2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by Sputnik2 »

We’ve had a lot of changes in our life in 2020 and I’m looking to hear other’s thoughts on a couple of upcoming decisions.

Current Financial Situation:
- Age 38. Married with two young kids.
- Current net worth ~$2.0 MM.
- 401K / Traditional IRA retirement accounts: $1.0 MM
- ROTH accounts: $100k
- Physical gold: $100k
- Checking accounts (spread across personal and business accounts): $320k
- Normal Stock investment account: $230k
- Equity in 4 rental properties: $260k ($1.5MM conservative value - $1.24 MM mortgage)
- Should get $2300 per month pension from mega corp in 2047. Need to make sure I don’t forget this in 27 years. 😊

Big Changes already completed in 2020:
- Took a severance package from mega corp. Quit a $250k per year job.
- Moved family from USA to Asia. My wife is from Asia and we wanted our young kids to spend some time in her country learning the language and culture. This was the main driver for taking severance package and moving.
- Rented out our primary home.
- Put all of our mortgages in forbearance due to CARES act. This is huge. I will probably put around $100k into my pocket and defer repayment of this until the end of our mortgages. This is not a popular thing to do amongst the real estate investing crowd, but I believe I am complying will all applicable rules and the economics make sense.

Other potential relevant information:
- I estimate we can live very well off of ~$4k per month in Asia.
- I took out a “good” international health insurance plan for our family at $300/month. Healthcare is good and not expensive here.
- Wife and I each have $1.0MM life insurance policy.
- I have a long term disability policy.
- We have a will, medical POA, financial POA, account beneficiaries, etc, all setup.
- We want our kids to go to high school / college in the US and envision we will move back at some point.

General financial thoughts – I welcome feedback on my viewpoints
- I feel like I mostly won the “game”. At 38 and $2.0 MM net worth I think we have a lot of options. I started from zero, paid for college, and just worked hard and saved. Right now we are taking some time off to be together more as a family. I am far from bored currently. We might go back to work at some point.
- My general philosophy is that I can take more financial risk now than that of someone who is retiring at 60+ because I have still have “human-capital”. Meaning that my wife and I are still young enough to go back into the work force if we want to. Because we can do that, I take higher risks on stock vs. bond allocation, assumed return of the market, invest in real estate, hope that money owed while mortgages are in forbearance can be pushed to the end of the mortgage, and by quitting a six figure job to pursue a passion. I realize the longer we stay out of the job market the harder it will be to re-enter, and our salaries will most certainly be less, but I am confident we could find jobs that at least cover our expenses and in time build back to a higher salary.

Specific Questions / upcoming decisions to make – I would like thoughts/advice on these items
- Using provisions in the CARES act, I am thinking about taking out $100k withdrawal from each of our traditional IRAs ($200k in total). I can do this without a penalty if I do it in 2020 due to new CARES act rules. I am pretty sure I can also spread the tax burden over 3 years. So $66k would be taxed this year at a very high rate because my income for this year will probably be ~400k due to salary, severance package, and rental income. However the rest would be taxed at a very low rate in 2021 and 2022 if I choose not to work. I am thinking about doing this because I will need access to cash over the years to live and to fund kids college, and most of our money is in tax deferred accounts.
- I am thinking about starting to do ROTH conversion ladders. Should I start in 2021 or wait until 2023 if I withdraw the $200k from our IRAs?
- I’m debating about how much cash to keep on hand. A worst case scenario would be that we end up with some big chronic medical problem or decide to move back to the US without jobs and have US based expenses for a year or so until we find work. I currently have ~$350k in cash across all our accounts and I think I should invest more of it, but am hesitant to do so at the moment.
- Anything else I should be considering?

I’ve been a long time follower of this forum and appreciate all the great advice and viewpoints people bring.

Thanks.
Last edited by Sputnik2 on Fri Nov 27, 2020 8:22 am, edited 2 times in total.
z3r0c00l
Posts: 1888
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC
Contact:

Re: 2020 Life Changes – Age 38, International relocation, CARES act, and cash on hand

Post by z3r0c00l »

I would be curious to know how (if not exactly where) you keep 100K in gold. Not that it would take up too much space, but I presume you didn't bring it is Asia with you, no?
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

Re: 2020 Life Changes – Age 38, International relocation, CARES act, and cash on hand

Post by Sputnik2 »

z3r0c00l wrote: Sun Nov 22, 2020 6:35 am I would be curious to know how (if not exactly where) you keep 100K in gold. Not that it would take up too much space, but I presume you didn't bring it is Asia with you, no?
I bought it many years ago. I had a friend that was very big into buying physical gold coins and I phased into it by buying through an online broker. It's currently inside a safe deposit box at a bank. I somewhat view it as a hedge against currency collapse and a safety net, but I have thought of selling it from time to time.
z3r0c00l
Posts: 1888
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC
Contact:

Re: 2020 Life Changes – Age 38, International relocation, CARES act, and cash on hand

Post by z3r0c00l »

Sputnik2 wrote: Sun Nov 22, 2020 6:39 am
z3r0c00l wrote: Sun Nov 22, 2020 6:35 am I would be curious to know how (if not exactly where) you keep 100K in gold. Not that it would take up too much space, but I presume you didn't bring it is Asia with you, no?
I bought it many years ago. I had a friend that was very big into buying physical gold coins and I phased into it by buying through an online broker. It's currently inside a safe deposit box at a bank. I somewhat view it as a hedge against currency collapse and a safety net, but I have thought of selling it from time to time.
Thanks! I know that didn't help with your question but I am always curious how others keep gold safe.
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by Sputnik2 »

Regarding CARES act IRA withdrawal question -- I talked to one financial advisor and it seems like the math supports not taking out 200k from IRA via CARES act and instead doing large ROTH conversions in 2021 and 2022.

Reason being that I don't need the cash now and if I don't plan to work next year (and maybe longer) it would be better to just withdraw ~$100k through ROTH conversions each year and that should only be taxed up to 12% tax bracket. If I did the CARES act withdrawal this year I would have 66k taxed at 30+% because my income in 2020 is so high.
TheNightsToCome
Posts: 628
Joined: Fri Jun 30, 2017 11:48 pm

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by TheNightsToCome »

I am not an expert re: disability insurance, but I think you are wasting your money on that policy if you are not working.

I took long breaks from my career when younger, and learned that my disability insurer would happily accept my premium payments but would not pay out if I became disabled while skiing, diving, hang gliding, etc., during my time away from work. The insurer did not volunteer this information. I had to make a number of directed inquiries before the insurer coughed up this information.
HomeStretch
Posts: 5191
Joined: Thu Dec 27, 2018 3:06 pm

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by HomeStretch »

Roth conversions are reasonable for low income years.

Do you and spouse each have financial durable POAs? I didn’t see it listed in your estate documents.
need403bhelp
Posts: 1124
Joined: Thu May 28, 2015 6:25 pm

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by need403bhelp »

TheNightsToCome wrote: Thu Nov 26, 2020 7:40 am I am not an expert re: disability insurance, but I think you are wasting your money on that policy if you are not working.

I took long breaks from my career when younger, and learned that my disability insurer would happily accept my premium payments but would not pay out if I became disabled while skiing, diving, hang gliding, etc., during my time away from work. The insurer did not volunteer this information. I had to make a number of directed inquiries before the insurer coughed up this information.
Depends on insurer. Principal will cover wife for disability even if SAHM (can’t purchase this way but will do so if purchased while working, although obviously own occupation definition is moot point if SAHM and would have to not be able to work at all basically to get coverage).

More to OPs point, most long term disability insurance policies don’t pay disability benefit if you are in foreign country >6 months each year.

With that said, if OP plans to return to work in US, could be worthwhile keeping policy as an expensive hedge against op become uninsurable later.
User avatar
ram
Posts: 1698
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by ram »

Our family spent 2 to 3 years in Asia before returning to US when the oldest child was ready to join high school. At an expense level of 4K/mo almost certainly you are sending the kids to private schools in Asia. Most likely they will be ahead of their US public school peers with regard to Math and Science when they return to the US. They fit nicely in the honors level classes upon return to US. Have letters of recommendations from the science teachers overseas documenting the level of courses taken. Our oldest had trouble getting into some of the Honors classes as the local school was initially unwilling to accept our assertion that she was studying at an advanced level. By contrast the younger one who did middle school here in US had no trouble getting into high school honors classes based on the recommendations of the middle school teachers. Though our kids (now young adults) speak two Asian languages they had to take another European language (options included Spanish, French, German) as a second language in US and had to do some catch up work. You may want to introduce one of these languages while the kids are overseas.
Ram
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by Sputnik2 »

need403bhelp wrote: Thu Nov 26, 2020 12:53 pm
TheNightsToCome wrote: Thu Nov 26, 2020 7:40 am I am not an expert re: disability insurance, but I think you are wasting your money on that policy if you are not working.

I took long breaks from my career when younger, and learned that my disability insurer would happily accept my premium payments but would not pay out if I became disabled while skiing, diving, hang gliding, etc., during my time away from work. The insurer did not volunteer this information. I had to make a number of directed inquiries before the insurer coughed up this information.
Depends on insurer. Principal will cover wife for disability even if SAHM (can’t purchase this way but will do so if purchased while working, although obviously own occupation definition is moot point if SAHM and would have to not be able to work at all basically to get coverage).

More to OPs point, most long term disability insurance policies don’t pay disability benefit if you are in foreign country >6 months each year.

With that said, if OP plans to return to work in US, could be worthwhile keeping policy as an expensive hedge against op become uninsurable later.
I need to confirm that coverage is valid while not working. However, I do know that coverage is valid outside of the US. This was a main issue for me when I took the policy out years ago and I searched all of the major providers. Mass Mutual was the only one I could find that would provide coverage if I was disabled and living abroad.
User avatar
8foot7
Posts: 2395
Joined: Mon Jan 05, 2015 7:29 pm

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by 8foot7 »

I would not sleep well nor feel anything close to like I had won the game if I had a $2 million net worth, $300,000 in checking, I had left the country, and I was playing like I needed mortgage forbearance. But my comfort level is not yours.

More specifically I don’t know why you’d pull out 100k from your IRA because you “need cash” but then in the next point say you have $300k in cash and feel like you need to invest more of it.
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by Sputnik2 »

HomeStretch wrote: Thu Nov 26, 2020 7:54 am Roth conversions are reasonable for low income years.

Do you and spouse each have financial durable POAs? I didn’t see it listed in your estate documents.
I went back and looked at our estate planning documents. Yes, we have a financial POA. I edited the original post to include it. Thanks for asking.
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by Sputnik2 »

8foot7 wrote: Thu Nov 26, 2020 7:22 pm I would not sleep well nor feel anything close to like I had won the game if I had a $2 million net worth, $300,000 in checking, I had left the country, and I was playing like I needed mortgage forbearance. But my comfort level is not yours.

More specifically I don’t know why you’d pull out 100k from your IRA because you “need cash” but then in the next point say you have $300k in cash and feel like you need to invest more of it.
Thanks for your comment.

My thought is to get access to as much hard cash that I can control as I don't know what the future will bring. I don't need to take 200k out of IRA now via CARES act, but if I could do it cheaper than doing ROTH conversions I would. However, it seems like ROTH conversions in 2021/2022 is the way to go.

For your comment about not sleeping well at night, I'm curious did you factor my age into it?
From reading hundreds of posts on Bogelheads and from the financial advisors I have talked to, I am under the opinion that $2.0MM at 38 provides me a lot of options. Ex: I can take some time off work, pursue another passion, get a lower paying job that I enjoy more, or I could choose to go back to corporate America. I feel very fortunate to be able to have all of these options.
Topic Author
Sputnik2
Posts: 7
Joined: Wed Sep 09, 2020 5:31 am

Re: 2020 Life Changes – Age 38, quit job, moved to Asia, CARES act, and cash on hand

Post by Sputnik2 »

ram wrote: Thu Nov 26, 2020 1:31 pm Our family spent 2 to 3 years in Asia before returning to US when the oldest child was ready to join high school. At an expense level of 4K/mo almost certainly you are sending the kids to private schools in Asia. Most likely they will be ahead of their US public school peers with regard to Math and Science when they return to the US. They fit nicely in the honors level classes upon return to US. Have letters of recommendations from the science teachers overseas documenting the level of courses taken. Our oldest had trouble getting into some of the Honors classes as the local school was initially unwilling to accept our assertion that she was studying at an advanced level. By contrast the younger one who did middle school here in US had no trouble getting into high school honors classes based on the recommendations of the middle school teachers. Though our kids (now young adults) speak two Asian languages they had to take another European language (options included Spanish, French, German) as a second language in US and had to do some catch up work. You may want to introduce one of these languages while the kids are overseas.
Thanks for the comment. Kids schooling is very important to us and we have pretty much setup our lives here in order to optimize our kids schooling. It's great to be able to pick a house close to the school and not worry about commuting to work. Yes, it's a private school. Thanks for the advice on getting letters of recommendations. I'm a little more worried about them transitioning back on the social side vs the academic side at the moment though, but we'll see.
Post Reply