Thank you for helping people with their retirement. Here is my situation and I await your comments. I am 64 years old, single, and live in the California Bay Area. I was diagnosed with cancer in July 2019 and I stopped working in November 2019. I went through disability for a year, until November 2020. Cancer treatments were successful and I am now cancer free.
So now I’m thinking of retiring. Financially, I own three rental houses that produce $ 1,250 per month in net income. My Social Security would be $ 2,500 per month if I take it now, or $ 3,000 per month if I wait until Full Retirement Age, which is 66½ years. My accounts total $ 1.6 million, of which $ 700,000 is in individual retirement accounts, $ 600,000 invested in stocks with Fidelity, and $ 300,000 in cash. My estimated expenses are $ 8,000 per month. In 2021, approximately $ 10,000 per month will be owed to my COBRA health insurance premiums. In early 2022, I can enroll in Medicare. Waiting for your thoughts. Chris See: I lived ‘adventurous’ but now my debts are equal to half my savings and we live ‘from day to day’. How can I save for retirement? Dear Chris, I am very happy to learn that your cancer treatments were successful and that you do not have cancer. That is a great relief. Financially, he appears to be safe to retire, the advisers said. He has done a great job saving and has other sources of income, which is always comforting. With your current assets, you could possibly take around $ 60,000- $ 65,000 out of your portfolio each year, assuming it‘s adequately diversified, and then use rental income and Social Security income to meet your needs, said Brenda Knox, advisor. Financial Elements Financial. . You can even take less out of your wallet once you’ve finished paying COBRA. If you need $ 8,000 a month, minus your Social Security and the money you get from rental properties, that would be about $ 4,250 a month ($ 51,000 a year), or 3% of your portfolio, “which is very doable, “said Scott Hammel. , Financial Advisor to Apeiron Planning Partners. Of course, these numbers depend on a number of factors, including how your portfolios are allocated, whether your expenses are higher or lower than you estimate, and if something unexpected comes up. Still, there are a few points that financial advisers made that I would like to share with you. First, one of the most important components of retirement planning is calculating an estimate of how much you will spend on it. He said his estimated expenses are $ 8,000 a month or $ 96,000 a year. You seem to be diligent about your saving habits, but be sure to factor in all possible expenses when making that estimate. Does it include a good discretionary or travel budget, as well as Medicare and health care costs after 65? A single man can expect to spend $ 140,000 in retirement on health care alone, according to Fidelity Investments. Are you planning to move sometime and would that affect your monthly expenses? And don’t forget about taxes, especially in California. This may sound morbid, but also consider what your life expectancy will be, which can help you determine how you withdraw your funds so that you are sure you have enough to live comfortably your entire life. You are cancer free now, which is absolutely wonderful, but do you expect this to affect your health care costs in the future? And does your family have a history of living to old age? A financial advisor can help you create a retirement spending plan, as well as build a stable track record to meet all of your short- and long-term needs. This time of reflection could also help you decide when to take Social Security. You may feel obligated to claim Social Security now, even before your full retirement age. And some advisers even suggest that you do so, given your medical history and depending on your family’s longevity history, Hammel said. But you must do it in the first year after unemployment ends, so that other income doesn’t make your Social Security taxable. You may also want to wait until your full retirement age, if you are comfortable relying on other sources of income in the meantime, or even later. Once you claim Social Security early, that reduction in monthly benefits will stay the same for the rest of your life. Comparatively, if you wait until full retirement age, you get 100% of the benefits owed, and if you delay even longer, up to age 70, you get more than you are technically owed in benefits. If you decide to defer applying for Social Security, you can convert some of the money from your individual retirement account to a Roth account, which means you pay taxes now and then withdraw them tax-free later, or you can simply withdraw them from your accounts GO TO. as you move forward to cover your living expenses, Knox said. “I’m comfortable with him digging deeper into the portfolio in the early years in exchange for the higher Social Security benefit in the future if his health is good,” she said. “If he was my client, we would review the Social Security question every year, discussing the portfolio and longevity assumptions.” Now to your investments. One of the most important things you can do for your financial stability is to make sure you are adequately diversified to get a sufficient return, Hammel said. “In this portfolio, a good rule of thumb is a 4-5% distribution, so between $ 60,000 and $ 80,000 a year without significantly affecting equity, provided that a moderate tolerance for risk is invested,” he said. Do you know your tolerance for risk? Getting an idea of how comfortable you are with risk will allow you to change your asset allocation accordingly. You also have a lot of cash, which is great, but all that money in that account isn’t working as hard as it could be, said Glenn Downing, founder and director of CameronDowning. You definitely need an emergency fund, but perhaps not as much as you currently have. Again, this is where a financial advisor could help: A professional planner could help you allocate the correct amount in a cash account, while at the same time ensuring that your risk tolerance and risk ability are aligned with your portfolios. See also: I am 55 years old, I am tired of ‘devastating jobs’, I have $ 1 million badly invested, can I retire now? Also look at the rents you have. I couldn’t tell if he was referring to $ 1,250 per unit or total for his rental income, but if it’s collective, that sounds a little low for the Bay Area, unless it’s studios or one-bedroom apartments, Downing said. . You can eventually raise the rent, even slightly (and if that’s even a possibility in this pandemic), or you can sell and try to get a better return on the stock market. Rental units are a form of diversification, which is great, but you may be able to do better elsewhere, Downing said. Even if you are single, you must have estate planning documents in place. Create a will and power of attorney or power of attorney for health care. I say this because no matter what happens, you must be in control of what happens to you and your assets if you become disabled or worse. If you do not have these documents, the courts will decide for you. I’ll finish this: Before you officially retire, have a plan for what you will do with your days. The idea of retirement is often one that brings excitement, who doesn’t want a break from the hustle and bustle, but without a real idea of what to do in retirement it could quickly turn into boredom or even stress. You may already know what you want to do in this next chapter, but if you don’t, take the time now to review any potential opportunities, such as volunteering, some part-time job in a field you’ve always liked, or taking on a job. new Hobby. “This is a great planning point, even more than the money,” Downing said. “If you are only 64 now and the cancer is gone, you can easily have 30 years ahead of you.” Questions about your own retirement savings or where to live in retirement? Email us at HelpMeRetire@marketwatch.com