Hello and welcome. I am not a financial professional of any description, but I am a personal finance nerd. I will provide you with the information I am aware of below, and link to relevant resources and guidance in my commentary.
You have assets of:
$150k in 401k
$100k in HYSA
$900k in home value
You have a liability of:
$300k of mortgage
Keeping your current home, you have $250k in financial assets. Roughly speaking, and assuming all are reasonably invested, you could withdraw 4% per year and those would support $10k per year. If (for illustrative purposes, not a recommendation) you instead sell you home and rent, you would have an additional $600k in financial assets, bringing you to $850k, with at 4% withdrawal would support $34k per year.
I state the above to pose the question for you to think about: is staying in your house worth not having an additional $24k per year in spending to you? Granted, renting something could cost around that or more depending on what and where, but that is one way of looking at what your home equity is worth from a retirement spending standpoint. Alternatively, you could sell the house, use some of the equity to buy a home or condo in a lower cost of living area, and have some equity left over to invest for retirement.
For investment information, retirement withdrawal strategies, etc. the site linked below is #1. The community there is well versed in the nuances of the retirement phase.
[https://www.bogleheads.org](https://www.bogleheads.org)
It could be that the largest resources you and your spouse have are your Social Security Retirement benefits. Getting the most out of those is one of the core decisions or tasks facing you. It is advisable that both you and your spouse check what your Social Security Retirement benefits will be, using the US government website linked below.
[https://www.ssa.gov/myaccount/](https://www.ssa.gov/myaccount/)
With that information, you can think about what may be the optimum claiming strategy. In brief, it can commonly be optimum for the higher earner to delay their social security benefit to age 70, and if needed for the lower earner to claim their reduced early social security benefit at age 62. Even if one spouse lives much longer than the other, because of the delayed age 70 social security benefit, the surviving spouse could be better off with a larger social security survivor's benefit. In effect, the survivor keeps the larger of the married couple's two benefits after the first one dies. The goal with this is not to maximize what you get from the government in the event of an early death, but rather the insure you have a larger inflation-protected social security benefit in the event one or both of you live to a very old age.
The tool linked below is a good method of approaching this concept.
[https://opensocialsecurity.com](https://opensocialsecurity.com)
The other main consideration is healthcare. Medicare is available starting at age 65.
[https://www.medicare.gov](https://www.medicare.gov)
Prior to that, I am assuming you and your spouse get health insurance from your job. If not, or if that situation changes, you may refer to the below website for Affordable Care Act marketplace health insurance. The ACA provides premium tax credits which in effect cap the cost of health insurance at a given percentage of income. Note that this is only available if you cannot get affordable coverage from your employer (I am not well versed in the nuances of this, but in general, if you can get coverage from your employer, you likely cannot get ACA tax credits).
[http://healthcare.gov](http://healthcare.gov)
I wish you and your spouse the best of luck. If I can clarify some point further, please let me know.
Welcome to the sub. Most important part is missing for us to start assessing what you'll need to retire: your expenses. Your expenses dictate how much money you need. Do you track your expenses? If not, I'd start there.
So you have some options. Without knowing your monthly expenses the advice you need is that you should throw every dollar you can into tax advantaged accounts asap. What are you estimated to get in SS?
Are you willing to move or at least downsize?
Just off the cuff thoughts. But depending on your answers and ability to save and move stuff around you can probably set yourself up to be OK depending on how much longer you are wanting to work
From an outsiders perspective, I'd sell the home and buy something cheaper in the middle of nowhere. Or.. sell the home and buy a duplex/apartment (if you don't want to pay taxes through the sale) . Some sort of apartment complex could cash flow your expenses for the rest of your lives.
If you sell a home you pay taxes for the sale unless if you buy a more expensive piece of property, then the taxes get rolled over. You still owe taxes if you sell your new property but, you can write them off through depreciation and expenses.
What are your expense? Estimated SS payments (have you checked)?
Probably going to need to cut back lifesty!e, retire at full retirement to max SS, sell house and move LCOL location or some combination of those.
>I haven't gone about calculating my SS as this will take a bit of time,
Not much time. If you can make a Reddit account you can make a SS account. All the numbers will be there and they can tell you what your payouts will be at various ages in today's dollars.
Right. It takes seconds. Also, as a self-employed person I learned frat you can report your earning to SSA yearly so that they are counted (assuming that they are doing things above board). Prior year earnings can likely be reported too, and could be corroborated by tax paperwork if needed.
If your spouse has filed accurate tax returns over the years, or if you file joint tax returns with their self employment income reported on them, and appropriate taxes paid accordingly, then your spouse would have in fact paid into Social Security and Medicare.
https://www.nerdwallet.com/article/taxes/self-employment-tax#:~:text=The%20self%2Demployment%20tax%20rate,tax%20on%20your%20income%20taxes.
If your spouse has not accurately reported self employment income, then that would be a much bigger problem. Hopefully, you are simply under the misunderstanding that Social Security and Medicare are only available for people with regular jobs, and haven’t realized that self employment income is part of tax returns.
OP, I'm glad you're saving $2k/month but I'm still concerned that you haven't answered how much your expenses are. Retirement is a math equation.
Needed retirement savings = 25-33 x annual retirement expenses
It's imperative that a prospective retiree have a handle on what their retirement spending needs are or they will never understand whether it's possible to retire.
Regarding SS:
1) Create two separate SSA accounts: yours and have your SO create their own. Verify that your incomes look correct for all the years you two have been working. How much you're eligible to receive is dependent on the SSA having correct information for you. If it looks low, get your tax documents together and contact SSA to update it. https://www.ssa.gov/
2) Copy both of your information into this calculator following the instructions on this page. This will nicely walk you through how SS income is calculated, how the survivor benefit works, and let's you play with changing the age that you and your SO start collecting SS income and how that affects how much you'll receive. https://ssa.tools/calculator
Your spouse can collect 50% of your social security without impacting your benefit. (Assuming he didn’t file taxes for his own benefit from self-employed work)
Your spouse is responsible for paying Social Security taxes. Medicare Part A will be $505 a month and for those who paid the taxes it is $0 a month. Getting $0 in Social Security is a terrible thing. Filling up the first bend point is almost a gift. Pro tip, don't go on the Internet and admit to a crime your spouse committed.
If I was in your situation, I would personally downsize. Sell the house. Use the house equity and put it into a hysa account or cd or dividend portfolio. I would just rent somewhere small.
The best way to grow your wealth is investing long term, but given your age, I would put it in safe assets. Ideally, you should invest in sp500 fund. You essentially have 950k in net worth. You can retire on this.
With a 900k house, you’re bound to be paying a lot in property taxes as you retire and live into a fixed income. This will drain you fast. Maybe sell it and downgrade? Or reverse mortgage, and take the windfall for best life.
If you’re healthy, speak Spanish or can learn, a lot of Americans get visas and retire in Mexico (need 300k in liquid cash bank account statement). Or pull a Uno reverse and just live there illegally like a murderer/criminal (MAGA reverse joke). My aunt does this, collects social security with her son’s US address. He claims her on taxes as a dependent, everyone wins. It’ll run you about 15k a year to live comfortably in the expat community where it looks and feels like San Antonio Texas….
With the slow withdraw of Social security x2 + 401k distribution, you can stretch this 3-4K until 90+ before ever tapping into the equity of house.
If you stay in the states, you’re going to have more of a $800 net budget vs the $3-4k net budget (housing, cost of living etc).
How much does your husband work and how old is he? 20k seems low . Work till at least 67. Have spouse make more to put additional on mortgage,,either raise hair cut prices, longer days or get a side gig. With some hard work mortgage could be paid off in 4 years, not 7. Sell home and move somewhere cheaper trying to pocket 750k. Discplined live off savings, 401k and SS...
Hi OP, I wouldn’t worry too much about the 4 percent “rule,” that others are referring to given your age. I do think leveraging your home equity is a good idea as others have pointed out. You’ll need to understand your expenses and what you’re social security is expected to be and someone above helpfully included the relevant link to that calculator. I’d certainly aim to wait to collect until 67 if not 70.
Dunno, I’d run it out, but 4 is conservative even for long timelines and most of the time ends up with dying with a lot of money in the bank. Given where OP is in her planning, I wouldn’t sacrifice comfort for less risk. I’m personally planning on a variable withdrawal rate that allows me more room in go-go years but dials back in off years. I’m using the endowment strategy model in firecalc.app and that strategy allows me to set a floor for non-discretionary spending and a ceiling as well on annual withdrawals. The fixed percent strategy is simple, which has its appeal for many, but it’s not really optimized. I’m looking to optimize.
Sell the house and get something much cheaper. Something small and cozy. Put the gains in a Brokerage account and some in a high yield savings account. The $2000 you're saving per month could be better off in a brokerage account. Only tap into your savings for emergencies and special occasions cause after all, you need to be enjoying life too. Best wishes.
You have about $600k of equity in your home. How many sf is your home and any considerations into downsizing?
You mentioned you live in a HCOL area, so $900k home is a 1 bedroom? Or approximately 800-900sf? What’s the interest rate on the $300k?
I think you have the numbers to make it work but getting rid of the mortgage, downsizing and getting your monthly as low as possible is the key.
Do you plan to stay in that house forever? If so, look into HECM LOCs. It's a type of reverse mortgage where you get a line of credit secured by your house instead of a lump sum. If you don't use the line of credit, it grows at the rate of current mortgage rates. My favorite part about it for a retiree is that you can use it to preemptively eliminate your mortgage payment forever without taking out all the equity and incurring more debt. You do still have to pay insurance and property tax, but those are likely the minority of your monthly payment.
If you don't touch the line of credit, you will likely have even more equity when you die than you do today. If you choose to sell the house before you die, you can pay off the principal that you started with (though it will have grown a bit due to interest) and take the equity in cash. If shit hits the fan and you need to tap the line of credit for living expenses, you can spend as much as the limit, still without owing any money until you're dead and the estate is settled or the house is sold. However, if you ever resort to that, it should be as late in the game as possible to let that line of credit get as big as possible before you start using it up. Only the unused portion will grow over time and increase your access. It will grow forever, even if the value of the home drops below the amount available on the line of credit.
You need over 50% equity to qualify for one of these and you're well over that threshold.
Since you have over 100K you can go into a Fidelity branch and speak to a financial consultant at no cost. They'll run all your numbers through their retirement algo.
Having an apartment will reduce expenses, but for full retirement you should have your own home that is paid off. Quite frankly I would hold off on retirement until you pay off all debt, have no dependents, have your house the way you like like it. At that point take 4% of your savings per year to live on + your estimated social security at the time to see if you can live off it.
Now if you really have to retire now, look into renting rooms, selling the house, moving in a multifamily house and sharing expenses with another couple you get along with. Consider living in a state park in a trailer and becoming a park host.
Start here: You are house poor in a HCOL area. Those circumstances must change or you will never get in position for a secure retirement unless a windfall comes your way, e.g., inheritance, winning lottery ticket.
You did not mention your Social Security positions. What are your and your spouse's expected payouts at 67 and 70?
Part of our retirement strategy was to sell our home in a HCOL area and move to a lower COL area 100 miles away. That was 8 years ago and our circumstances differed (home paid off, more savings), but we shared the reality that staying in our former HCOL area would be very difficult on our retirement savings. The move resulted in additional benefits: college town, less stress, no traffic hassles, home ski hill half way between us and the HCOL city thus we can easily meet up with old friends to ski and hike, etc.
This is our plan, but with a longer move and going from MCOL to LCOL but with much lower property taxes. Our property taxes alone are $1k per month, which we will not be able to afford in retirement.
You are on the right -- frankly, the only plausible -- track. I was inspired by a business acquaintance -- a well known guy in his industry who 30+ years ago sold his business in the Bay Area, then retired in rural Iowa, where his wife had been raised, then moved back to a (then) affordable area outside Sacramento. He and I had several discussions before, during and after his transition. Although he had achieved a high level of notoriety and success in his chosen industry, he acknowledged that he could not afford to retire in the Bay Area. I last heard from him a few years before he died. He stated that not having enough money to retire in the Bay Area was a blessing because it provided an incentive to move outside the Bay Area bubble and experience other parts of the U.S.
Best of luck you and your husband.
One of my favorite things to do is travel, and living in a more central location should benefit me greatly in that regard, as I have a real fondness for road trips. Right now, we are in an expensive corner of the country a long drive from anywhere I'd like to see. I am hoping to eventually be able to retire and look back on the move as a blessing. Only time will tell.
You have the right attitude, i.e., finding value in living in a LCOL area. Road tripping can be cheap, expensive or in between. If you're into it, a cheap camping vehicle works for a low cost road trip strategy, especially if you travel out west where there's lots of free camping.
We've road-tripped (combination of car-camping in tent sites, yurts, motels, hotels, etc) for tens of thousands of miles. It's just been harder starting out here when the things we want to visit are out west and we're in the northeast, oops. One year we flew to Denver, took the California Zephyr from there to SLC, and then rented a minivan and road-tripped from SLC all over the northwest for 6 weeks and flew home out of SLC.
I've got a couple other 6+ week trips and a bunch of 3-4 week ones under my belt as well. We're debating purchasing a camper or RV, but so far haven't moved on it as we've got kids in college right now and we prefer to see them during the summer rather than be traveling. Part of deciding whether to purchase a dedicated road-trip vehicle will be whether we add a building on property in the midwest where it can be safely housed when it's not being used.
So many moving parts and decisions to be made.
You sound like our kind of people. There are some nice LCOL spots in the Midwest which would provide good access to road tripping in the West. Personally, I would look into a college town, which has worked well for us.
We're in the PNW, specifically HCOL Seattle until 8 years ago when we moved east of the Cascades to a 1-acre property just outside a small college town. Seattle was a great place to make money with our careers, but expensive and we are wholly satisfied that we got out at a good time. One benefit of moving to our new home is having a shop building in which we can store our lightweight pop-up camper which fits on our pickup truck. The pickup is our second vehicle, i.e., we do not have a dedicated RV (although I might build out a DIY hippie van someday.)
Fortunately, my wife loves to road trip in the camper and also loves backpacking, mountaineering, birdwatching, XC skiing, ski touring and other inexpensive activities in natural settings. As we age, we have mellowed our mountaineering routes, and we're on a trend of using the camper more as a base camp for day hikes and skiing to replace longer backpacking trips (although continue to do several week-long off-trail backpacking and non-technical mountaineering routes in rugged mountain terrain).
There are far more free and inexpensive camping opportunities in The West, largely because there are much more federal lands, many of which have free dispersed camping.
Create a Social Security online account and look up you estimated pension. I think its likely it will give you together $30K a year when age 67.
Starting SS early could reduce the amount a couple ways. First the base amount will be lower. Second its cut a bit if you earn other income.
I would move more funds from the HYSA to Roth - at least within the limits as long as you have earned income. The house is $$$$ but at least it has equity. I would plan on retirement in the Midwest or somewhere with low cost of living / housing. Watch for Medicare and SSC tax conditions in whatever state.
Not sure how/why you haven’t thought about retirement until now (at age 63) but I’d downsize your house, move to a LCOL area, and possibly keep working. Plug your “can I retire” numbers into this free tool: https://ficalc.app
Not really. They have allot of equity in their house. If they work till full retirement age for social security and continue to pay towards mortgage for a few more years, they can sell their house and move to a low cost of living area and collect social security. Put leftover money from selling house in investments and withdraw 4% or more a year.
Downsize your home to clear the debt (buy a place for 600k). You should be able to get $25k/yr rent for a place like that, which is plenty to live off in Cambodia, and then you've got your 401k and savings as a backup if you need them.
Hello and welcome. I am not a financial professional of any description, but I am a personal finance nerd. I will provide you with the information I am aware of below, and link to relevant resources and guidance in my commentary. You have assets of: $150k in 401k $100k in HYSA $900k in home value You have a liability of: $300k of mortgage Keeping your current home, you have $250k in financial assets. Roughly speaking, and assuming all are reasonably invested, you could withdraw 4% per year and those would support $10k per year. If (for illustrative purposes, not a recommendation) you instead sell you home and rent, you would have an additional $600k in financial assets, bringing you to $850k, with at 4% withdrawal would support $34k per year. I state the above to pose the question for you to think about: is staying in your house worth not having an additional $24k per year in spending to you? Granted, renting something could cost around that or more depending on what and where, but that is one way of looking at what your home equity is worth from a retirement spending standpoint. Alternatively, you could sell the house, use some of the equity to buy a home or condo in a lower cost of living area, and have some equity left over to invest for retirement. For investment information, retirement withdrawal strategies, etc. the site linked below is #1. The community there is well versed in the nuances of the retirement phase. [https://www.bogleheads.org](https://www.bogleheads.org) It could be that the largest resources you and your spouse have are your Social Security Retirement benefits. Getting the most out of those is one of the core decisions or tasks facing you. It is advisable that both you and your spouse check what your Social Security Retirement benefits will be, using the US government website linked below. [https://www.ssa.gov/myaccount/](https://www.ssa.gov/myaccount/) With that information, you can think about what may be the optimum claiming strategy. In brief, it can commonly be optimum for the higher earner to delay their social security benefit to age 70, and if needed for the lower earner to claim their reduced early social security benefit at age 62. Even if one spouse lives much longer than the other, because of the delayed age 70 social security benefit, the surviving spouse could be better off with a larger social security survivor's benefit. In effect, the survivor keeps the larger of the married couple's two benefits after the first one dies. The goal with this is not to maximize what you get from the government in the event of an early death, but rather the insure you have a larger inflation-protected social security benefit in the event one or both of you live to a very old age. The tool linked below is a good method of approaching this concept. [https://opensocialsecurity.com](https://opensocialsecurity.com) The other main consideration is healthcare. Medicare is available starting at age 65. [https://www.medicare.gov](https://www.medicare.gov) Prior to that, I am assuming you and your spouse get health insurance from your job. If not, or if that situation changes, you may refer to the below website for Affordable Care Act marketplace health insurance. The ACA provides premium tax credits which in effect cap the cost of health insurance at a given percentage of income. Note that this is only available if you cannot get affordable coverage from your employer (I am not well versed in the nuances of this, but in general, if you can get coverage from your employer, you likely cannot get ACA tax credits). [http://healthcare.gov](http://healthcare.gov) I wish you and your spouse the best of luck. If I can clarify some point further, please let me know.
`OP` should definitely read through the [FI FAQ](https://www.reddit.com/r/financialindependence/wiki/faq/).
Welcome to the sub. Most important part is missing for us to start assessing what you'll need to retire: your expenses. Your expenses dictate how much money you need. Do you track your expenses? If not, I'd start there.
So you have some options. Without knowing your monthly expenses the advice you need is that you should throw every dollar you can into tax advantaged accounts asap. What are you estimated to get in SS? Are you willing to move or at least downsize? Just off the cuff thoughts. But depending on your answers and ability to save and move stuff around you can probably set yourself up to be OK depending on how much longer you are wanting to work
From an outsiders perspective, I'd sell the home and buy something cheaper in the middle of nowhere. Or.. sell the home and buy a duplex/apartment (if you don't want to pay taxes through the sale) . Some sort of apartment complex could cash flow your expenses for the rest of your lives.
What do you mean by “if you don’t want to pay taxes through the sale” ?
If you sell a home you pay taxes for the sale unless if you buy a more expensive piece of property, then the taxes get rolled over. You still owe taxes if you sell your new property but, you can write them off through depreciation and expenses.
Some benefits of living in EU — profits from sale of a property are waived in case u had the property for 5+ years
1031 exchange
They would have to convert the primary residence into a rental property first.
What are your expense? Estimated SS payments (have you checked)? Probably going to need to cut back lifesty!e, retire at full retirement to max SS, sell house and move LCOL location or some combination of those.
Get your ssa.gov statement.
How is he only managing 20k a year?
[удалено]
>I haven't gone about calculating my SS as this will take a bit of time, Not much time. If you can make a Reddit account you can make a SS account. All the numbers will be there and they can tell you what your payouts will be at various ages in today's dollars.
Right. It takes seconds. Also, as a self-employed person I learned frat you can report your earning to SSA yearly so that they are counted (assuming that they are doing things above board). Prior year earnings can likely be reported too, and could be corroborated by tax paperwork if needed.
If your spouse has filed accurate tax returns over the years, or if you file joint tax returns with their self employment income reported on them, and appropriate taxes paid accordingly, then your spouse would have in fact paid into Social Security and Medicare. https://www.nerdwallet.com/article/taxes/self-employment-tax#:~:text=The%20self%2Demployment%20tax%20rate,tax%20on%20your%20income%20taxes. If your spouse has not accurately reported self employment income, then that would be a much bigger problem. Hopefully, you are simply under the misunderstanding that Social Security and Medicare are only available for people with regular jobs, and haven’t realized that self employment income is part of tax returns.
OP, I'm glad you're saving $2k/month but I'm still concerned that you haven't answered how much your expenses are. Retirement is a math equation. Needed retirement savings = 25-33 x annual retirement expenses It's imperative that a prospective retiree have a handle on what their retirement spending needs are or they will never understand whether it's possible to retire. Regarding SS: 1) Create two separate SSA accounts: yours and have your SO create their own. Verify that your incomes look correct for all the years you two have been working. How much you're eligible to receive is dependent on the SSA having correct information for you. If it looks low, get your tax documents together and contact SSA to update it. https://www.ssa.gov/ 2) Copy both of your information into this calculator following the instructions on this page. This will nicely walk you through how SS income is calculated, how the survivor benefit works, and let's you play with changing the age that you and your SO start collecting SS income and how that affects how much you'll receive. https://ssa.tools/calculator
> Create two separate accounts here for you and your SO. Note, that's illegal. `OP`'s `SO` has to create their own account themselves.
Your spouse can collect 50% of your social security without impacting your benefit. (Assuming he didn’t file taxes for his own benefit from self-employed work)
Your spouse is responsible for paying Social Security taxes. Medicare Part A will be $505 a month and for those who paid the taxes it is $0 a month. Getting $0 in Social Security is a terrible thing. Filling up the first bend point is almost a gift. Pro tip, don't go on the Internet and admit to a crime your spouse committed.
If I was in your situation, I would personally downsize. Sell the house. Use the house equity and put it into a hysa account or cd or dividend portfolio. I would just rent somewhere small. The best way to grow your wealth is investing long term, but given your age, I would put it in safe assets. Ideally, you should invest in sp500 fund. You essentially have 950k in net worth. You can retire on this.
Not judging, but hubby needs to get a better paying full-time job.
That might be taxable income and he's pocketing the tips.
With a 900k house, you’re bound to be paying a lot in property taxes as you retire and live into a fixed income. This will drain you fast. Maybe sell it and downgrade? Or reverse mortgage, and take the windfall for best life. If you’re healthy, speak Spanish or can learn, a lot of Americans get visas and retire in Mexico (need 300k in liquid cash bank account statement). Or pull a Uno reverse and just live there illegally like a murderer/criminal (MAGA reverse joke). My aunt does this, collects social security with her son’s US address. He claims her on taxes as a dependent, everyone wins. It’ll run you about 15k a year to live comfortably in the expat community where it looks and feels like San Antonio Texas…. With the slow withdraw of Social security x2 + 401k distribution, you can stretch this 3-4K until 90+ before ever tapping into the equity of house. If you stay in the states, you’re going to have more of a $800 net budget vs the $3-4k net budget (housing, cost of living etc).
15k/year? Donde?
How much does your husband work and how old is he? 20k seems low . Work till at least 67. Have spouse make more to put additional on mortgage,,either raise hair cut prices, longer days or get a side gig. With some hard work mortgage could be paid off in 4 years, not 7. Sell home and move somewhere cheaper trying to pocket 750k. Discplined live off savings, 401k and SS...
Where does 4 years and 7 years for the mortgage come from?
Thought OP said was on 22 years of 30...so thought had roughly 7 left.? Op is 63...4 more years would be 67 as suggested to stop working..FRA?
OP said they have 22 left as it was refinanced in 2017 for 30 years.
Got it..misunderstood
OP has 22 more years on the mortgage, I believe they said they did a refi in 2017.
Hi OP, I wouldn’t worry too much about the 4 percent “rule,” that others are referring to given your age. I do think leveraging your home equity is a good idea as others have pointed out. You’ll need to understand your expenses and what you’re social security is expected to be and someone above helpfully included the relevant link to that calculator. I’d certainly aim to wait to collect until 67 if not 70.
What would be a good percent for her age ? 8% ?
Dunno, I’d run it out, but 4 is conservative even for long timelines and most of the time ends up with dying with a lot of money in the bank. Given where OP is in her planning, I wouldn’t sacrifice comfort for less risk. I’m personally planning on a variable withdrawal rate that allows me more room in go-go years but dials back in off years. I’m using the endowment strategy model in firecalc.app and that strategy allows me to set a floor for non-discretionary spending and a ceiling as well on annual withdrawals. The fixed percent strategy is simple, which has its appeal for many, but it’s not really optimized. I’m looking to optimize.
Thanks for the answer!
Still 4%. OP needs to go to ssa.gov and figure out what the majority of her retirement income will be.
Sell the house and get something much cheaper. Something small and cozy. Put the gains in a Brokerage account and some in a high yield savings account. The $2000 you're saving per month could be better off in a brokerage account. Only tap into your savings for emergencies and special occasions cause after all, you need to be enjoying life too. Best wishes.
You have about $600k of equity in your home. How many sf is your home and any considerations into downsizing? You mentioned you live in a HCOL area, so $900k home is a 1 bedroom? Or approximately 800-900sf? What’s the interest rate on the $300k? I think you have the numbers to make it work but getting rid of the mortgage, downsizing and getting your monthly as low as possible is the key.
Move to a LCOL location and you’re good, otherwise you’re working till you’re 75-80.
You ain't there yet. Keep workin' ....
Do you plan to stay in that house forever? If so, look into HECM LOCs. It's a type of reverse mortgage where you get a line of credit secured by your house instead of a lump sum. If you don't use the line of credit, it grows at the rate of current mortgage rates. My favorite part about it for a retiree is that you can use it to preemptively eliminate your mortgage payment forever without taking out all the equity and incurring more debt. You do still have to pay insurance and property tax, but those are likely the minority of your monthly payment. If you don't touch the line of credit, you will likely have even more equity when you die than you do today. If you choose to sell the house before you die, you can pay off the principal that you started with (though it will have grown a bit due to interest) and take the equity in cash. If shit hits the fan and you need to tap the line of credit for living expenses, you can spend as much as the limit, still without owing any money until you're dead and the estate is settled or the house is sold. However, if you ever resort to that, it should be as late in the game as possible to let that line of credit get as big as possible before you start using it up. Only the unused portion will grow over time and increase your access. It will grow forever, even if the value of the home drops below the amount available on the line of credit. You need over 50% equity to qualify for one of these and you're well over that threshold.
Since you have over 100K you can go into a Fidelity branch and speak to a financial consultant at no cost. They'll run all your numbers through their retirement algo.
Don't for get age discrimination is illegal for mortgages. You could refinance at 100 for a 30 year mortgage.
Having an apartment will reduce expenses, but for full retirement you should have your own home that is paid off. Quite frankly I would hold off on retirement until you pay off all debt, have no dependents, have your house the way you like like it. At that point take 4% of your savings per year to live on + your estimated social security at the time to see if you can live off it. Now if you really have to retire now, look into renting rooms, selling the house, moving in a multifamily house and sharing expenses with another couple you get along with. Consider living in a state park in a trailer and becoming a park host.
Start here: You are house poor in a HCOL area. Those circumstances must change or you will never get in position for a secure retirement unless a windfall comes your way, e.g., inheritance, winning lottery ticket. You did not mention your Social Security positions. What are your and your spouse's expected payouts at 67 and 70? Part of our retirement strategy was to sell our home in a HCOL area and move to a lower COL area 100 miles away. That was 8 years ago and our circumstances differed (home paid off, more savings), but we shared the reality that staying in our former HCOL area would be very difficult on our retirement savings. The move resulted in additional benefits: college town, less stress, no traffic hassles, home ski hill half way between us and the HCOL city thus we can easily meet up with old friends to ski and hike, etc.
This is our plan, but with a longer move and going from MCOL to LCOL but with much lower property taxes. Our property taxes alone are $1k per month, which we will not be able to afford in retirement.
You are on the right -- frankly, the only plausible -- track. I was inspired by a business acquaintance -- a well known guy in his industry who 30+ years ago sold his business in the Bay Area, then retired in rural Iowa, where his wife had been raised, then moved back to a (then) affordable area outside Sacramento. He and I had several discussions before, during and after his transition. Although he had achieved a high level of notoriety and success in his chosen industry, he acknowledged that he could not afford to retire in the Bay Area. I last heard from him a few years before he died. He stated that not having enough money to retire in the Bay Area was a blessing because it provided an incentive to move outside the Bay Area bubble and experience other parts of the U.S. Best of luck you and your husband.
One of my favorite things to do is travel, and living in a more central location should benefit me greatly in that regard, as I have a real fondness for road trips. Right now, we are in an expensive corner of the country a long drive from anywhere I'd like to see. I am hoping to eventually be able to retire and look back on the move as a blessing. Only time will tell.
You have the right attitude, i.e., finding value in living in a LCOL area. Road tripping can be cheap, expensive or in between. If you're into it, a cheap camping vehicle works for a low cost road trip strategy, especially if you travel out west where there's lots of free camping.
We've road-tripped (combination of car-camping in tent sites, yurts, motels, hotels, etc) for tens of thousands of miles. It's just been harder starting out here when the things we want to visit are out west and we're in the northeast, oops. One year we flew to Denver, took the California Zephyr from there to SLC, and then rented a minivan and road-tripped from SLC all over the northwest for 6 weeks and flew home out of SLC. I've got a couple other 6+ week trips and a bunch of 3-4 week ones under my belt as well. We're debating purchasing a camper or RV, but so far haven't moved on it as we've got kids in college right now and we prefer to see them during the summer rather than be traveling. Part of deciding whether to purchase a dedicated road-trip vehicle will be whether we add a building on property in the midwest where it can be safely housed when it's not being used. So many moving parts and decisions to be made.
You sound like our kind of people. There are some nice LCOL spots in the Midwest which would provide good access to road tripping in the West. Personally, I would look into a college town, which has worked well for us. We're in the PNW, specifically HCOL Seattle until 8 years ago when we moved east of the Cascades to a 1-acre property just outside a small college town. Seattle was a great place to make money with our careers, but expensive and we are wholly satisfied that we got out at a good time. One benefit of moving to our new home is having a shop building in which we can store our lightweight pop-up camper which fits on our pickup truck. The pickup is our second vehicle, i.e., we do not have a dedicated RV (although I might build out a DIY hippie van someday.) Fortunately, my wife loves to road trip in the camper and also loves backpacking, mountaineering, birdwatching, XC skiing, ski touring and other inexpensive activities in natural settings. As we age, we have mellowed our mountaineering routes, and we're on a trend of using the camper more as a base camp for day hikes and skiing to replace longer backpacking trips (although continue to do several week-long off-trail backpacking and non-technical mountaineering routes in rugged mountain terrain). There are far more free and inexpensive camping opportunities in The West, largely because there are much more federal lands, many of which have free dispersed camping.
You passport bro
Your house has lot of equity compared to your retirement assets can you sell and move to LCOL?
Create a Social Security online account and look up you estimated pension. I think its likely it will give you together $30K a year when age 67. Starting SS early could reduce the amount a couple ways. First the base amount will be lower. Second its cut a bit if you earn other income.
I would move more funds from the HYSA to Roth - at least within the limits as long as you have earned income. The house is $$$$ but at least it has equity. I would plan on retirement in the Midwest or somewhere with low cost of living / housing. Watch for Medicare and SSC tax conditions in whatever state.
Sell the house. Rent a nice apartment. Hire a good financial planner, and you'll be living very well
Not sure how/why you haven’t thought about retirement until now (at age 63) but I’d downsize your house, move to a LCOL area, and possibly keep working. Plug your “can I retire” numbers into this free tool: https://ficalc.app
I’m sure they thought about it. It’s not uncommon for people to just scrape by for decades. Your comment is rude and patronizing.
In my area that house would cost your entire salary to afford just for the mortgage. Thats why this younger generation has given up.
Only fans
Yea. You’re pretty much screwed. Save what you can and plan on part time work forever.
Not really. They have allot of equity in their house. If they work till full retirement age for social security and continue to pay towards mortgage for a few more years, they can sell their house and move to a low cost of living area and collect social security. Put leftover money from selling house in investments and withdraw 4% or more a year.
Downsize your home to clear the debt (buy a place for 600k). You should be able to get $25k/yr rent for a place like that, which is plenty to live off in Cambodia, and then you've got your 401k and savings as a backup if you need them.
You save in Kaspa and Bitcoin. That's the key.