Intro, and almost ready to retire

[TB1960]

Hi my name is TB and my wife’s name is CB. And we live in North Carolina.

Here are some details...

TB-Age 60 Salary $95k/year, at a mega-corp with health insurance, 401k, stock purchase plan, yada, yada…

CB-Age 55 Salary $20K/year, part time teacher no benefits

We have no debt other than a $25K Mortgage with 2.75 interest.

Expenses are currently about $6,000.00 a month. That will drop to $4,300 once the mortgage is paid off in 15 months.

$ status:
$100K cash checking account, please don’t ask why so much at this time, lol.
$200K in IRA account
$120K in an Ameriprise account
$15k in Ebay account
$800k in cash, waiting to transition to retirement asset allocation
Home value about $430,000.00 after mortgage is paid off.

In addition, we are 1/3 owner in a real estate LLC that includes about 10 properties and 10 promissory notes. All properties are paid for so no mortgages.

Our 1/3 total income from the LLC, (Rental and promissory note payments), is about $6,000.00 monthly for at least the next 10 years and beyond. However, we do have to deduct property taxes and other expenses from the monthly total. I estimate the monthly expenses to be about $800.00.

1/3 cash value of the real estate is about $800k

1/3 cash value of the promissory notes is about $700k; amortized to about $1,500K.

TB-I hope to retire once our mortgage is paid for and maybe CB will have a full time job by then that will help pay for medical benefits.

In full disclosure I stole the format for this email from jdunc31.

 

[HI Bill]

Welcome! Sounds like you're golden, assuming that you have factored in health care and intermittent expenses into your budget! Have you run your numbers through FIRECALC? Whether to pay off the mortgage is always a contentious subject on this board, but I'd just pay it off (especially considering your large amount of assets earning presumably less than 2.75%) and RE! Then, I'd just invest your $800K in diversified ETFs. Best wishes!

 

[MBAustin]

Welcome TB! If you haven't found them already, we have a helpful list of things to think about before you make the leap:

Some Important Questions to Answer

You will find quite a few folks here who would question why you are paying the high fees that are common with Ameriprise, and a lot of advice on managing the money yourself at Vanguard or Fidelity. Hopefully you'll find some helpful guidance in that regard.

 

[pb4uski]

...In addition, we are 1/3 owner in a real estate LLC that includes about 10 properties and 10 promissory notes. All properties are paid for so no mortgages.

Our 1/3 total income from the LLC, (Rental and promissory note payments), is about $6,000.00 monthly for at least the next 10 years and beyond. However, we do have to deduct property taxes and other expenses from the monthly total. I estimate the monthly expenses to be about $800.00.

1/3 cash value of the real estate is about $800k

1/3 cash value of the promissory notes is about $700k; amortized to about $1,500K. ...

So is my understanding correct that you're thinking that the value of 1/3 of the LLC is ~$1.5m ($800k + $700k) and 1/3 of the LLC generates ~$64k a year of cash net income ($6k/month of income less $800/mo of expenses)?

 

[obsessed]

So here is my TB1960 to do list:

1) Close Ameriprise account
2) Take $25k and pay off the mortgage
3) Now that mortgage is paid off, immediately start retirement process
4) Rebalance your assets to your desired allocation

Even if DW doesn't find/seek FT employment, it looks like your assets support paying for medical insurance on top of your projected expenses (~$2.7m investable net worth including the LLC)

 

[jdunc31]

Hi my name is TB and my wife’s name is CB. And we live in North Carolina.

Here are some details...

TB-Age 60 Salary $95k/year, at a mega-corp with health insurance, 401k, stock purchase plan, yada, yada…

CB-Age 55 Salary $20K/year, part time teacher no benefits

We have no debt other than a $25K Mortgage with 2.75 interest.

Expenses are currently about $6,000.00 a month. That will drop to $4,300 once the mortgage is paid off in 15 months.

$ status:
$100K cash checking account, please don’t ask why so much at this time, lol.
$200K in IRA account
$120K in an Ameriprise account
$15k in Ebay account
$800k in cash, waiting to transition to retirement asset allocation
Home value about $430,000.00 after mortgage is paid off.

In addition, we are 1/3 owner in a real estate LLC that includes about 10 properties and 10 promissory notes. All properties are paid for so no mortgages.

Our 1/3 total income from the LLC, (Rental and promissory note payments), is about $6,000.00 monthly for at least the next 10 years and beyond. However, we do have to deduct property taxes and other expenses from the monthly total. I estimate the monthly expenses to be about $800.00.

1/3 cash value of the real estate is about $800k

1/3 cash value of the promissory notes is about $700k; amortized to about $1,500K.

TB-I hope to retire once our mortgage is paid for and maybe CB will have a full time job by then that will help pay for medical benefits.

In full disclosure I stole the format for this email from jdunc31.

No disclosure needed! I am sure I stole most things from other posts I read as well

I am brand new here and still soaking up the advice, congrats so far to you though--looks to be in a good spot!

 

[Dtail]

Is that a Ferrari 348 in your avatar?

 

[TB1960]

Welcome! Sounds like you're golden, assuming that you have factored in health care and intermittent expenses into your budget! Have you run your numbers through FIRECALC? Whether to pay off the mortgage is always a contentious subject on this board, but I'd just pay it off (especially considering your large amount of assets earning presumably less than 2.75%) and RE! Then, I'd just invest your $800K in diversified ETFs. Best wishes!

Hi Bill, I have not run FIRECALC as of yet. The motgage is on its last leg, so, the monthly payments are mostly principal. I like your idea about investing in ETF's!

 

[TB1960]

Dtail, you are correct! Ferrari 348

 

[TB1960]

No disclosure needed! I am sure I stole most things from other posts I read as well

I am brand new here and still soaking up the advice, congrats so far to you though--looks to be in a good spot!

I joined back in Feb and have been gaining knowledge with each visit to this site. Not sure what i would do without this forum!

 

[TB1960]

So is my understanding correct that you're thinking that the value of 1/3 of the LLC is ~$1.5m ($800k + $700k) and 1/3 of the LLC generates ~$64k a year of cash net income ($6k/month of income less $800/mo of expenses)?

pb4uski, I might be off on the $800/mo of expenses. It might be closer to $1000/mo. The other numbers are close although they do fluctuate.

 

[pb4uski]

Hi Bill, I have not run FIRECALC as of yet. The motgage is on its last leg, so, the monthly payments are mostly principal. I like your idea about investing in ETF's!

One ETF that I find interesting is SWAN. It is a bit unusual in that it invests 90% of the fund in a variety of U.S. Treasuries and 10% in 70 delta SPY call options. The history of the ETF is short (Nov 2018 IIRC) but the index was backtested to the 2005. It appears to give SPY returns over roling 3-5 year periods of time with less volatility.

I own some but given it's short history it is currently in the category that I don't necessarily recommend it but I do mention it for people to consider. Obviously YMMV.

https://snetworkglobalindexes.com/presentation/Files/2020q3-swanxt-presentation.pdf

 

[38Chevy454]

Welcome former lurker TB1960. Rough calculation, you currently have about $1M in cash or available cash right now ($800K, $120K, $100K, $15K). Just pay off the small mortgage amount, get rid of Ameriprise, invest all remaining cash that into an AA that meets your risk tolerance. Maybe put approx 1/4 into more conservative near term stable investment, but the rest into equities for 5 year and longer time horizon. Use some low fee wide diversified type holdings. You get $5000/mo towards your $4300/mo budget once mortgage is paid off, so you only need a small extra if you need to cover medical ins and taxes. I think you and your wife can retire now if you want; or should retire now if you ask for my opinion. That's my recommendation for your situation. Enjoy retirement, you are in good shape.

 

[HI Bill]

Welcome former lurker TB1960. Rough calculation, you currently have about $1M in cash or available cash right now ($800K, $120K, $100K, $15K). Just pay off the small mortgage amount, get rid of Ameriprise, invest all remaining cash that into an AA that meets your risk tolerance. Maybe put approx 1/4 into more conservative near term stable investment, but the rest into equities for 5 year and longer time horizon. Use some low fee wide diversified type holdings. You get $5000/mo towards your $4300/mo budget once mortgage is paid off, so you only need a small extra if you need to cover medical ins and taxes. I think you and your wife can retire now if you want; or should retire now if you ask for my opinion. That's my recommendation for your situation. Enjoy retirement, you are in good shape.

+1. I'd just add that you should choose a low-cost provider such as Vanguard for your new investments!