Doppleganger
Confused about dryer sheets
- Joined
- Feb 18, 2024
- Messages
- 2
As the subject says, it's been 7 yrs since I retired. Was a scary decision at the time, but I think it was the correct one. I live in CA, USA (specifically in the Bay Area) with my wife and two kids so it is not cheap at all. Worked so much that my health deteriorated. It took 20 years after college, but my wife and I were able to build our liquid net wealth from zero to about 2 million. House and cars fully paid off before retiring. Exercising and cooking at home a lot now.
I understand 2 million is very little FOR THIS AREA, but I've been able to live and invest off the money since 2017. My net worth has since doubled since I retired. I will be 50 soon, I have started shifting my taxable money from "growing my money" to "preserving it" (stocks/options -> Tbill/CD/bonds, IRA money still in growing mode). Grandparents on both wife and my side lived into their late 90's so need to make sure money last until at least 100.
Thinking ahead, biggest issue for me is fulltime nursing home costs. It's about $100K-$150K/yr I will need at the end of our lives. After speaking to an agent, long term healthcare insurance is off the table (estimate total lifetime premiums paid to be $500K-$1M based on family history and best age to start).
Long term healthcare insurance alt:
Since I no longer wish to grow my money as much, this would be the perfect time to buy joint life annuities and let it sit for decades before it starts paying out. Along with social security, I would only need to invest $200K in QLACs (QLAC because I need to live off my taxable money) with a payout starting at 80 yrs old. Wife loved the idea, but wasn't thrilled about taking social security at 70 and QLACs at 80 to make this work, so plan number 2. Take social security at 62 and then have four annuities payout at 65, 70, 75, 80. The four annuities cost $100K each (4*100K) so double initial $200K, but wife likes this a lot more. I don't really care as long as I get to the $150K/yr number, and if the avg cost shifts up, I'm allowed to shift the payout dates up to 5 years before the first payout (70, 75, 80, 85) and that should take it over $200K/yr in case I need it....IRMAA be damned.
Living off safe 5% returns:
Due to the highly public bank failures last year, Fidelity had one bank offer a FDIC insured 5-year CD at 5%. I used all my available taxable cash that day on Fidelity. I also invested 10% of my taxable net worth cash into government agency bonds that mature in 25 years. I bought them below par and had a 4.875% coupon, so overall about 5.1% at maturity. T-bills are 5.3-5.4% but they are too short term. Good for emergency cash only. Looking to lock down more 5% return in the 10-15 yr timeframe.
Future:
Next move will be starting my Roth conversions. In order to keep it in the tax bracket I want, I estimate it'll take my 11-12 years of conversions to get it all done. Next next move will be to sell the house and downsize after my youngest kid graduates high school. I haven't told my wife, but I plan to use about 1/4-1/3 of the home sale for travel/vacation over the next decade for the two of us before we get too old to enjoy it.
I understand 2 million is very little FOR THIS AREA, but I've been able to live and invest off the money since 2017. My net worth has since doubled since I retired. I will be 50 soon, I have started shifting my taxable money from "growing my money" to "preserving it" (stocks/options -> Tbill/CD/bonds, IRA money still in growing mode). Grandparents on both wife and my side lived into their late 90's so need to make sure money last until at least 100.
Thinking ahead, biggest issue for me is fulltime nursing home costs. It's about $100K-$150K/yr I will need at the end of our lives. After speaking to an agent, long term healthcare insurance is off the table (estimate total lifetime premiums paid to be $500K-$1M based on family history and best age to start).
Long term healthcare insurance alt:
Since I no longer wish to grow my money as much, this would be the perfect time to buy joint life annuities and let it sit for decades before it starts paying out. Along with social security, I would only need to invest $200K in QLACs (QLAC because I need to live off my taxable money) with a payout starting at 80 yrs old. Wife loved the idea, but wasn't thrilled about taking social security at 70 and QLACs at 80 to make this work, so plan number 2. Take social security at 62 and then have four annuities payout at 65, 70, 75, 80. The four annuities cost $100K each (4*100K) so double initial $200K, but wife likes this a lot more. I don't really care as long as I get to the $150K/yr number, and if the avg cost shifts up, I'm allowed to shift the payout dates up to 5 years before the first payout (70, 75, 80, 85) and that should take it over $200K/yr in case I need it....IRMAA be damned.
Living off safe 5% returns:
Due to the highly public bank failures last year, Fidelity had one bank offer a FDIC insured 5-year CD at 5%. I used all my available taxable cash that day on Fidelity. I also invested 10% of my taxable net worth cash into government agency bonds that mature in 25 years. I bought them below par and had a 4.875% coupon, so overall about 5.1% at maturity. T-bills are 5.3-5.4% but they are too short term. Good for emergency cash only. Looking to lock down more 5% return in the 10-15 yr timeframe.
Future:
Next move will be starting my Roth conversions. In order to keep it in the tax bracket I want, I estimate it'll take my 11-12 years of conversions to get it all done. Next next move will be to sell the house and downsize after my youngest kid graduates high school. I haven't told my wife, but I plan to use about 1/4-1/3 of the home sale for travel/vacation over the next decade for the two of us before we get too old to enjoy it.
