Life transition, what's next

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Topic Author
MJT
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Life transition, what's next

Post by MJT » Tue Jan 08, 2019 5:20 pm

Have pretty much lived to work but it seems my career is over, risen to my level of incompetence. I'm sixty-one and find myself working part time at Home Depot. My wife is seventy-five and we use her Social Security to pay the rent, my part-time job to feed ourselves. We have about 300 K in retirement accounts, another 100 K in stocks and a little over 300 K in short term CD's that pay next to nothing. Would like to put the 300 K sitting in CD's to work, not sure where to invest. Very conservative and cynical, the financial seems to be based on nothing, alas the CD's. Thinking about taking Social Security at 62. Becoming a minimalist; recently downsized and sold our home; would like perspectives on how to best move forward and keep from living on the street.

Jimmie
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Re: Life transition, what's next

Post by Jimmie » Tue Jan 08, 2019 5:42 pm

On behalf of all the future posters, please include more information. For example, you say your wife pays rent with SS. How much is that?

Giving out the most information will yield the best responses. The people on this site know their stuff, are generally nice, and willing to help.

PQ12$
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Re: Life transition, what's next

Post by PQ12$ » Tue Jan 08, 2019 6:05 pm

Congrats on having $700K saved! That puts you well ahead of a large swath of the general population.

As the other poster said -- give this group detailed financial information and you will get the best advice:

assets
liabilities
monthly expenses, income
current/projected social security
investments
etc.

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David Jay
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Re: Life transition, what's next

Post by David Jay » Tue Jan 08, 2019 6:16 pm

Welcome to the forum.

As others have suggested, more information will allow us to give you better informed feedback.

I would like to suggest looking at Social Security options with opensocialsecurity.com which is done by a CPA who is a member of the forum. With $700,000 of investments, it may not be the optimal strategy to start SS benefits at age 62, this tool will show you the optimal strategy.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Topic Author
MJT
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Re: Life transition, what's next

Post by MJT » Wed Jan 09, 2019 4:06 pm

A little more information about our finances. Wife's social security is $1146 a month, she also has a small monthly pension of $249, I bring home about $1200 a month from the part-time job. Our rent is $1157/month, monthly living expenses average about $1,100 a month (food, drink, insurance, gas YMCA membership, internet service, trac fone). Me taking social security at 62 would bring in just over $1,400. We also receive a annual mandatory distribution from a retirement annuity of $2800.

We recently moved to the Toledo area to help a daughter going through a divorce, but are not sure we want to stay here (or keep the apt. we're renting).

350K is invested in TIAA CREF retirement annuities, another 100K with Edward Jones (90% stock, 10% bonds), have 4K in an HSA account, 250K in saving/checking accounts, $150K in 3 and 6 month Cd's.

Thegame14
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Re: Life transition, what's next

Post by Thegame14 » Wed Jan 09, 2019 4:14 pm

where is the $250K checking/savings and what rate? At the bare minimum it should be moved to an online bank earning 2% which is about $420 a month, you can get 14month Cd's at almost 3%, which is around $625 a month

also that $100K in Edward jones is too risky at your age. should be more like 60/40 stocks bonds or even 50/50

Rupert
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Re: Life transition, what's next

Post by Rupert » Wed Jan 09, 2019 4:17 pm

Don't despair. You're actually not in bad shape relative to many of your peers, especially since you seem willing to continue working part time. Absolutely nothing wrong with working at Home Depot. The key is going to be to continue keeping your expenses low, and that includes investment expenses. Edward Jones has notoriously high fees, so consider moving that money to a low-cost provider such as Vanguard if the tax consequences of doing so aren't too punitive. Also, is that 250K sitting in checking/savings accounts earning interest? If not, move that somewhere so it can work for you. Finally, do seriously reconsider drawing social security at 62. Use the calculator recommended up-thread to explore your options.

Edit: Forgot to ask, what are you doing for health insurance?

bloom2708
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Re: Life transition, what's next

Post by bloom2708 » Wed Jan 09, 2019 4:23 pm

Welcome!

If you are working part-time, spend the other part-time here. It won't take long to pick up the basics.

Don't do anything until you have a plan.

You have some good advice so far. Consolidating to Fidelity or Vanguard. Reducing your stock exposure. Lowering expense ratios/fees. Keep 3-4 years of expenses in fixed income and get the rest working at a reasonable mix of stocks/bonds.

Lots of areas to learn and grow. In the other part-time, pick up the book "A Guide To the Good Life: The Ancient Art of Stoic Joy" by William B. Irvine.

If you have your health and your spouse has her health, some investments and cash, health coverage and a good attitude, the world is your oyster. Think of it as Financial Independence/Retiring Early @61. :!:
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

22twain
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Re: Life transition, what's next

Post by 22twain » Wed Jan 09, 2019 4:26 pm

MJT wrote:
Wed Jan 09, 2019 4:06 pm
We also receive a annual mandatory distribution from a retirement annuity of $2800.
Is this a lifetime-income payout that was "purchased" by giving up a lump sum, or is it a required minimum distribution (RMD) from your account, to keep the IRS happy?
MJT wrote:
Wed Jan 09, 2019 4:06 pm
350K is invested in TIAA CREF retirement annuities
Is this where the distribution above comes from?
My investing princiPLEs do not include absolutely preserving princiPAL.

123
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Re: Life transition, what's next

Post by 123 » Wed Jan 09, 2019 4:33 pm

You might want to consider a brokerage account at Vanguard, Schwab, or Fideltiy. It's a lot easier to buy brokered CDs and the rates are geneally more attractive than your local brick and mortar bank.

Here are the latest brokered CD rates available at Vanguard: https://personal.vanguard.com/us/FixedIncomeHome

When you see an advertised CD rate that appears attractive elsewhere it is not unusual for it to be matched by a brokered CD within a week or two. The brokered CD may be from a bank you're not familiar with but as long as it's FDIC insured and you respect the FDIC nsurance limit you'll be fine.

If you only want to deal with a bank Ally Bank is easy and offers attractive rates: https://www.ally.com/bank/cd-rates/
The closest helping hand is at the end of your own arm.

Shallowpockets
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Re: Life transition, what's next

Post by Shallowpockets » Wed Jan 09, 2019 4:39 pm

Take a look at that Edward Jones account. How did it do in 2018. Compare that to the index. Did it beat the index? Good time to look, right now in January. That may be an eye opener.
Get all the paperwork so you can see how much you may have lost in AUM fees and trading. That is money could be in your pocket or growing for you in a non active investment.
Don't do anything now, but read here and become aware so you can proceed with new knowledge and confidence.

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leeks
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Re: Life transition, what's next

Post by leeks » Wed Jan 09, 2019 4:53 pm

Is living with the newly (or soon to be) divorced daughter an option? Possibly relocating to another area that suits all three of you (and any children if she has some)? It could be mutually beneficial financially. Of course, it could be a disaster for your relationship, depends on the family dynamic for sure. But maybe it is possible to rent a place together that is laid out in a way that allows everyone an adequate degree of privacy?

It sounds like you two are doing well in terms of not having debt, having accumulated savings, and being able to work part-time to cover some expenses. And also for being available to your daughter during her time of need.

JBTX
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Re: Life transition, what's next

Post by JBTX » Wed Jan 09, 2019 5:04 pm

Given your low expenses you aren't in bad shape. $700K at a 4.0% withdrawal rate = 28000 per year = 2333 per month, which pretty much equals your living expenses (not sure if you included medical expenses or taxes, if any). Plus the social security and small pension.

It isn't clear what your asset allocation is, overall it may not be bad, depending on how much stocks you have in retirement accounts.

Take some time and use some of the resources here. Ultimately probably would be best to move out of edwards jones, to a low fee advisor, but you don't have to rush into it.

3-20Characters
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Re: Life transition, what's next

Post by 3-20Characters » Wed Jan 09, 2019 6:23 pm

Don’t panic!

1️⃣ Are your expenses accurate? If not, revise them. (Garbage in/garbage out).

2️⃣ Do you have health insurance? If not get it. In your situation, a high deductible policy through the health exchange should be peanuts. It should also come with an HSA. Keep funding HSA for medical expenses later on in life.

3️⃣ Get the money out of Edward Jones to vanguard, fidelity etc, set up in a passive low fee fund(s). Would suggest a life strategy fund. Get your overall AA ~50/50 or what feels comfortable.

I did a worksheet based on your information with suggestions in comments section. How does it look? Accurate? Get the smart people here to catch my mistakes and offer additional advice.

Image

Topic Author
MJT
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Re: Life transition, what's next

Post by MJT » Fri Jan 11, 2019 12:32 pm

Thegame14 wrote:
Wed Jan 09, 2019 4:14 pm
where is the $250K checking/savings and what rate? At the bare minimum it should be moved to an online bank earning 2% which is about $420 a month, you can get 14month Cd's at almost 3%, which is around $625 a month

also that $100K in Edward jones is too risky at your age. should be more like 60/40 stocks bonds or even 50/50
We are currently receiving .25% on the CD's, .08% on the checking/savings account. These accounts are in a Credit Union. The Edward Jones account returned .09% in 2018, was averaging 11.96%.

Thegame14
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Re: Life transition, what's next

Post by Thegame14 » Fri Jan 11, 2019 12:39 pm

MJT wrote:
Fri Jan 11, 2019 12:32 pm
Thegame14 wrote:
Wed Jan 09, 2019 4:14 pm
where is the $250K checking/savings and what rate? At the bare minimum it should be moved to an online bank earning 2% which is about $420 a month, you can get 14month Cd's at almost 3%, which is around $625 a month

also that $100K in Edward jones is too risky at your age. should be more like 60/40 stocks bonds or even 50/50
We are currently receiving .25% on the CD's, .08% on the checking/savings account. These accounts are in a Credit Union. The Edward Jones account returned .09% in 2018, was averaging 11.96%.
you need to move the checking and savings to a better bank, some online banks are paying 2.4% money market and some cd's are getting close to 3%

Topic Author
MJT
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Re: Life transition, what's next

Post by MJT » Fri Jan 11, 2019 12:51 pm

22twain wrote:
Wed Jan 09, 2019 4:26 pm
MJT wrote:
Wed Jan 09, 2019 4:06 pm
We also receive a annual mandatory distribution from a retirement annuity of $2800.
Is this a lifetime-income payout that was "purchased" by giving up a lump sum, or is it a required minimum distribution (RMD) from your account, to keep the IRS happy?
MJT wrote:
Wed Jan 09, 2019 4:06 pm
350K is invested in TIAA CREF retirement annuities
Is this where the distribution above comes from?
Yes, its a required minimum distribution from my wife's retirement TIAFF/CREF annuity to "keep the IRS" happy.

Topic Author
MJT
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Re: Life transition, what's next

Post by MJT » Fri Jan 11, 2019 1:01 pm

leeks wrote:
Wed Jan 09, 2019 4:53 pm
Is living with the newly (or soon to be) divorced daughter an option? Possibly relocating to another area that suits all three of you (and any children if she has some)? It could be mutually beneficial financially. Of course, it could be a disaster for your relationship, depends on the family dynamic for sure. But maybe it is possible to rent a place together that is laid out in a way that allows everyone an adequate degree of privacy?

It sounds like you two are doing well in terms of not having debt, having accumulated savings, and being able to work part-time to cover some expenses. And also for being available to your daughter during her time of need.
Our daughter is a hoarder with two daughters of her own. Sharing a space would I think be difficult for all of us. We have thought of investing in a four- plex, each with own space and renters to help subsidize (in a perfect world!). It would mean a commitment to the Toledo area that's in transition as well, daughter prefers Phoenix.

RickBoglehead
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Re: Life transition, what's next

Post by RickBoglehead » Fri Jan 11, 2019 1:08 pm

MJT wrote:
Fri Jan 11, 2019 12:32 pm
We are currently receiving .25% on the CD's, .08% on the checking/savings account. These accounts are in a Credit Union. The Edward Jones account returned .09% in 2018, was averaging 11.96%.
Are you sure that's right, 0.25%, i.e. 1/4 of 1% on CDs?

Ally Bank pays 2% on Savings. Ally pays 2.3% on an 11 month no penalty CDs.

Edward Jones is likely not the place to have your money. 90% stocks is way over weighted IMO, and they take a large percent of your assets every year for their management fee. As has been posted on the forum very often, make sure you remove that fee from any "return" they quote to you.

btenny
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Re: Life transition, what's next

Post by btenny » Fri Jan 11, 2019 1:54 pm

I think you are doing great overall right now. You are living low cost. You are covering your bills. And life seems to be OK but complicated as normal for most of us. The issue is you need to keep working at HD for 3-4 more years until you reach full retirement age. Then take your Social Security which will be a lot higher than your present projection. Then at 66 you can quit and live well on two SS checks and some money from your investments. Plus what SS you receive will be tax free.

I suggest you move your investments as discussed above to make more $$ and better returns. Do not start spending that $$ now. You have a good nest egg but you will need it for future expenses. Plus if you are careful and invest carefully and get good returns you might even become a millionaire by age 66.

Good Luck.

PS. Do not commit to giving your daughter $$ or letting her or her kids move in with you. Yes I know she is having issues due to her divorce. But she needs to deal with her problems. You can provide moral support but not $$. You cannot afford to pay her rent or anything. Make sure she knows this.

jwhitaker
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Re: Life transition, what's next

Post by jwhitaker » Fri Jan 11, 2019 2:45 pm

Yeah it actually seems like you are not in that bad of shape. Certainly no one with 800k of savings will be living on the street anytime soon. That is more than 20 times your annual expenses, so that gets you to age 81 without even thinking about investment returns or the pension and SS you are and will be taking in.

What is your immediate concern? If it's working at home depot then would you like another job or do you not want to work at all? If you don't want to work at all and are very worried about withdrawing from principle, then maybe you should think about claiming social security or buying a single premium immediate annuity. For your age and gender I get a 6.3% annual payments off of your investment from the immediateannuities website. That's $1570 a month by putting in 300k. I'm not sure you should do that for financial reasons, but it might help you psychologically.

It sounds like that is your problem, your daughter is going through stuff, your career ended, you moved to someplace you don't like and you're working a job you feel is degrading. I would say calm down and breath. Do not make any hasty, irreversible financial moves like claiming SS or buying annuities right away. Your savings is at a level relative to your spending where you will probably be fine coasting for a couple years until some of these personal things settle down. But moving from Edward Jones to Vanguard and putting your CDs and savings somewhere with a 2%+ yield are positives you can pursue immediately.

Question for the experts - couldn't he claim spousal benefits under SS now (or in a couple years) while delaying his claim to his own benefits until later? Might not be much but he doesn't need much.

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BL
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Re: Life transition, what's next

Post by BL » Fri Jan 11, 2019 7:57 pm

No, at least before FRA, any application for SS would be applying for both self and/or spousal, so it would be a final amount.

Agree that finding a place to live, not accepting responsibility (especially financial) for extended family, working a bit if possible, and delaying SS if possible is important in getting going.

Getting away from EJ is urgent; ask V to initiate the transfer. Is this an IRA? I think a single balanced fund such as Balanced Fund (60/40) or Total Stock Market since you have fixed income elsewhere might work. If you want it managed, Vanguard PAS does it for 0.3%/yr, much lower than EJ, and they put you into very low-ER funds.

As an example, I have some money in Vanguard Prime Money Market, 2.44% rate, not FDIC insured, and latest CD rate at PenFed is 2.80% for 1 year, with too high an interest penalty to break it.)

Topic Author
MJT
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Re: Life transition, what's next

Post by MJT » Mon Jan 14, 2019 3:38 pm

Thanks to everyone for your feedback, looks like I need to take some action!

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CyclingDuo
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Re: Life transition, what's next

Post by CyclingDuo » Tue Jan 15, 2019 8:47 pm

MJT wrote:
Mon Jan 14, 2019 3:38 pm
Thanks to everyone for your feedback, looks like I need to take some action!

Original Post: Have pretty much lived to work but it seems my career is over, risen to my level of incompetence. I'm sixty-one and find myself working part time at Home Depot. My wife is seventy-five and we use her Social Security to pay the rent, my part-time job to feed ourselves. We have about 300 K in retirement accounts, another 100 K in stocks and a little over 300 K in short term CD's that pay next to nothing. Would like to put the 300 K sitting in CD's to work, not sure where to invest. Very conservative and cynical, the financial seems to be based on nothing, alas the CD's. Thinking about taking Social Security at 62. Becoming a minimalist; recently downsized and sold our home; would like perspectives on how to best move forward and keep from living on the street.
Just wanted to chime, MJT. There is absolutely nothing wrong with your scenario of part-time work at HD to keep from having to dip into the savings. From all the reading I have been doing this past year, yours is a very normal path that many take in some, if not many, of the transition years - whether it occurs as a result of being forced to do so, or by choice.

The layers of emotions of finding self-identity, purpose, etc... are normal as well compared to whatever you were doing before. Throw in the move to Toledo and being in different environs than you were before simply exacerbates all of the emotions you are going through at the this time. Don't lose sight of what makes you happy: family, food, movies, books, walks, grandchildren, etc... . We get one journey in this life - so enjoy as much as you can of it each and every day in spite of the moments each day that may not be so enjoyable.

Would love to know more of your story as I am currently in the midst of some transitions myself.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

CurlyDave
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Re: Life transition, what's next

Post by CurlyDave » Wed Jan 16, 2019 12:14 am

CyclingDuo wrote:
Tue Jan 15, 2019 8:47 pm

Just wanted to chime, MJT. There is absolutely nothing wrong with your scenario of part-time work at HD to keep from having to dip into the savings. From all the reading I have been doing this past year, yours is a very normal path that many take in some, if not many, of the transition years - whether it occurs as a result of being forced to do so, or by choice...

Would love to know more of your story as I am currently in the midst of some transitions myself...
+1

I love tools, construction, and talking to people. A part time job at Home Depot would be no problem at all for me. I would advise keeping that job as long as you reasonably can. This will delay having to take SS until your benefit will be higher.

The only thing you need to do right away is to get away from Edward Jones. I like my TD Ameritrade account because they have a well-deserved reputation for very good customer service, but they are not the lowest cost brokerage around. Vanguard or Fidelity will do just fine, but escape from EJ.

IMHO 50/50 stocks to fixed income investments is less risky than a higher amount of fixed income -- inflation will eat you alive. Read this forum and think about moving to that kind of an Asset Allocation.

I am not as big a fan of delaying SS to the bitter end as some here, but if you can be happy at Home Depot there is no shame in that work. Even a few years of delay in SS will bring big dividends.

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mhadden1
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Re: Life transition, what's next

Post by mhadden1 » Wed Jan 16, 2019 12:34 am

MJT wrote:
Fri Jan 11, 2019 1:01 pm
leeks wrote:
Wed Jan 09, 2019 4:53 pm
daughter prefers Phoenix.
Looks like your income right now from Home Depot, SS etc, and say 25k from the savings (< 4%) is up close to 60k. There are many pleasant places in the USA with pretty low living costs where you can live very comfortably on that. Maybe even Phoenix, which I know little about. I think your heat bill there would be low, anyway.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

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