Age 62 - just lost job - seeking advice

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Topic Author
smmsmm57
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Joined: Fri May 19, 2017 10:13 am

Age 62 - just lost job - seeking advice

Post by smmsmm57 »

Emergency funds: 0 (zero)

Debt:
Mortgage & Home equity loan on house (Value $ 225K:
Mortgage: $135K
HELOC: $20K

Credit Cards $13 K – Average 7% interest

Tax Filing Status:
Tax Rate: 24% Federal, 0% State

State of Residence: FL

Age: 62

Desired Asset allocation: (unknown, seeking advice)

Current retirement assets

Taxable
0 (zero)

His 401k (Fidelity) Percent of Total
S&P 500 Index (expense ratio: 0.023 %) $ 6K 0.02

IRA at Vanguard: Percent of Total
VTBLX Total Bond Market Index (expense ratio: 0.05 %) 30 % ($ 100K)
VTABX Total International Bond Market Index (expense ratio: 0.11 %) 16 % ($ 53 K)
VTIAX Total International Stock Index (expense ratio: 0.11 %) 15 % ($ 52 K)
VTSAX Total Stock Market Index (expense ratio: 0.04 %) 3 % ($ 10K)

Stocks:
AU ANGLOGOLD 0.04 7% ($ 23 K)

Brokerage Fund at TD Ameritrade:
$ Cash available to trade 15 % ($ 50 K)

Contributions
New annual Contributions
$0 (zero)

Questions:
1. I recently lost my job and am now living on monthly social security of $2,200 a month and about $2,500 from my IRA. I need to reallocate my holdings to reflect my new situation. In terms of a level of risk I am willing to have I would say around 7 out of 10. I am 62, my wife is 55, neither one of us is currently working and we are using Obama Care for medical insurance.

[note: OP added more detail in this post below - moderator prudent]
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geerhardusvos
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Re: Age 62 - just lost job - seeking advice

Post by geerhardusvos »

Sorry to hear about that. Not easy being out of work. You and your wife are still pretty young, do you guys have any skills or ability to pick up work, even for a couple thousand dollars per month? Do you have the ability to reduce your spending to only live off of your Social Security while you let your investments grow and figure out your next employment situation? I highly recommend taking stock of your strengths and figuring out how you can apply them in the marketplace. Sounds like you’re living off about 4500 per month which might be a too high especially for Florida where are you should be able to live comfortably on $2000-3000 during times of unemployment. Do whatever you can to not draw down your investments. That’s the best advice I can give with the information you provided. Stay positive, make connections, don’t give up
VTSAX and chill
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Watty
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Re: Age 62 - just lost job - seeking advice

Post by Watty »

smmsmm57 wrote: Wed Dec 25, 2019 2:05 pm Credit Cards $13 K – Average 7% interest
......
Stocks:
AU ANGLOGOLD 0.04 7% ($ 23 K)

The first thing to do would be to sell off that stock and pay off the credit cards, and then stop charging anything on the credit cards.

That stock is a large percentage of your portfolio and little better than a bet at a casino.

You would first want to check to figure out how much you would need to pay in capital gains tax if you sell it but most likely you would be in the income range where long term capital gains are taxed at 0%.

The only reason I would keep it any longer is if you have a lot of short term gains that you could make long term by holding it for a few months.

Your number one priority after that should be finding jobs for both your and your wife. Looking for work should be a full time job that you should be working on for many hours each day.

One thing to consider is that starting Social Security at 62 may have been a mistake and you may want to have it stopped so that it can grow and pay you more when you start it later. You can check your Social Security claiming strategy on this website.

https://opensocialsecurity.com/
Topic Author
smmsmm57
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Joined: Fri May 19, 2017 10:13 am

Re: Age 62 - just lost job - seeking advice

Post by smmsmm57 »

Not sure if I mentioned the stock is in an IRA and I do not want to take it out and pay tax on it
to pay off credit cards. Also, I am going to have some patience and wait for the AU (GOLD stock)
to go up, which it has been doing lately and I believe will do more so in coming 12 months.

We are not adding anything to credit card debt and have goal of making it go down $250 / a month.
The interest rate of 7% is fixed and they have fixed payment plans such that I only pay them off and do not
use them.

I forgot to mention I have $500 / month in car loans with total balance of $15,000. I considered getting
paid for cars but neither of them is extravagant, both are older than 7 years, we have had and maintained
them well for 5 years and will last a lot longer. Do not want to buy someone else's headaches and get a massive
repair bill. My mechanic says they will last forever as is and will be paid off in 2.5 years. I know the $500 in car
loans is a lot of my budget but keeping both cars is I believe the right way to go.

Thanks very much to the in-depth responses :!:
Topic Author
smmsmm57
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Re: Age 62 - just lost job - seeking advice

Post by smmsmm57 »

Also, still paying off a mortgage of $1,200 a month
Luckywon
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Re: Age 62 - just lost job - seeking advice

Post by Luckywon »

A few things I would recommend, beyond the obvious of finding employment:

-Use the 50k cash in your brokerage account to pay off your car loan and credit card debt.

-Sell the gold stock. You stated in your OP that you need to reallocate your holdings to reflect your new situation. I read your thoughts on the gold above above but frankly the gold stock is speculative, and in your new situation you cannot afford to be speculative. I would suggest your investments being around 80 % in bond funds.

-Open a Roth IRA even if you only contribute $100 to it. It may or may not be worthwhile to contribute much to it next year but you may be at an income level at some point in the next years where Roth conversions would make sense and the earlier one is opened the better because of the five year withdrawal rule.

I wish you success in managing through this period. Hopefully you or your wife will find good employment soon.
Topic Author
smmsmm57
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Joined: Fri May 19, 2017 10:13 am

Re: Age 62 - just lost job - seeking advice

Post by smmsmm57 »

Thanks very much.

The idea of taking money out my IRA (and paying taxes on it) to pay off car loans and
credit card debt at 7% or less is new to me. Wouldn't by doing that I be losing the
opportunity cost of that money staying in the IRA gaining in value by both the amount I'd need
to pay off the debt as well as on the money that I would be taxed on if I were to take it out of
the IRA?

It seems like at the end of the year, my net worth would be greater if I kept as much money
as possible in the IRA?

I do understand your rationale however on the "get rid of the gold" aspect.

Thanks again!
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David Jay
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Re: Age 62 - just lost job - seeking advice

Post by David Jay »

The issue is you need to reduce your living expenses by getting rid of consumer debt. Mortgage, HELOC, cars and credit cards.
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arcticpineapplecorp.
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Re: Age 62 - just lost job - seeking advice

Post by arcticpineapplecorp. »

smmsmm57 wrote: Wed Dec 25, 2019 2:05 pm IRA at Vanguard: Percent of Total
VTBLX Total Bond Market Index (expense ratio: 0.05 %) 30 % ($ 100K)
VTABX Total International Bond Market Index (expense ratio: 0.11 %) 16 % ($ 53 K)
VTIAX Total International Stock Index (expense ratio: 0.11 %) 15 % ($ 52 K)
VTSAX Total Stock Market Index (expense ratio: 0.04 %) 3 % ($ 10K)

Questions:
1. I recently lost my job and am now living on monthly social security of $2,200 a month and about $2,500 from my IRA. I need to reallocate my holdings to reflect my new situation. In terms of a level of risk I am willing to have I would say around 7 out of 10. I am 62, my wife is 55, neither one of us is currently working and we are using Obama Care for medical insurance.
Sorry to hear about your situation. I have a question that hasn't been asked:

Are you taking out $2500 a month from your IRA? Or $2500 a year?

If monthly, that means you're taking out $30,000 a year from your IRA.

But the problem is it appears you only have $215,000 in your IRA? (100k + 53K + 52K 10k).

If so, won't your IRA run out in 7 (or so) years? ($215,000 / $30,000 = 7.17 years)

Is this correct?

Is this a problem that you will run your IRA dry in 7 years when you're 69 years old?

And if so, there would only be $79,000 left ($6k, $23k, $50k below):

S&P 500 Index (expense ratio: 0.023 %) $ 6K 0.02
AU ANGLOGOLD 0.04 7% ($ 23 K)
$ Cash available to trade 15 % ($ 50 K)

But if taking out $30,000 a year to supplement SS, that would onlly give you another 2-3 years of withdrawals left. And then there'd be nothing, except for the house value, whatever it would be worth in 9-10 years.

Are you trying to buy time for 10 years until you sell the house or take a reverse mortgage?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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CyclingDuo
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Re: Age 62 - just lost job - seeking advice

Post by CyclingDuo »

smmsmm57 wrote: Wed Dec 25, 2019 2:05 pm Emergency funds: 0 (zero)

Debt:
Mortgage & Home equity loan on house (Value $ 225K:
Mortgage: $135K
HELOC: $20K


Credit Cards $13 K – Average 7% interest


Tax Filing Status:
Tax Rate: 24% Federal, 0% State

State of Residence: FL

Age: 62

Desired Asset allocation: (unknown, seeking advice)

Current retirement assets

Taxable
0 (zero)


His 401k (Fidelity) Percent of Total
S&P 500 Index (expense ratio: 0.023 %) $ 6K 0.02


IRA at Vanguard: Percent of Total
VTBLX Total Bond Market Index (expense ratio: 0.05 %) 30 % ($ 100K)
VTABX Total International Bond Market Index (expense ratio: 0.11 %) 16 % ($ 53 K)
VTIAX Total International Stock Index (expense ratio: 0.11 %) 15 % ($ 52 K)
VTSAX Total Stock Market Index (expense ratio: 0.04 %) 3 % ($ 10K)

Stocks:
AU ANGLOGOLD 0.04 7% ($ 23 K)

Brokerage Fund at TD Ameritrade:
$ Cash available to trade 15 % ($ 50 K)



Contributions

New annual Contributions
$0 (zero)

Questions:
1. I recently lost my job and am now living on monthly social security of $2,200 a month and about $2,500 from my IRA. I need to reallocate my holdings to reflect my new situation. In terms of a level of risk I am willing to have I would say around 7 out of 10. I am 62, my wife is 55, neither one of us is currently working and we are using Obama Care for medical insurance.
Sorry to hear about the recent job loss.

I would kick, scratch, claw, and dig deep to find work for both you and your wife to find some replacement income ASAP. Especially since you have the consumer debt (CC's), auto loan debt, HELOC and mortgage.

Was there a severance? Have you applied for unemployment yet?

I started the following thread earlier this year outlining some of the process I went through due to a job loss and some of the initial steps are applicable to you as well. You might want to read it and the links within the first post regarding immediate steps to take if this is a fresh job loss:

viewtopic.php?t=273092

You will want to cut your expenditures down to the basic needs. Based on the numbers you have shown us in this thread, it's hard not to recommend that both you and your wife immediately get some replacement income coming in to replace what you just lost to avoid taking from your savings.

Are you both looking for work?
"Save like a pessimist, invest like an optimist." - Morgan Housel
BarbBrooklyn
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Re: Age 62 - just lost job - seeking advice

Post by BarbBrooklyn »

"-Use the 50k cash in your brokerage account to pay off your car loan and credit card debt."

The advice is not to take money out of IRA; it is to liquidate the brokerage account.

Fix the debt, get back to work have your wife find work.

If you took a 7 year loan on a car, it's not a car you can afford.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."
flaccidsteele
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Re: Age 62 - just lost job - seeking advice

Post by flaccidsteele »

Honest question to OP: where did the money go?

We’re you lower paid or haven’t been working very long or something else (eg. health issues)?
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
BlueCable
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Re: Age 62 - just lost job - seeking advice

Post by BlueCable »

I'm sorry to hear you've lost your job. Best of luck to you and your wife in your job searches.
Jack FFR1846
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Re: Age 62 - just lost job - seeking advice

Post by Jack FFR1846 »

As a 62 year old, I'm going to be really blunt.

Dump that gold stock. It's going nowhere. Buy total US market mutual fund or ETF (VTI, VTSAX, SCHB, ITOT...whatever).

Get a job. Any job. Dennys, Home Depot, Dominos....I don't even care. Get a job.
Your wife needs to get a job. Super market, Starbucks, Home Goods.....I don't even care, she needs a job.

Dump the car and buy a 1990's Honda.

Sell the house. Rent.

You need to do all of this. If you or your wife can get back into what you were doing, that's fine. But you cannot afford to wait. Get whatever you can now.
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birnhamwood
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Re: Age 62 - just lost job - seeking advice

Post by birnhamwood »

I agree totally with Jack FFR1846.

Don't let pride get in the way of a job. Both of you should settle for anything that brings in a minimum age, preferably with health benefits. School bus drivers are needed, janitors, teacher aides, groundskeepers, etc., etc., just to mention one area.
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JoeRetire
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Re: Age 62 - just lost job - seeking advice

Post by JoeRetire »

smmsmm57 wrote: Wed Dec 25, 2019 2:05 pm Emergency funds: 0 (zero)
Age: 62

I recently lost my job and am now living on monthly social security of $2,200 a month and about $2,500 from my IRA. I need to reallocate my holdings to reflect my new situation. In terms of a level of risk I am willing to have I would say around 7 out of 10. I am 62, my wife is 55, neither one of us is currently working and we are using Obama Care for medical insurance.
You need to find a new job.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
Nicolas
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Re: Age 62 - just lost job - seeking advice

Post by Nicolas »

You have cars, have you considered driving for Uber or Lyft, at least temporarily?
Jablean
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Re: Age 62 - just lost job - seeking advice

Post by Jablean »

Here's the thing. You lost your job while the market is up - yay - take your profits and reduce your debt which at the minimum is costing you 7% on the CCs and who knows how much on the Heloc and cars.

And yes, some tough love.

You bought 2 cars both on 7 year loans
You took at a Heloc on a house that's not worth that much more than your mortgage and Heloc combined
You don't have an emergency fund so you either underfunded it or you've been out of work for more than 6 months
You've applied for early SS benefits (ie reducing their value)

And in spite of that you are resistant to reducing your car loans or getting rid of your speculative gold stocks.

This to me means you have other issues above just the recent job loss. You and your wife are pretty much the same age as me and my DH. I'd be scared spitless at this point. You need income.

What are your job prospects?
What jobs can your wife do?
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geerhardusvos
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Re: Age 62 - just lost job - seeking advice

Post by geerhardusvos »

I’m concerned that OP is looking for a silver bullet to fix his problems... and getting out of debt and working hard and reducing standard of living don’t seem to be very interesting to them, but hoping that’s not the case here. This is definitely an emergency, I just hope the op has a similar sense of urgency
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WolfgangPauli
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Re: Age 62 - just lost job - seeking advice

Post by WolfgangPauli »

+1
birnhamwood wrote: Wed Dec 25, 2019 6:55 pm I agree totally with Jack FFR1846.

Don't let pride get in the way of a job. Both of you should settle for anything that brings in a minimum age, preferably with health benefits. School bus drivers are needed, janitors, teacher aides, groundskeepers, etc., etc., just to mention one area.
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HomeStretch
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Re: Age 62 - just lost job - seeking advice

Post by HomeStretch »

I am sorry to hear about your job loss.

Apply for unemployment benefits. You and wife need to aggressively look for jobs, reduce expenses and consider selling house and renting if you can reduce your housing expense.

You are withdrawing about 10% of your portfolio per year. Your withdrawal rate is unsustainable. No investment strategy / asset allocation will allow you to sustain that rate.

Agree with advice to pay off credit card debt at 7% and your car loan if it has a rate > 2-3%.

Best of luck with your and wife’s job search.
HEDGEFUNDIE
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Re: Age 62 - just lost job - seeking advice

Post by HEDGEFUNDIE »

Can you and your wife live on $40k per year?

If so, neither of you will need to work another day in your lives. However, it will require you to stop speculating with your money and putting it all into a sensible retirement target date fund (or better yet - Wellesley).

If not, go find a job. Even a $20k per year minimum wage job will raise your annual income to $60k, higher than the median FL household income.
Last edited by HEDGEFUNDIE on Wed Dec 25, 2019 11:16 pm, edited 1 time in total.
Topic Author
smmsmm57
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Joined: Fri May 19, 2017 10:13 am

Re: Age 62 - just lost job - seeking advice

Post by smmsmm57 »

Thanks to all who replied. The responses certainly run the gamut, some of which make invalid assumptions based
on facts not in evidence. About 1 in 4 of them I found as valid and useful though. (I am the one who asked though, so I
got what I asked for)

Thanks again
Topic Author
smmsmm57
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Re: Age 62 - just lost job - seeking advice

Post by smmsmm57 »

For example, not sure where the "you have two cars with 7 year loans" observation came from. Both cars were
3 year loans for less than $ 11,000 each.

(Many of these replies are based on incorrect assumptions)

I'm just sayin'

Thanks
Jazzysoon
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Re: Age 62 - just lost job - seeking advice

Post by Jazzysoon »

If you think you/your wife will start working again, you might consider reversing your SS decision(has to be within 12months). You only get 1 'undo', but with collecting SS it impacts how much can potentially be subject to tax and adds to your AGI for the ACA. And of course delaying increases the monthly benefit.
Escapevelocity
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Re: Age 62 - just lost job - seeking advice

Post by Escapevelocity »

Please clarify the car loans. You stated you’ve had them for five years and that they will be paid off in 2.5 years. How did you originally finance them? You bought them used and now five years later you still have 2.5 years of payments? How does that happen?
CurlyDave
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Re: Age 62 - just lost job - seeking advice

Post by CurlyDave »

smmsmm57 wrote: Wed Dec 25, 2019 11:05 pm Thanks to all who replied. The responses certainly run the gamut, some of which make invalid assumptions based
on facts not in evidence. About 1 in 4 of them I found as valid and useful though. (I am the one who asked though, so I
got what I asked for)

Thanks again
Well, I didn't reply before, but I will now.

No assumptions -- just facts.

Your age and is working against you. Your withdrawal rate is not sustainable for the rest of you or your wife's lifespan. Your ability to get a job is only decreasing with each passing day. Right now is the best time of my entire lifetime to find a job. Unemployment is as low as it is ever likely to get.

If both you and your wife get jobs now, it will be easier to keep them when times get tougher than it will be to get jobs later on if times get tougher.

You really need to start bring in more income and stop withdrawing from your portfolio. Treat this like the emergency it is.

I have a family friend who works 24 hours a week at Home Depot. It covers a lot of his expenses that SS doesn't. Both of you need to work as long as you can -- the day will come when you can't. A bigger portfolio then will be good.

P.S. I am 74 and have been there and done that. I have medical issues that make working impossible for me. But I have a decent portfolio and money is not my worry.
Luckywon
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Re: Age 62 - just lost job - seeking advice

Post by Luckywon »

Luckywon wrote: Wed Dec 25, 2019 3:49 pm
-Use the 50k cash in your brokerage account to pay off your car loan and credit card debt.

smmsmm57 wrote: Wed Dec 25, 2019 4:03 pm Thanks very much.

The idea of taking money out my IRA (and paying taxes on it) to pay off car loans and
credit card debt at 7% or less is new to me. Wouldn't by doing that I be losing the
opportunity cost of that money staying in the IRA gaining in value by both the amount I'd need
to pay off the debt as well as on the money that I would be taxed on if I were to take it out of
the IRA?

It seems like at the end of the year, my net worth would be greater if I kept as much money
as possible in the IRA?

Thanks again!

I was referring to using the 50k in your brokerage account to pay the car loans and credit card debt, not taking money out of the IRA.

If using the money in your brokerage account to pay off debt would force you to take money out of the IRA, then that is probably not wise.

It may be helpful for you to state the total and break down of your annual expenses.
flaccidsteele
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Re: Age 62 - just lost job - seeking advice

Post by flaccidsteele »

Here’s a fact

OP has worked and deployed capital for decades and still has very little $

Not sure what advice will change this trajectory
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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BL
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Re: Age 62 - just lost job - seeking advice

Post by BL »

I think the question is: What is not in a retirement fund (such as IRA or 401k)?
The money at TD Ameritrade?
The gold fund? You can't afford the risk.
If not in retirement fund, it could be used to pay off your credit cards and car loans. Maybe wait until 2020 when your income might be lower.
This would reduce your monthly expenses.

You have been living beyond your means and it looks like you plan to continue spending instead of cutting expenses to the bone. Encourage you both the spend full time on finding a job, any job, to reduce the amount you are bleeding from your IRA.
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Mactheriverrat
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Re: Age 62 - just lost job - seeking advice

Post by Mactheriverrat »

Everything evolves. | May Every Sunrise Bring You Hope. May Every Sunset Bring you Peace.
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dodecahedron
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Re: Age 62 - just lost job - seeking advice

Post by dodecahedron »

If your SS at age 62 is $2,200, that indicates you must have had a pretty significant earnings record over your lifetime, but your assets are very low and your debt is significant. It looks very likely there is a history of cash flow/spending issues.

Tweaking your investments and asset allocation is not going to save you. That is just moving the deckchairs around on a sinking ship. You need to stop the bleeding: work on cash inflow (from jobs for you and your wife and possibly selling stuff off that you own) and reducing cash outflow by questioning every expense. You need to get back into a situation where you are building up assets, not drawing them down!

You should be figuratively digging into the sofa cushions for every possible resource you can tax-efficiently use to reduce the drain on your precious assets. Time for a radical rethinking of your household lifestyle.

Absolutely agree that you and spouse ought to be working hard on finding jobs of some sort ASAP.

Do you have unneeded stuff you can sell on Ebay? I am having a very hard time understanding why in the world you need two cars if neither of you is working.

Can you take in a roommate (maybe even a family member) to help with household expenses? Is AirBnB an option? Could you downsize out of your house and into a modestly priced rental apartment?

This sounds like a case for Dave Ramsey style intervention. (His investment advice is bad, but his spending/budgeting advice is sound.) A rice and beans lifestyle to pay down that credit card debt for starters. Every penny you can put towards that credit card debt will generate a higher return than anything you could plausibly expect from investing the money in stocks.
msk
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Re: Age 62 - just lost job - seeking advice

Post by msk »

Age and lifestyle snippets sound like looking for a new job either for self or DW unlikely and unpalatable. I am guessing, but OP sounds like he had an income of around $100k and, to me, the only realistic way forward is to cut his lifestyle to match new income stream; $2200 from SS plus, say, a max of 4% of his entire investable portfolio. I am unclear what that is given all the outstanding loans. If it were me I would place the highest priority on paying off all loans asap, starting from those with the highest interest rates. Trying to optimize taxes is a lower priority than regaining peace of mind. To me.
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Wiggums
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Re: Age 62 - just lost job - seeking advice

Post by Wiggums »

smmsmm57 wrote: Wed Dec 25, 2019 2:05 pm Emergency funds: 0 (zero)

Debt:
Mortgage & Home equity loan on house (Value $ 225K:
Mortgage: $135K
HELOC: $20K


Credit Cards $13 K – Average 7% interest


Tax Filing Status:
Tax Rate: 24% Federal, 0% State

State of Residence: FL

Age: 62

Desired Asset allocation: (unknown, seeking advice)

Current retirement assets

Taxable
0 (zero)


His 401k (Fidelity) Percent of Total
S&P 500 Index (expense ratio: 0.023 %) $ 6K 0.02


IRA at Vanguard: Percent of Total
VTBLX Total Bond Market Index (expense ratio: 0.05 %) 30 % ($ 100K)
VTABX Total International Bond Market Index (expense ratio: 0.11 %) 16 % ($ 53 K)
VTIAX Total International Stock Index (expense ratio: 0.11 %) 15 % ($ 52 K)
VTSAX Total Stock Market Index (expense ratio: 0.04 %) 3 % ($ 10K)

Stocks:
AU ANGLOGOLD 0.04 7% ($ 23 K)

Brokerage Fund at TD Ameritrade:
$ Cash available to trade 15 % ($ 50 K)



Contributions

New annual Contributions
$0 (zero)

Questions:
1. I recently lost my job and am now living on monthly social security of $2,200 a month and about $2,500 from my IRA. I need to reallocate my holdings to reflect my new situation. In terms of a level of risk I am willing to have I would say around 7 out of 10. I am 62, my wife is 55, neither one of us is currently working and we are using Obama Care for medical insurance.
OP,

Very sorry for your job loss.

You have 183k of debt and 294k in savings.

I have read all the suggestions. Are you thinking that the market will outpace the debt while drawing down $2,500 a year?

What is YOUR plan? How can we help you?
BarbBrooklyn
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Re: Age 62 - just lost job - seeking advice

Post by BarbBrooklyn »

I'm still trying to do the math on your car loans, but I've given up on that.

Looking at the 1200 per month payment on your mortgage, I think it's a 15 year loan? Can you refi to a 30 year?

Has your wife worked recently? Are you currently job hunting?

You can't afford to retire yet.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."
slick_dealer_05
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Re: Age 62 - just lost job - seeking advice

Post by slick_dealer_05 »

Op, to be blunt, your problem isn't income, it is expenses.
Clearly you are living beyond your means and have saved almost nothing in the 24% income tax bracket.
If you continue this path, you'll have to declare bankruptcy in 3-5 years and will just have social security to live by.
student
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Re: Age 62 - just lost job - seeking advice

Post by student »

dodecahedron wrote: Thu Dec 26, 2019 3:16 am This sounds like a case for Dave Ramsey style intervention. (His investment advice is bad, but his spending/budgeting advice is sound.) A rice and beans lifestyle to pay down that credit card debt for starters. Every penny you can put towards that credit card debt will generate a higher return than anything you could plausibly expect from investing the money in stocks.
+1.
clip651
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Re: Age 62 - just lost job - seeking advice

Post by clip651 »

Sorry to hear about your job loss. Have you applied for unemployment? I agree with the others re job hunting for yourself and your wife. What is your field of work? How about your wife?

best wishes,
cj
peterwantstosave
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Re: Age 62 - just lost job - seeking advice

Post by peterwantstosave »

OP,

I'm so sorry this is happening to you. I am sure it is beyond shocking.

1) Honestly, you should read Dave Ramsey's Total Money Makeover today. It's available at any library.

2) Then, you should get two jobs, one driving Uber/Lyft, the other delivering pizzas. You can get these started in 14 days. Two jobs will be exhausting, but it will keep you occupied on fixing the task at hand.

3) After you've read Dave Ramsey's book, you should follow it to a T. You should liquidate all of your brokerage assets, pay off all your debt and vow to never go into debt again. It's your only path to wealth. You're spending more than you earn.

4) Once you've done that, you should read The Bogleheads Guide to Investing, and do that for Baby Step Four in Ramsey's Book, instead of his investing advice.

5) Look for a job in your chosen field.

If you do these five things, you'll be debt free except your house with two jobs and on the path to a new better one.

Hope this helps, Peter

EDIT TO ADD: I've done lots of dumb things with money. The number one thing is assuming I could just afford things that I never could afford. I worry that you're too confident in your own situation to really take any of this advice. That's a problem. You may think we are all beating up on you, but so many of us have been there. What we're collectively advocating does work. We are the living proof of that.
Last edited by peterwantstosave on Thu Dec 26, 2019 9:08 am, edited 1 time in total.
403b: 54% VTSAX, 36% BTMKX 10% QCBMRX | GSRA: 100% Money Market (100% QCBMRX on Dec 11, 2020) | Roth IRA: 100% FIPFX | Taxable: 100% FSKAX
FI4LIFE
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Re: Age 62 - just lost job - seeking advice

Post by FI4LIFE »

I feel sorry for you in this stressful situation, but why come here asking for advice then chastise people for responding? No asset allocation will fix your situation. Your current one is appropriate.

Paying off the credit cards is great advice that you seem to want to ignore. You are not in a position to speculate that future returns on your investments will be greater than the credit card interest rate of 7% (which you stated was an average, which means some cards have a higher rate...pay those first). By the way, what kinds of credit cards have a 7% interest rate? Mine are substantially higher. At a minimum, use your HELOC to pay them off, assuming you still have access and the interest rate on the heloc is lower.

You have two vehicles that you can no longer afford. Sell them and buy older vehicles and/or live with one car. Two unemployed people in Florida need exactly ZERO cars. You have two. I have bought used my entire life. The whole "someone else's headache" narrative is just something you tell yourself to justify the purchase. It's ridiculous. Do you think a used car is going to cost you MORE than $500 a month in repairs... EVERY MONTH? I drive a 16 year old Honda that I bought for 6k. I've driven it 3 years. If I've spent more than $300 TOTAL in age related repairs, that's a lot. I can afford "better" but recognize vehicles for what they are...a way to get from A to B, not a status symbol.

Bogleheads are a smart group. That is why so many are millionaires. Listen to what they are telling you or continue doing things your way and go bankrupt. Up to you.
MathIsMyWayr
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Re: Age 62 - just lost job - seeking advice

Post by MathIsMyWayr »

smmsmm57 wrote: Wed Dec 25, 2019 2:05 pm Tax Filing Status:
Tax Rate: 24% Federal, 0% State

Questions:
1. I recently lost my job and am now living on monthly social security of $2,200 a month and about $2,500 from my IRA. I need to reallocate my holdings to reflect my new situation. In terms of a level of risk I am willing to have I would say around 7 out of 10. I am 62, my wife is 55, neither one of us is currently working and we are using Obama Care for medical insurance.
Was OP's total income close to or over $200k to be at the 24% bracket?
He is asking about asset allocation, not a career advice.
Herekittykitty
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Re: Age 62 - just lost job - seeking advice

Post by Herekittykitty »

FI4LIFE wrote: Thu Dec 26, 2019 8:58 am…...

Paying off the credit cards is great advice..... At a minimum, use your HELOC to pay them off, assuming you still have access and the interest rate on the heloc is lower...…
Paying debt is about getting rid of debt and reducing risk. In this case with the information we have, it seems very likely that paying off credit cards will get rid of debt, reduce risk, and increase cash flow - assuming risk is not increased in order to get rid of debt and increase cash flow. Credit cards could be paid off from brokerage account money or from any jobs the OP and/or (preferably "and" to make this go faster) get to bring in income as the OP and/or his wife look for more desirable longer term jobs. Possibly the sale of unneeded/unwanted items could supplement the effort.

But transferring unsecured debt (credit cards) to secured debt (HELOC) increases risk and I wouldn't do it even if there were no other way to pay the credit cards (which isn't the case anyway.)
I don't know anything.
FI4LIFE
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Re: Age 62 - just lost job - seeking advice

Post by FI4LIFE »

Herekittykitty wrote: Thu Dec 26, 2019 9:13 am
FI4LIFE wrote: Thu Dec 26, 2019 8:58 am…...

Paying off the credit cards is great advice..... At a minimum, use your HELOC to pay them off, assuming you still have access and the interest rate on the heloc is lower...…
Paying debt is about getting rid of debt and reducing risk. In this case with the information we have, it seems very likely that paying off credit cards will get rid of debt, reduce risk, and increase cash flow - assuming risk is not increased in order to get rid of debt and increase cash flow. Credit cards could be paid off from brokerage account money or from any jobs the OP and/or (preferably "and" to make this go faster) get to bring in income as the OP and/or his wife look for more desirable longer term jobs. Possibly the sale of unneeded/unwanted items could supplement the effort.

But transferring unsecured debt (credit cards) to secured debt (HELOC) increases risk and I wouldn't do it even if there were no other way to pay the credit cards (which isn't the case anyway.)
This is a very thoughtful insight that I had not considered. Especially relevant in this particularly high risk situation. Good catch :beer
ARoseByAnyOtherName
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Re: Age 62 - just lost job - seeking advice

Post by ARoseByAnyOtherName »

smmsmm57 wrote: Wed Dec 25, 2019 11:05 pm Thanks to all who replied. The responses certainly run the gamut, some of which make invalid assumptions based
on facts not in evidence. About 1 in 4 of them I found as valid and useful though. (I am the one who asked though, so I
got what I asked for)

Thanks again
If some of the responses aren't helpful because they make invalid assumptions based on facts not in evidence, then I encourage you to Edit your post to add additional information and clarity.

If there are some posts you think aren't useful because they have tough messages that are hard for you to hear, well I completely understand that. BUT please set that aside as much as you can, and try to understand and sit with the feedback you're getting.

When it comes to investment and finances the Bogleheads are some of the most astute group of people around. Some of us have seen firsthand the result of poor planning and money management by our elders. This result can be extremely unpleasant, to say the least. I encourage you to read this feedback with an open mind.

Happy holidays and best of luck.
bikechuck
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Re: Age 62 - just lost job - seeking advice

Post by bikechuck »

Nicolas wrote: Wed Dec 25, 2019 7:01 pm You have cars, have you considered driving for Uber or Lyft, at least temporarily?
Do people make any income after expenses doing this? If you are using your own car you likely would have have to pay more for insurance, the car would not lsst as long with additional wear and tear, your maintenance frequency and costs would go up. Would you need to cover fuel costs or are they reimbursed?

It just seems like there are better options.
3funder
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Re: Age 62 - just lost job - seeking advice

Post by 3funder »

David Jay wrote: Wed Dec 25, 2019 4:15 pm The issue is you need to reduce your living expenses by getting rid of consumer debt. Mortgage, HELOC, cars and credit cards.
+1. This is very important.
Nicolas
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Re: Age 62 - just lost job - seeking advice

Post by Nicolas »

bikechuck wrote: Thu Dec 26, 2019 9:39 am
Nicolas wrote: Wed Dec 25, 2019 7:01 pm You have cars, have you considered driving for Uber or Lyft, at least temporarily?
Do people make any income after expenses doing this? If you are using your own car you likely would have have to pay more for insurance, the car would not lsst as long with additional wear and tear, your maintenance frequency and costs would go up. Would you need to cover fuel costs or are they reimbursed?

It just seems like there are better options.
I, myself, wouldn’t do it. It wouldn’t pay me enough after expenses, and I don’t need the money. But some people are desperate. I understand also that you can meet a lot of people in a job like this and have some interesting experiences, not all positive, to be sure.
CrazyCatLady
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Re: Age 62 - just lost job - seeking advice

Post by CrazyCatLady »

OP, do you or your wife have a pension coming? Or a similar income stream? If yes, it would help to provide details (age it starts, amount, retirement benefits). How much will your wife's social security be at 62, 67, and 70?

Also, it may help to clarify the car loans and the amounts and location (i.e. Tax deferred, Roth, taxable) of your other assets. It could be people are misunderstanding your assets, but most want to help if they can get a clear view of your assets.

Sorry about the job loss. Always sucks and is scary when not expected!
Thegame14
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Re: Age 62 - just lost job - seeking advice

Post by Thegame14 »

no idea why you have 50K in cash earning maybe 2% interest by $7K in credit cards at 7% interest, that needs to be paid off ASAP. Also you do not state your monthly expenses. What did you do for work? Could you get another job or work as a contractor for a few years?
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BL
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Re: Age 62 - just lost job - seeking advice

Post by BL »

I am sorry if I or we made it sound like we have no empathy toward your problem. I am sure it is a difficult time right now and you could well be stressed out. However, it seems like everyone is trying to give helpful suggestions which you don't appear to want to hear.

Part of the problem is your list of assets. The separate parts are not clear as to what is in retirement funds. Unless you clarify, we have no way to know which are taxed only on Capital Gains, if any, and which are fully taxable, and with a penalty for your spouse's withdrawals from IRA until about age 59.5.

If you are indeed in the 24% tax bracket, that means you were jointly making over 165k + ~24k S. D., or over 189k maybe for last year?? When did you lose your jobs? Perhaps your tax bracket is much lower this year or certainly next year. Anyway, your debts have interest costs in excess of what you could expect to earn on investments.

To edit you first post, go there and click on the "pencil" icon.
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