Another Way To Fund Retirement?

[jazz4cash]

The key missing information is how much is her SS and how much would her rent be.

I ran maximum safe ending in FIRECalc using the following parameters:

• 20 year time horizon (to 96 in case she lives longer than expected)
• $500,000 starting portfolio (assumes that the gain on sale of her principal residence would be less than the $250,000 exemption and therefore not taxed).
• 20/80 AA

The result is that she could spend $24,004 in inflation adjusted spending from her portfolio
starting in 2024; since SS is inflation adjusted, add whatever she gets in SS to that.

Jazz
How would that be better than a SPIA paying 4k per month for life with zero effort to maintain and no risk of overspending?

 

[Koolau]

The thing is, she's so damn lovable nobody will mind!

Well, there you go! Sometimes a winning personality is your ticket to a charmed life. Good for her. I'll quit worrying about her.

 

[pb4uski]

Yes, my thoughts too. She really needs to buy a SPIA so that she doesn't blow through the $500K on bad investments.

SPIA would work if financial discipline is a concern. I wouldn't put the whole $500k in aSPIA though because once it is paid there is no getting it back other than over time.

 

[RetiredHappy]

SPIA would work if financial discipline is a concern. I wouldn't put the whole $500k in aSPIA though because once it is paid there is no getting it back other than over time.

I agree, so maybe $300K into a SPIA and $200K for emergency use.

 

[marko]

Yes, my thoughts too. She really needs to buy a SPIA so that she doesn't blow through the $500K on bad investments.

Good insight but see my post #22. This sort of thing is furthest from her mind. Her calculation is notably simpler.

 

[Alex The Great]

Does she owe any taxes for these $500K? I mean did that condo grow up in price beyond the exemption?

 

[marko]

Today's update:
Subtitle: "From bad to worse"
Quite predictably there's been a change of plans.

Because of the damage from the hurricane in Florida, she's now moving to Maine.
The people who she's sold her condo to now want to move in on November 30 instead of January 10.
Instead of renting, she just bought (on a whim) a very small condo (formerly a motel efficiency with a separate bedroom) in a tourist area which also allows weekly rentals.
That all sounded somewhat fine until she announced that.....they turn off the water for three months in the winter and she can't stay there. She does not see this as a problem at all.

It sounds like she's paying cash ($400k) from the condo proceeds instead of stretching her cash with a mortgage. So she's essentially sold a very decent condo in exchange for a crappy one and banking $100k to live on.

Her three month winter plan is to "visit" her wide range of friends who winter in Florida (East Coast) staying with each one for a few weeks each. This is not a big change from her usual winter modus. This would include ourselves of course, but I expect that whole idea to change again 10 times before December, so I'm not getting too excited yet.

Always interesting! The saga continues.

 

[pb4uski]

Wow.

 

[Walt34]

This sounds like a couple of my older relatives, now passed on, and one nephew, who is still with us. Except the older ones weren't at all lovable. The nephew, although likeable, knows better than to try mooching off me.

 

[Koolau]

Today's update:
Subtitle: "From bad to worse"
Quite predictably there's been a change of plans.

Because of the damage from the hurricane in Florida, she's now moving to Maine.
The people who she's sold her condo to now want to move in on November 30 instead of January 10.
Instead of renting, she just bought (on a whim) a very small condo (formerly a motel efficiency with a separate bedroom) in a tourist area which also allows weekly rentals.
That all sounded somewhat fine until she announced that.....they turn off the water for three months in the winter and she can't stay there. She does not see this as a problem at all.

It sounds like she's paying cash ($400k) from the condo proceeds instead of stretching her cash with a mortgage. So she's essentially sold a very decent condo in exchange for a crappy one and banking $100k to live on.

Her three month winter plan is to "visit" her wide range of friends who winter in Florida (East Coast) staying with each one for a few weeks each. This is not a big change from her usual winter modus. This would include ourselves of course, but I expect that whole idea to change again 10 times before December, so I'm not getting too excited yet.

Always interesting! The saga continues.

You need to write a book!

 

[Target2026]

A living example of - Die with zero!!!

 

[marko]

You need to write a book!

Yes but the plot changes day to day.

 

[audreyh1]

Too bad!

 

[marko]

So here's an update to the saga.

Selling your condo, then renting and living off the equity was a somewhat unconventional but logical move. It made a certain amount of sense. Instead, she bought another, cheaper (in price and quality) condo an hour and a half away from all her friends, family and office.

She has about $70k left to live on and the condo shuts off the water, heat and electricity for January and February, so she rented a place in Florida for two months.

Now she's starting to realize that maybe she had been a little bit too hasty. She called the other day saying that she couldn't believe she was 76 years old, sitting in a laundromat. Her brother showed up offering to make a few minor improvements and she told him not to bother because she's not going to keep the place.

So, now she's been spending her evenings with us one or two times a week and with her brother another two nights a week, spending the weekends out in the hinterlands of Maine. She doesn't like staying with us so much because we have a lot of stairs and she has two knee replacements (and never did the therapy).

This was all so predictable! The only surprise is that it only took two weeks. The rest of us thought she'd last until next summer. Again, she always manages to land on her feet so this should prove for an interesting few months ahead!

 

[athena53]

I share the same two concerns SecondCor521 mentioned. Rents go up. Depending on how close she is to the FL coast, property insurance costs could skyrocket and the landlord will pass on the costs to tenants.

She may also get to the point where she can't age in place- mobility issues, fall risks, having to give up her car...then as the OP noted, she may bounce back up to Massachusetts and need help with all of this.

 

[street]

There is so much help for low-income housing in this country if you just ask.

Maybe she is too proud to do it but the ones I see are beautiful building. Some even provide one meal a day.

You pay to what you have in assets.

 

[marko]

I share the same two concerns SecondCor521 mentioned. Rents go up. Depending on how close she is to the FL coast, property insurance costs could skyrocket and the landlord will pass on the costs to tenants.

She may also get to the point where she can't age in place- mobility issues, fall risks, having to give up her car...then as the OP noted, she may bounce back up to Massachusetts and need help with all of this.

No. She's only renting in Florida for January and February because they turn off the power and water in her condo in Maine.

She'll have sold this dump in Maine and be back in Mass by March. Seen this movie ever since I've known her.