Work injury and disability

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
AKchef907
Posts: 1
Joined: Tue Feb 28, 2017 10:19 am
Location: Alaska and Georgia

Work injury and disability

Post by AKchef907 »

Hi folks. I'm excited that I've found this forum and would appreciate some sound advice.
Briefly, I took an early retirement from a well renowned culinary school in 2009 and liquidated my belongings and bought a one-way ticket to Alaska. I found employment in the oil/gas/ mining industry and traveled to every corner of the state. It was a great gig albeit very strenuous. All my expenses were paid and the jobs were in very remote areas we refer to as the bush. My schedule was 12 hours a day, 7 days a week and 4-10 month stretches. The pay was great and I had no debt. Unfortunately, I was injured in a small plane mishap and after 3 years of surgeries and rehab I'm pretty much fine except that I'm considered disabled. I have around 275,000 in the bank and am wanting to get into some sound investing. I'm eligible for to apply for disability in November 2017 and should receive around 2400.00 a month. I stand to inherit around 150,000 from my father. I relocated to Georgia to help him out. His health is bad and at 85 he needs quite a lot of assistance.
I would really like some sound advice on my best options to fund my retirement. I'm debt free and my funds are in a money market at around 0.12 percent. Dismal to say the least. I have no debt and I get by fine physically. My passion is traveling and immersing myself in the various cultures. I'm single, 57, and finished with surgeries and rehab. Unfortunately, I'm in no way competitive in the chef market.
Sorry to ramble and I would like to hear from fellow BH's as to a strategy that best meets my needs.
Thanks in advance. Glen
User avatar
bottlecap
Posts: 6606
Joined: Tue Mar 06, 2007 11:21 pm
Location: Tennessee

Re: Work injury and disability

Post by bottlecap »

Glen:

You'll have to give us some more information. The biggest thing that jumps out: what are your yearly expenses?

Also, where is the anticipated disability coming from and how likely is it (and how likely is the amount you state)?

JT
btenny
Posts: 5557
Joined: Sun Oct 07, 2007 6:47 pm

Re: Work injury and disability

Post by btenny »

Are you eligible for SS on top of your pension?
t3chiman
Posts: 87
Joined: Wed Mar 18, 2015 12:34 pm

Re: Work injury and disability

Post by t3chiman »

AKchef907 wrote:... like some sound advice on my best options to fund my retirement. I'm debt free and my funds are in a money market at around 0.12 percent. ...
Glen-
Wow. Years in Alaska! You followed your bliss and had the adventure of a lifetime. The stories you could tell...

But now, you have a price to pay. I assume the legalities are at an end and you are paid off for your pain and suffering.

Can't work as a professional chef? It's understandable after being banged up. But at least you are on your feet. [?] Maybe start a school for bush chefs. You are an expert, after all.

As for investments, you are vulnerable to market downturns that can wipe out 40% of your nest egg in a few months. Vanguard has a nice high dividend yield index fund that has done well over time. And their health care funds are good; you may enjoy the irony.

Hope this helps.
User avatar
CaliJim
Posts: 3050
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: Work injury and disability

Post by CaliJim »

More info is needed, but I suspect you may be at risk of outliving your savings.
For situations such as this, a single premium immediate annuity (longevity insurance) is a good option. You can read more about them here using the search function ("SPIA"). Also, Jim Otars web site: http://retirementoptimizer.com
An SPIA could bring you in an extra $1000+ a month for life.
-calijim- | | For more info, click this Wiki
t3chiman
Posts: 87
Joined: Wed Mar 18, 2015 12:34 pm

Re: Work injury and disability

Post by t3chiman »

CaliJim wrote:...
An SPIA could bring you in an extra $1000+ a month for life.
With $400k in your pocket, you could buy into VHDYX, take out $2k per month indefinitely, and still have enough to fund a nice vacation a couple of times a year.

Speaking of vacations, I recommend Quebec City. Easy to get to, lots of history, great food and wine. Don't miss the early July music fest.

For a real anti-Alaska holiday, get yourself to Shanghai. Airfares are cheap these days, and you can find accommodations for any budget. You don't go to China for the wine, but the food is great. While there, you owe it to yourself to ride their hi-speed rail system. You will need some language assistance to navigate Shanghai's massive rail terminal, but once on the train, everything is announced in two languages, so you can relax and enjoy the scenery, as it flashes by at 300km/hr.

HTH
User avatar
CaliJim
Posts: 3050
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: Work injury and disability

Post by CaliJim »

t3chiman wrote:
CaliJim wrote:...
An SPIA could bring you in an extra $1000+ a month for life.
With $400k in your pocket, you could buy into VHDYX, take out $2k per month indefinitely, and still have enough to fund a nice vacation a couple of times a year.
How did you do that math? What growth rate are you assuming for VHDYX?

I did a quick model, assuming 1% inflation, 2.85% yield on VHDYX, $2k/mo initial withdrawal adjusted up for inflation annually. The VHDYX plan, by my calcs, runs out of money in year 21.

Calcs:

Code: Select all

 Infl 	1.00%		
 Yld 	2.85%		
 Initial Inv 	 $400,000 		
			
 Year 	 Beg Value 	 Income 	 Withdrawal 
 -   	 $400,000 	 $11,400 	 $(24,000)
 1 	 $387,400 	 $11,041 	 $(24,240)
 2 	 $374,201 	 $10,665 	 $(24,482)
 3 	 $360,383 	 $10,271 	 $(24,727)
 4 	 $345,927 	 $9,859 	 $(24,974)
 5 	 $330,811 	 $9,428 	 $(25,224)
 6 	 $315,015 	 $8,978 	 $(25,476)
 7 	 $298,517 	 $8,508 	 $(25,731)
 8 	 $281,293 	 $8,017 	 $(25,989)
 9 	 $263,321 	 $7,505 	 $(26,248)
 10 	 $244,578 	 $6,970 	 $(26,511)
 11 	 $225,037 	 $6,414 	 $(26,776)
 12 	 $204,675 	 $5,833 	 $(27,044)
 13 	 $183,464 	 $5,229 	 $(27,314)
 14 	 $161,379 	 $4,599 	 $(27,587)
 15 	 $138,391 	 $3,944 	 $(27,863)
 16 	 $114,471 	 $3,262 	 $(28,142)
 17 	 $89,592 	 $2,553 	 $(28,423)
 18 	 $63,722 	 $1,816 	 $(28,708)
 19 	 $36,831 	 $1,050 	 $(28,995)
 20 	 $8,886 	 $253 	 $(29,285)
 21 	 $(20,146)	 $(574)	 $(29,577)
And if you add 1% growth in for the value of VHDYX, it fails in year 23.

Using https://www.immediateannuities.com/info ... tep-1.html, I see a $250k SPIA => $1182/mo, and a $400k SPIA => $1891/mo. Almost $2k/year not inflation adjusted....but for as long as you live.
Last edited by CaliJim on Thu Mar 02, 2017 1:42 am, edited 3 times in total.
-calijim- | | For more info, click this Wiki
User avatar
CaliJim
Posts: 3050
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: Work injury and disability

Post by CaliJim »

OP

I suspect you are seriously in Otars GRAY zone with regard to retirement.

You are only 57 and have potentially 35 years ahead of you. And it sucks to be out of money before you run out of time.

The disability income is a good floor, but depending on your cost of living, an unexpected health or other financial set back could seriously hurt you.

$400k is nothing to shake a stick at - but going forward, you can't really plan for more than a ~2% real average return on your income. That's only $8k/year. You could get more than that, but only by taking more risk. And too much risk could cut your nest egg in half in less than 3 months in a market crash. And then where would you be.

And a few unexpected expenses can reduce that $400k pretty easily too.

In your shoes... given the info available.... I recommend you do more research and reading on this site.... but seriously... read Jim Otars stuff on retirement planning, read the Boglehead book on retirement planning.

Here is a taste of OTARs stuff: http://retirementoptimizer.com/articles/Article105.pdf His web site it really good and his core info is free to download.

And consider: If you buy a $250k SPIA, that gives you a total of $3500 a month (disability + annuity income, $42k annual) to live on, plus the $150k to invest conservatively for emergency and eventual nursing home expenses.

And I'd do something like this with the $150k: $100k in Vanguard LifeStrategy Conservative Growth Fund (VSCGX) - a 40/60 fund, and $50k in a CD ladder. Simple and easy to manage.
Last edited by CaliJim on Thu Mar 02, 2017 7:15 pm, edited 1 time in total.
-calijim- | | For more info, click this Wiki
t3chiman
Posts: 87
Joined: Wed Mar 18, 2015 12:34 pm

Re: Work injury and disability

Post by t3chiman »

CaliJim wrote:..
How did you do that math? What growth rate are you assuming for VHDYX?

I did a quick model, assuming 1% inflation, 2.85% yield on VHDYX, $2k/mo initial withdrawal adjusted up for inflation annually. The VHDYX plan, by my calcs, runs out of money in year 21.
...
Vanguard performance chart shows VHDYX having 7.48% annual return (10 years).

I think the original poster is in good shape financially. And, I hope, physically. Three years of rehab! Lucky to be alive.
User avatar
CaliJim
Posts: 3050
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: Work injury and disability

Post by CaliJim »

t3chiman wrote:
CaliJim wrote:..
How did you do that math? What growth rate are you assuming for VHDYX?

I did a quick model, assuming 1% inflation, 2.85% yield on VHDYX, $2k/mo initial withdrawal adjusted up for inflation annually. The VHDYX plan, by my calcs, runs out of money in year 21.
...
Vanguard performance chart shows VHDYX having 7.48% annual return (10 years).

I think the original poster is in good shape financially. And, I hope, physically. Three years of rehab! Lucky to be alive.
I hope so too.

I like dividends just as much as the next guy - but really it is total returns, and investor behavior, that matter most. Note: VHDYX had 0% total growth Jan 2007 thru Dec 2011; that's CG and Dividends combined. So consider past growth over various periods with caution. Past performance is no guarantee of anything.

A stock fund is not an annuity, and OP is not necessarily a sophisticated investor. In other words, OP may be subject to behavior issues such as selling after it has gone down, and buying after it has gone up.

OP: Welcome to the forums! You can see how we get on here! Risk and return go hand in hand. If you seek better returns... you will get more risk. Invest wisely! :)

And give us a reply sometime.
-calijim- | | For more info, click this Wiki
mouses
Posts: 4217
Joined: Sat Oct 24, 2015 12:24 am

Re: Work injury and disability

Post by mouses »

I am also concerned that you don't have enough in savings and income long term to be secure.

Is there some sort of work that you could do that would accommodate your physical situation? If you worked, would that lower or lose your disability payments?

I don't know anything about living abroad long term, but I wonder if it would be feasible, after your father passes, for you to relocate to a lower cost of living, safe country.
Post Reply