repairs/appliance replacements not covered by the home warranty?

Does the budget include income tax expenses?
Click to expand...

Taxes yes. Until full retirement.
Lumpy expenses no.

Thanks for pointing that out
 
Lewis Clark said:
Does your budget include setting funds aside for lumpy expenses such as replacing vehicles, and home repairs/appliance replacements not covered by the home warranty?

Does the budget include income tax expenses?
Click to expand...

Yeah, I agree on this. It is a very detailed budget (youth sports, yikes!), but seems to leave out these two biggies.

As for life insurance, 2024 is probably a decent plan. You still have a youth in the house. Probably OK to keep the term a few more years.
 
I think you are good to go. Eliminating your college cash, youth sports allowance and life insurance (these will go away in a not too distant future). Assuming a 3.5% WR still has you within your current invested assets. Even if you have a higher initial WR, you are bound to get some SS to make up for the difference when that comes online.

You could drop your term life insurance since you appear to not have to replace an income to go on with your life. But you might as well keep it while your wife is working. It would allow your wife to retire if it was on you and it would enable you to make up for the shortfall of her income if it is on her.
 
On the lake lot, do you plan to pay cash or get a mortgage. If the latter, you may want to do that before both of you stop working. As has been mentioned on this forum numerous times, banks seem to get weird when there is no income, regardless of how big your balance sheet is.
 
Katoslake said:
Good questions. Thanks for making think.

We thought we'd consider ditching life insurance when our terms expire in 2024.
Click to expand...

Agree with keeping your life insurance policies through the end of their terms. It rarely makes sense to cancel a life insurance policy toward the end of the term. The premiums you paid earlier in the term are subsidizing the actuarial cost of the insurance for your current age.
 
I may have missed it, but how much longer do you anticipate having your DW's substantial income? How much retirement income from pensions and SS do you anticipate once both of you are retired?

Your cell phone bill for 5 people at over $500 per month seems too high. It seems like you could get an unlimited plan for 5 for less than 200.

Umbrella liability of just $1,000,000 seems low given your assets. We have a similar net worth and carry 4 million in Umbrella liability.
 
Katoslake said:
Family
Me- 59
DW- 57
Children: 1 on his own (grateful), 1 in college (2years remaining fingers crossed) 1 in high school (keeps us young)

Income
DW – 250,000 Total monthly income, gross= 20,833
Me- Retiring 12/1/2020
Assets
House- 500,000
Lake Lot- 176,000
Taxable Cash- 233,000
IRA Cash- 1,718,811
IRA-Bonds- 1,677,933
IRA Domestic Stock- 481,337
IRA- Intl Stock- 85,257
IRA Annuity- 555,835
RSU’s – gain 11,712 can’t cash out until April 2021
MegaCorp Medical Subsidy- 211,000
Total Investible Assets= 4,763,885
Total Assets= 5,650,885

529’s and Prepaid Tuition- NOT LISTED IN ASSETS
529 - $98,000 total
Prepaid Tuition
19,000= 2 years remaining for one student.
38,000 = 4 years for the other student.

Liabilities
Lake Lot- 105,000

Net Worth= 5,545,885

Expenses Per Month


Lake Lot- note payment- 950
Property Taxes primary home- 1,075
Property Taxes Lake lot- 300
Insurance- 275
Internet- 125
Electric- 320
Water- 125
Septic- 70
Home Warranty- 120
Pool maintenance- 160
Yard- 200
Mosquito Spray- 120
Food- 1,700
Total = 5,540

Medical Expenses and Insurance
Family Health Insurance- we pay 850.
Medical Copays- 600
Disability Ins- 375
Life Insurance (Term)- 275
LTC- 350
Glasses, Contacts- 225
Total= 2,675

Lifestyle and Quality of Life
Charity- 1,200
College Cash- 800
Cars and Car insurance- 815
Pets- 600
Cell Phones- 5 people- 510
Holidays and Birthdays- 950
Travel- 250
Clothes, Beauty supplies, sundries- 1,250
Youth Sports- 500
Hair, nails- 100
Computers, Cable- 420
Theater Tickets- 150
Total= 7,545
Total Monthly Expenses= 15,760

Holding more cash because of a large bonus and lump sum pension payout.
Plan to go in at approximately 30-35% FZROX, 55-60% FXNAX and remainder in cash.

Waiting to see 2020 IRS bill to make sure we don't get surprised.

A few questions I have are:
1) 401k vs IRA as it relates to protection from litigation or lawsuit ?
(nothing pending, just the only reason I can think of to stay in 401k)
2) Pay off Lake lot
3) Build on lake lot while still living in current home (I'm a little leery of having two houses for any length of time)

Any other advice, thoughts or feedback would be greatly appreciated.
I'm sure I've omitted something.

Thanks in advance !
Click to expand...

If you're worried about longevity; in my opinion you are way to overvalued in Bonds and Cash. Just a thought. You have have done extremely well though :)
Congrats indeed!
 
Katoslake said:
Family
Me- 59
DW- 57
Children: 1 on his own (grateful), 1 in college (2years remaining fingers crossed) 1 in high school (keeps us young)

Income
DW – 250,000 Total monthly income, gross= 20,833
Me- Retiring 12/1/2020
Assets
House- 500,000
Lake Lot- 176,000
Taxable Cash- 233,000
IRA Cash- 1,718,811
IRA-Bonds- 1,677,933
IRA Domestic Stock- 481,337
IRA- Intl Stock- 85,257
IRA Annuity- 555,835
RSU’s – gain 11,712 can’t cash out until April 2021
MegaCorp Medical Subsidy- 211,000
Total Investible Assets= 4,763,885
Total Assets= 5,650,885

529’s and Prepaid Tuition- NOT LISTED IN ASSETS
529 - $98,000 total
Prepaid Tuition
19,000= 2 years remaining for one student.
38,000 = 4 years for the other student.

Liabilities
Lake Lot- 105,000

Net Worth= 5,545,885

Expenses Per Month


Lake Lot- note payment- 950
Property Taxes primary home- 1,075
Property Taxes Lake lot- 300
Insurance- 275
Internet- 125
Electric- 320
Water- 125
Septic- 70
Home Warranty- 120
Pool maintenance- 160
Yard- 200
Mosquito Spray- 120
Food- 1,700
Total = 5,540

Medical Expenses and Insurance
Family Health Insurance- we pay 850.
Medical Copays- 600
Disability Ins- 375
Life Insurance (Term)- 275
LTC- 350
Glasses, Contacts- 225
Total= 2,675

Lifestyle and Quality of Life
Charity- 1,200
College Cash- 800
Cars and Car insurance- 815
Pets- 600
Cell Phones- 5 people- 510
Holidays and Birthdays- 950
Travel- 250
Clothes, Beauty supplies, sundries- 1,250
Youth Sports- 500
Hair, nails- 100
Computers, Cable- 420
Theater Tickets- 150
Total= 7,545
Total Monthly Expenses= 15,760

Holding more cash because of a large bonus and lump sum pension payout.
Plan to go in at approximately 30-35% FZROX, 55-60% FXNAX and remainder in cash.

Waiting to see 2020 IRS bill to make sure we don't get surprised.

A few questions I have are:
1) 401k vs IRA as it relates to protection from litigation or lawsuit ?
(nothing pending, just the only reason I can think of to stay in 401k)
2) Pay off Lake lot
3) Build on lake lot while still living in current home (I'm a little leery of having two houses for any length of time)

Any other advice, thoughts or feedback would be greatly appreciated.
I'm sure I've omitted something.

Thanks in advance !
Click to expand...

Do you really only spend 250 dollars per month on travel? Any plans to change that?

Disability, long term care and life insurance add up to quite a bit of money. Do you need all that? With just over 5 million in investible assets, being 59 and 57 you most likely don't need all or some of that.

How much longer does you DW plan on working?

In my opinion if you truly plan on building on the lot, do it while your DW is still working.
 
JoeWras said:
Yeah, I agree on this. It is a very detailed budget (youth sports, yikes!), but seems to leave out these two biggies.

As for life insurance, 2024 is probably a decent plan. You still have a youth in the house. Probably OK to keep the term a few more years.
Click to expand...

Sports cost should decrease soon. Probably be replaced by clothing if daughter has her way. :LOL:
Thinking of getting a smaller term when these policies expire.

Thanks for your comments !
 
cnocmmz said:
If you're worried about longevity; in my opinion you are way to overvalued in Bonds and Cash. Just a thought. You have have done extremely well though :)
Congrats indeed!
Click to expand...

Everything at Fidelity currently. About to go- 35-40 Total St Index and 55-60 Total Bond Index with a little cash.

I just keep running the numbers and it seems success rates are very similar even with a little less stock exposure. Been using FIRE Calc and portfolio vis to run numbers.

Thanks for your comments !
 
NgineER said:
I think you are good to go. Eliminating your college cash, youth sports allowance and life insurance (these will go away in a not too distant future). Assuming a 3.5% WR still has you within your current invested assets. Even if you have a higher initial WR, you are bound to get some SS to make up for the difference when that comes online.

You could drop your term life insurance since you appear to not have to replace an income to go on with your life. But you might as well keep it while your wife is working. It would allow your wife to retire if it was on you and it would enable you to make up for the shortfall of her income if it is on her.
Click to expand...

Hoping to get a bit of a raise by eliminating the items you mention. Not wishing time to pass too quickly, I'll gladly keep paying these bills !

Thanks for your comments !
 
brokrken said:
On the lake lot, do you plan to pay cash or get a mortgage. If the latter, you may want to do that before both of you stop working. As has been mentioned on this forum numerous times, banks seem to get weird when there is no income, regardless of how big your balance sheet is.
Click to expand...

Great points ! I'm thinking that if we time it properly we would try to get a mortgage before my wife stops working.

I'm thinking we should pay off the remaining balance on the lot- approx 105,000 at 6% ASAP and then use the lot equity for the down payment of the build.

Appreciate your input. Thanks
 
Golden sunsets said:
I may have missed it, but how much longer do you anticipate having your DW's substantial income? How much retirement income from pensions and SS do you anticipate once both of you are retired?

Your cell phone bill for 5 people at over $500 per month seems too high. It seems like you could get an unlimited plan for 5 for less than 200.

Umbrella liability of just $1,000,000 seems low given your assets. We have a similar net worth and carry 4 million in Umbrella liability.
Click to expand...

Wife will likely work 3-4 yrs. She has a 401K which is included in our numbers. SS will be taken first by me at 67 ? perhaps and her at 70.

Please tell me where to get a cheaper phone plan ! We are long time customers with our current company and have found they take advantage of loyalty and laziness on our part

I'll look into a bigger umbrella.

Thanks for your advice !
 
viking111 said:
Do you really only spend 250 dollars per month on travel? Any plans to change that?

Disability, long term care and life insurance add up to quite a bit of money. Do you need all that? With just over 5 million in investible assets, being 59 and 57 you most likely don't need all or some of that.

How much longer does you DW plan on working?

In my opinion if you truly plan on building on the lot, do it while your DW is still working.
Click to expand...

Travel will increase. We will likely keep disability and LTC.

DW will hopefully work 3-4 more years.

We'd likely try to follow your advice and build before she quits. We are still considering how big a house to build. It won't be bigger, but the question is how much smaller.

We need to rearrange our budget in the coming years ( or sooner )for sure. Priorities will change

Thanks for your comments !
 
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