It's been a tough year for our family as my dad was recently diagnosed with cancer and passed away in the blink of an eye. He was the breadwinner and my mom really relied on him for everything financially (income, bills, etc) as she worked part-time. She is completely lost and not sure what to do so I've stepped in to help as much as I can to organize everything, work the paperwork to transfer assets, automate her bills etc which has been difficult from 600 miles away.
My wife and I have really "begun" our ER journey a year ago and we have been focused on accumulation within our tax advantaged accounts. I have not read up enough yet on the withdrawal strategies and what to do when you truly are near retirement. With that being said, I am looking to the community for help.
Mom's current info:
Age
58.5 in good health
Income
$12.5k per year (part-time work)
Debts
$0
Expenses
$40k per year
Cash
$330k (recently sold house and life insurance benefit)
IRA's
$400k - invested in VBINX (60/40)
Social Security
In 3.5 years @ 62 = $11,808 / yr
In 7.5 years @ full retirement age for survivors benefit = $30,720 / yr
*there are a handful of social security options but it appeared this scenario was the the most optimum payout assuming mom lives to 90.
She is renting now and would like to potentially purchase a home or a condo for roughly $150k in the next 12 months. She also doesn't really enjoy her job so she would like to stop working if possible or find something else that is more enjoyable.
I've run firecalc assuming retirement begins in one year and lasting for 31 years to age 90. I assume a portfolio of $510k ($150k removed from investment assets for home purchase and $70k removed from investment assets for emergency fund / living expenses for year 1). For social security I only included the survivors benefit that begins in 7.5 years, I've ignored the $11,808 payment for the first 4 years of social security. With those assumptions, we get a 99.1% success rate.
Now I'm struggling how to help her make this happen. My initial thoughts:
*Purchase home with cash - $150k
*Keep $70k in cash for emergency fund / living expenses
*Invest the remaining $110k or cash in taxable account (another 60/40 split fund?)
*Keep the $400k Vanguard IRA where it is (VBINX)
*Take monthly distributions (taxable or IRA?) to cover $40k yearly expenses (account distributions should reduce dramatically once full SS is available)
I feel like I am missing something big but maybe not? The goal would be to keep it as simple or automatic as possible and would prefer to not need to rebalance (hence the 60/40 balanced fund in the taxable account suggestion).
I appreciate any insight. This entire situation has further driven my desire to financial independence and appreciation for the delicacy of life as you never know what tomorrow brings.
My wife and I have really "begun" our ER journey a year ago and we have been focused on accumulation within our tax advantaged accounts. I have not read up enough yet on the withdrawal strategies and what to do when you truly are near retirement. With that being said, I am looking to the community for help.
Mom's current info:
Age
58.5 in good health
Income
$12.5k per year (part-time work)
Debts
$0
Expenses
$40k per year
Cash
$330k (recently sold house and life insurance benefit)
IRA's
$400k - invested in VBINX (60/40)
Social Security
In 3.5 years @ 62 = $11,808 / yr
In 7.5 years @ full retirement age for survivors benefit = $30,720 / yr
*there are a handful of social security options but it appeared this scenario was the the most optimum payout assuming mom lives to 90.
She is renting now and would like to potentially purchase a home or a condo for roughly $150k in the next 12 months. She also doesn't really enjoy her job so she would like to stop working if possible or find something else that is more enjoyable.
I've run firecalc assuming retirement begins in one year and lasting for 31 years to age 90. I assume a portfolio of $510k ($150k removed from investment assets for home purchase and $70k removed from investment assets for emergency fund / living expenses for year 1). For social security I only included the survivors benefit that begins in 7.5 years, I've ignored the $11,808 payment for the first 4 years of social security. With those assumptions, we get a 99.1% success rate.
Now I'm struggling how to help her make this happen. My initial thoughts:
*Purchase home with cash - $150k
*Keep $70k in cash for emergency fund / living expenses
*Invest the remaining $110k or cash in taxable account (another 60/40 split fund?)
*Keep the $400k Vanguard IRA where it is (VBINX)
*Take monthly distributions (taxable or IRA?) to cover $40k yearly expenses (account distributions should reduce dramatically once full SS is available)
I feel like I am missing something big but maybe not? The goal would be to keep it as simple or automatic as possible and would prefer to not need to rebalance (hence the 60/40 balanced fund in the taxable account suggestion).
I appreciate any insight. This entire situation has further driven my desire to financial independence and appreciation for the delicacy of life as you never know what tomorrow brings.