Veteran, 57, on Disability: How to Convince Wife to Downsize and Retire Together
Understanding Your Financial Situation and Retirement Plans
You are writing to me for the second time, and it seems that your previous plans to retire and move to the Philippines with your wife have been disrupted. You are now medically disabled and unable to work, which has thrown your retirement plans off course. This is a challenging situation, but there are ways to navigate your next financial steps.
You are 52 years old, and your wife is 57. The two of you still live in Maryland. Your father-in-law is considering moving back to the United States and living full-time, so the entire family is looking at relocating to a warmer area, possibly South Carolina or Texas. It’s important for you to be near a VA hospital due to your ongoing medical care, and ideally, you would like to be close to the beach.
You’re aiming to spend between $250,000 and $300,000 on a three-bedroom, two-bath rancher. Your wife wants to continue working for another eight years, but you're trying to convince her to retire at 60. You need help understanding whether your current savings are sufficient for retirement and whether the math supports a 4% to 5% annual withdrawal over the next 20 to 25 years.
Current Financial Assets and Liabilities
Your liquid savings amount to $150,000, and you also have a $100,000 CD earning 4.5%, a $20,000 high-yield savings account with a 3.6% interest rate, and a $30,000 emergency fund. In addition, you have a $300,000 investment portfolio that is split 80% in stocks and 20% in bonds. You also have $115,000 in a 403(b), $75,000 in stocks, $20,000 in a traditional IRA, $8,000 in a Roth IRA, and $20,000 to $25,000 in gold coins and watches.
Your home is valued at around $400,000, and you have only $50,000 left on your mortgage. Both you and your wife have life-insurance policies worth $250,000 each, which you've been paying for the last 25 years. You also own all three of your vehicles outright.
Income and Financial Challenges
You currently receive $2,100 per month from Social Security before taxes, which covers your mortgage. You also get a VA disability pension of $347 per month and are awaiting an increase that could add about $1,200 to your monthly income. Your wife is now the primary earner, making approximately $90,000 a year from salary and bonuses. You both continue to file taxes jointly.
You’re wondering what options you have to make your money grow. One question you’ve raised is whether you should cash out your life-insurance policies. You’ve tried to diversify your investments and have taken on as much risk as you're comfortable with. However, you're considering selling some of your stock positions in your portfolio and are unsure where to reinvest the proceeds.
Seeking Financial Advice
You've met with financial advisers in the past, but you haven’t agreed with their recommendations. You've also sought advice from family members who are in finance, but they've pushed you toward their firms’ products, which has created tension. You're concerned about choosing an adviser based on trust, shared goals, and expertise rather than personal connections.
Retirement Considerations
Retirement is a big decision, and it's important to consider both your financial readiness and your emotional well-being. Your wife may not be ready to retire just yet, and pushing her could lead to future regrets. It’s essential to respect her timeline and ensure she feels confident in her decision.
From a financial standpoint, you both have more than enough to retire comfortably. With your combined assets, including your home equity, you have nearly $1.2 million in investable funds. A 4% to 5% withdrawal rate from your total assets could provide you with $34,000 to $42,500 annually, plus your Social Security and VA benefits. This would bring your total income to around $77,000 to $85,000 per year without needing your wife’s contributions.
Planning for the Future
If you plan to retire at 60, your wife will not be eligible for Social Security until she turns 62 or later. If she claims benefits at 62, she’ll receive significantly less than her full benefit. Waiting until 67 or even 70 could increase her monthly payments by up to 8% per year.
It’s also important to consider inflation and how your expenses will grow over time. A 3% inflation rate and a 5.5% return on your investments could allow you to maintain a comfortable lifestyle while leaving a substantial portion of your savings intact.
Choosing the Right Financial Adviser
When selecting a financial adviser, it’s crucial to find someone who acts in your best interest. Not all advisers are fiduciaries, so it’s important to ask questions and understand their approach. Avoiding family members as advisers can help prevent conflicts of interest and ensure you receive unbiased advice.
Ultimately, your financial situation is strong, and with careful planning, you can achieve a secure and fulfilling retirement. Whether you choose to move to South Carolina, Texas, or somewhere else, your focus should remain on maintaining your health, managing your finances wisely, and making decisions that align with your long-term goals.
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