From looking at the past behavior displayed by Larry and Barb, there is zero chance they will wait it out until he is 67 to collect social security. Everything on this white board shows extreme short term thinking. He'll start collecting at 62 and worry about the long term ramifications of that decision down the road.
My question (based on Josh’s comment that he was making “big money”) is why he has so little saved? And THEN goes out and ensnares himself into a $2100 per month mortgage payment in retirement? Some folks are put on this earth for no other reason than to serve as a warning to others……..😮
Good video. I was laid off at 59. Couldn't get a job so, I retired. Best decision for my health. Its been 13 years and retirement is great. Saving ahead paid off. Good Luck, Rick
I like these kinds of videos from Josh. Reduces the anxiety and makes sense. I am 59, still employed - but for how long? - with similar circumstances and a little more in assets, hoping to pay off the final $250K on the mortgage before being out of work.
I know the feeling Larry. I lost my job in the March 2020 lockdowns at 50. My wife continues to work. I'm not returning. I don't miss one second of it. We have a large taxable account and rely on the dividends to pay bills. Very little debt helps too.
Enjoyed the video. Good thoughts. They can make it. Young people need to understand, they must prepare for the future, so they can handle these things when they happen, cause they will happen.
Another great real life video Josh. Even if you don't get laid off this is a plan a lot of us can go by - especially using the raise Barb gets once Larry starts his SS.
Great breakdown and plan. After he gets out of the woods on the high cost of COBRA he’s got a huge benefit and safety net because of ACA/Obamacare. Didn’t know about that benefit of Obamacare and BCBS being similar. Nice insight. Larry waiting & getting Social Security at higher amount and Barb getting the bump for spousal benefit is huge. Thank God for Obamacare and SS. 👍👍
He can survive but not much extra there. There are so many one time expenses that come up. A major appliance each year housing expenses, car you name it.
new tires/auto repair, a hip replacement or other medical illness that will one or both of them, storm blows down a large tree, larry gets a DUI from depression or other legal entanglement,...all examples of things that life will throw at you that will suck up your savings....Larry needs to get a job for the next few years...maybe time to look at consulting to both bring in money and provide healthcare...he needs a 4 - 6 yr year bridge
Just from the starting numbers, it is clear to me that Larry did not save up enough assets to make it here. I recommend going back to (some kind) work until 66. Wife too. Save that cash, you will need it in the future.
I looked at all my expenses and taking out medical the best I can figure is 3350 per month and that does not take into account federal taxes. I live in Texas. That is no mortgage or car payment.
Thanks John! I'm 62 and still working making a little over 6 figures. Except for the fact that I will have a pension that will pay me about $3500 a month and i'm single, my portfolio is almost an exact match to the one you describe in your podcast. All this to say this gives me another good benchmark for me to look at. Thanks again.
You should strongly consider retiring, look into all Josh's videos to understand why and how much healthy time people really have to enjoy in retirement.
I can’t for the life of me figure out why they wouldn’t finds something they can pay cash for and do some type of work assuming they are healthy enough, maybe his own business.
At 61 Larry has immense experience and can offer it to multiple companies as a freelancer without requiring any of the overhead burden that makes regular employees so expensive.
Once one spouse dies, the $3,000 SS for him and $1,125 SS for Barb will decrease by $1,125. In addition, there is a reduction for the survivor from the 3,000 dollar amount if the survivor takes survivor's benefits prior to survivor FRA - approx 66 and 6 months depending on DOB of survivor. Would it not be better to delay closer to age 70 to increase the survivor benefit? After all, the only sure thing "paycheck replacement" will be the Social Security check.
I agree. I never include the lesser of the SS because there’s a good chance one of us will outlive each other. For example people in the fed gov’t get FERS but survivor benefits are 50%.
He is ok he should hold steady and do what he needs to be done. There are people with nothing at that age and still working that will be 95pct of America
Interesting analysis Josh. A few minor quirks: As pointed out elsewhere in the comments, "Larry" and "Barb" will need to take around $20k/year from their IRA, so they'll have enough income to qualify for ACA credits. Also, "Barb"'s SS spousal benefit reduction for taking early is 35%, so her combined benefit after "Larry" begins drawing his check would be around $1025/mo.
Part time job would be a good idea. Could bring in from $1,000 to $2,000 per month. Sell the house and downsize could also help. The budget you give is doable, but I think a part time job would take the edge off.
You’d be surprised how difficult it is for people like Larry to even get a part time job that doesn’t demean him or pay him crap. Nine times out of ten it’s not worth it unless you absolutely have to.
@@Blublod even at mid fifties I get what your saying, for a bit in between jobs I stocked shelves in a grocery store overnight, now it did bring in almost 5k for 3 months which did offset some bills. Yes it sucked but I didnt drain 5k out of savings.Now what do you do with the 300k in cash? how do you maximize a safe return? as of now I bonds can give you 8 % for a year, 10k him, 10k her 10 k each gifted so thats 40k making 8% for a toatal of 3200 just there, now you still have 260k in cash well 200k means talk to banks and find best cd possible even at 1% thats another 2k for the year in interest, that alone takes a month of living expenses off the table. Done each year it adds up. Add in small PT job and there ya go. You need income to qualify for Obummer care..thats the intersest and the pt work...
Really confusing to hear a year of COBRA when this video was posted in October. If he "just got laid off" he should only need a couple months max of COBRA and be shopping now for a Marketplace plan to begin Jan 1. The income used for the Premium Tax Credit is for the current year of the insurance (for ex: 2023 income for 2023 health insurance.) You confused a friend of mine into thinking he would always need to pay for a year of COBRA before going on a Marketplace plan!
He is making assumption his IRA become $400K from $250K without considering the what if it become $150K instead due to the market down turn. It's good to be optimistic but the pesimistic factors should be accounted for just in case. I would keep working (or find another job) if I were Larry until he is 65.
If Larry has "zero" income by living on cash in 2023, won't he get pushed into medicaid rather than ACA and as such his asset base will be too high and he'll get screwed? Got to finesse the income to make at least enough to qualify for max ACA credits, right?
Idts...his health would have to take a sharp decline in order to qualify for Medicaid. Medicaid would require him to be at the point of needing skilled NH care.
Agree I went on Medicaid because of no income I am living off of cash savings til 64 or 65 when I start drawing s.s. Went from $1200 cobra to $1500 cobra to zero on Medicaid!
@@allenbazar2707 So, are you talking about being on SSDI? Everyone I've ever heard of that qualifies for Medicaid has to spend down their resources to $2,000 in order to qualify.
This is correct. One solution: "Larry" can take just enough from his IRA to qualify him for ACA credits, which IIRC would be around $20k for a family of two.
What about having Barb pay back the 6ish months of SS she has received and use a bit more cash to keep her from taking a haircut now and later on spousal benefit?
I just don't understand this. They have $ 650,000 in cash. High-yield savings accounts pay 5% so they could have around 2000$ per month after taxes just from the % without touching the money plus $750 and his ss
Good plan Josh but if Larry dies first like you said, that SS payment to Barb drops significantly and the mortgage doesn’t. I think she ll be in trouble if that happens. I dunno.
All expenses you round down all income you round up like sugar coating and what about 6500 deductible for each every year on insurance plan and dump the over priced house
Did you clean the board with vinegar? Works good for me. Also, with low low income one might qualify for SNAP. It's income only (not an asset test) to qualify. Another point for ACA (obamanation healthcare) GA did not opt in for medicaid expansion so one needs to have income of at least the FPL which will be 14,580 in 2023 for an individual (not sure about married) to be eligible for aca tax credits.
John is 55 Have been out of work for a long time. I am very recently being paid as a Caregiver for my elderly father. I dont see this lasting too long, and I am afraid for the future. Very unnerving.
Ty, looking at the numbers, I'm feeling hopeful. In my case, my mortgage is 575 and I'm single. I plan on working a seasonal tax acct job, which should net me 25 to 30k or so. I'm similar in age. Maybe I can get rid of the COJ airport job, once and fir all.
A reverse mortgage strategy can still be used by using this simple strategy. Step #1 take approximately 180k from the cash to pay down the principal to 60% equity. Step # 2 use the reverse mortgage to pay off the remaining 40% equity. Step #3 use remaining balance of cash for expenses for the next 4 years till Larry's social security kicks in. By using this strategy Larry and Barbara eliminated the principle and intrest portion of the mortgage payment by approximately $1600 monthly which reduced the monthly expenses to $3400 . They are receiving $4125 monthly from social security and the expenses are $3400 this is leaving them with an extra $725 a month that they can enjoy or invest back into the brokerage account . Easy peasy .
Yourself at 70 and your spouse at 62. THat makes the most sense to me for a spouse with their own work history and trying to maximize the lifetime benefit for both of you.
Wow. Mistakes were made. Everyone knows you shouldn’t carry mortgage into retirement. I would advise them to sell that house buy a smaller less expensive house outright. I’m assuming we are attempting to get to social security because Larry didn’t save enough for retirement with his high paying job? They need to reduce their expenses pronto. 2 retired people should not be living on the same amount as a family with a mortgage. 🤦🏾♀️. Sorry. I see it. He didn’t save enough for retirement
If Larry’s FRA is 3000, he def was making good money. He should have a ton more money than a $250k IRA. He should have had at least a million between 401k (none?) and IRA.
Depends on how long he was making the increased amount. If your career takes off in the last decade, your SS will reap the benefits, but your total savings will not due to previous years lack of compounding on a lower contribution amount. At least that is what happened to my career and I thank the heavens every day that as a single person I actually got a tad more than Larry at FRA and was very close to his investment total. I did not have a mortgage however and that was also beyond a blessing.
Actually, because of the standard deduction, almost $28K for married couples in 2023, Larry should be reducing is taxable IRA. If he stays under the standard deduction, then his IRA distribution will have zero tax consequences despite being taxable. Then use cash to cover the difference.
I would agree OR you could do Roth conversions for the $28k. each year and end up with zero taxes. You always want to consume the standard deduction each year ~ don’t let it go to waste 💰
Am I missing something. Why not just take out 10k from IRA and do 10k Roth conversion. The standard deduction is 25k or so? This is old vid from 2020? The rest come from cash. Or do all Roth conversion of 20k or whatever the standard deduction. 20k taxable income still puts them in good ACA? Don’t do in year of retirement because there no probably already too much taxable income. Do the following year.
I would add at least 5% for inflation for his yearly needs. Did his wife have her own 40 quarters in to file for SS on her behalf at age 62? I didn't hear that she did.
It may all work out, but It would be best for Larry to "reinvent" himself to create an income stream. Find a part-time job selling Medicare Advantage Plans, Insurance, some other independent contractor work for himself job. Income stream can build over time, but it will help to offset some of the money being spent from now until later.
If your wife doesn't get social security because she stayed home to take care of kids and parents would you defer collecting social security to 70 (she would get spousal benefit then)?
So the couple already brings in 3750 right off the bat per month. This is where this becomes a projection. There are funds (650k) that can make 10% on dividends. That would be a extra 5400/mth (minus taxes) that would be a total of 9166/mth. They good. But personally i would drop the house and go live in a trailer and move whenever god sends me. I wouldnt want to be in a certain state for more than a few months.
He should consider putting 15,000 of the 300k in an IRA. That will lower his ACA income and probably get him a much lower premium than 1300. If, as you said, he has only made 60k so far this year, the subsidies are generous. I know in my state they are. Good luck to them both.
Not unusual. I’m 59 and mine in $3000. But that’s fine. I don’t mind carrying that into retirement. I’ve budgeted about $5k a month for housing for life. That’s mortgage, taxes, insurance, HOA, and sewer. I’m a bit trapped anyhow. I’ve got a fix 2.9%. Don’t want to give that up.
Why can't his wife support him and provide for the whole family and it's future? What happened to women's demands for equality? Or is that just equality in the benefits, not the responsibilities?
He has 450k between the cash the IRA and brokerage account .He only needs to get a 2.70% return over the next 4 years to get to 500k . Currently 4year c.ds are paying over 3%.
Great video to show that someone with a mortgage and modest retirement savings can lose his job at 61 and retire without a lot of stress. Social Security is amazing!
they are trying to get rid of social security. How they think this is their money, I cannot fathom. I have paid into it for over 45 years. I will never get what I put in out of it regardless. This is the people's money, and that isn't my opinion, it is a fact. I have to vote dem because of that. How many people want to care for, pay for their parents??? Do you have the room for them to move in with you? Are you prepared to pay their expenses, including prescriptions and then the home care? I love my parents, so if it comes to that, I will do it. But there is something very wrong with the mentality that money we put in is no longer ours.
Josh, stop the generalizations. Just tell everyone they need to put together a detailed plan. I have friends whose expenses went thru the roof w travel, hobbies, golf, more dining out, home improvements, etc. You can't generalize.
70.5 here, still working full-time. Have $300k in 401k, a small pension from another employer; am paying down a $180k mortgage balance that obviously my 401k will easily cover. Wife gets $700/mo SS and is retired. I maxed out Social Security at 70 so our income with small pension after retirement will be $5k a month with $4.5k expenses and therefore some surplus. I'm thinking to stay at my workplace to snag my employer's bonus next March (a long 5 months from now). I really could leave now, but I'm paid my lifetime maximum and saving more than ever. My health is very good so that is a draw to leave now!
From looking at the past behavior displayed by Larry and Barb, there is zero chance they will wait it out until he is 67 to collect social security. Everything on this white board shows extreme short term thinking. He'll start collecting at 62 and worry about the long term ramifications of that decision down the road.
My question (based on Josh’s comment that he was making “big money”) is why he has so little saved? And THEN goes out and ensnares himself into a $2100 per month mortgage payment in retirement? Some folks are put on this earth for no other reason than to serve as a warning to others……..😮
I'm 55 and living 6 pack to 6 pack.
I've switched to Burbon as it's too hard to work off those beer carbs over 60.
If he is currently 61 his FRA is 67
I ❤ these scenario type videos. Thank you!
Good video. I was laid off at 59. Couldn't get a job so, I retired. Best decision for my health. Its been 13 years and retirement is great. Saving ahead paid off. Good Luck, Rick
I'm in the UK and those health insurance costs make me shiver.
I like these kinds of videos from Josh. Reduces the anxiety and makes sense. I am 59, still employed - but for how long? - with similar circumstances and a little more in assets, hoping to pay off the final $250K on the mortgage before being out of work.
I know the feeling Larry. I lost my job in the March 2020 lockdowns at 50. My wife continues to work. I'm not returning. I don't miss one second of it. We have a large taxable account and rely on the dividends to pay bills. Very little debt helps too.
Enjoyed the video. Good thoughts. They can make it. Young people need to understand, they must prepare for the future, so they can handle these things when they happen, cause they will happen.
Another great real life video Josh. Even if you don't get laid off this is a plan a lot of us can go by - especially using the raise Barb gets once Larry starts his SS.
Great breakdown and plan. After he gets out of the woods on the high cost of COBRA he’s got a huge benefit and safety net because of ACA/Obamacare. Didn’t know about that benefit of Obamacare and BCBS being similar. Nice insight. Larry waiting & getting Social Security at higher amount and Barb getting the bump for spousal benefit is huge. Thank God for Obamacare and SS. 👍👍
He can survive but not much extra there. There are so many one time expenses that come up. A major appliance each year housing expenses, car you name it.
new tires/auto repair, a hip replacement or other medical illness that will one or both of them, storm blows down a large tree, larry gets a DUI from depression or other legal entanglement,...all examples of things that life will throw at you that will suck up your savings....Larry needs to get a job for the next few years...maybe time to look at consulting to both bring in money and provide healthcare...he needs a 4 - 6 yr year bridge
Just from the starting numbers, it is clear to me that Larry did not save up enough assets to make it here. I recommend going back to (some kind) work until 66. Wife too. Save that cash, you will need it in the future.
Agree, especially with the expense side on his ledger. Even some part-time work would slow down cash burn and be good for morale.
i agree. he's running very thin. what happens if he needs a car or some huge unexpected home repair? back to work lar and take babs with you.
I looked at all my expenses and taking out medical the best I can figure is 3350 per month and that does not take into account federal taxes. I live in Texas. That is no mortgage or car payment.
Sell that house! Time to downsize!
Absolutely pay off house or sell
Thanks John! I'm 62 and still working making a little over 6 figures. Except for the fact that I will have a pension that will pay me about $3500 a month and i'm single, my portfolio is almost an exact match to the one you describe in your podcast. All this to say this gives me another good benchmark for me to look at. Thanks again.
You should strongly consider retiring, look into all Josh's videos to understand why and how much healthy time people really have to enjoy in retirement.
Brasso metal polish is great for cleaning whiteboards.
I can’t for the life of me figure out why they wouldn’t finds something they can pay cash for and do some type of work assuming they are healthy enough, maybe his own business.
At 61 Larry has immense experience and can offer it to multiple companies as a freelancer without requiring any of the overhead burden that makes regular employees so expensive.
For the $300K, I would build a T-Bill ladder and get ~5% interest and still have access to the money when needed.
Once one spouse dies, the $3,000 SS for him and $1,125 SS for Barb will decrease by $1,125. In addition, there is a reduction for the survivor from the 3,000 dollar amount if the survivor takes survivor's benefits prior to survivor FRA - approx 66 and 6 months depending on DOB of survivor. Would it not be better to delay closer to age 70 to increase the survivor benefit? After all, the only sure thing "paycheck replacement" will be the Social Security check.
I agree. I never include the lesser of the SS because there’s a good chance one of us will outlive each other.
For example people in the fed gov’t get FERS but survivor benefits are 50%.
He is ok he should hold steady and do what he needs to be done. There are people with nothing at that age and still working that will be 95pct of America
Can Larry apply for unemployment? That would help out cash flow in the short term.
Yes he can.
I cannot tell you how much the White board adds to your message. Thank you Josh --- Gordon
It's the way it bangs like a drum as soon as the pen goes near it .
He should have investigated getting a short-term insurance policy instead of expensive cobra. Pre-existings could be a problem though.
Interesting analysis Josh. A few minor quirks: As pointed out elsewhere in the comments, "Larry" and "Barb" will need to take around $20k/year from their IRA, so they'll have enough income to qualify for ACA credits. Also, "Barb"'s SS spousal benefit reduction for taking early is 35%, so her combined benefit after "Larry" begins drawing his check would be around $1025/mo.
Part time job would be a good idea. Could bring in from $1,000 to $2,000 per month. Sell the house and downsize could also help. The budget you give is doable, but I think a part time job would take the edge off.
You’d be surprised how difficult it is for people like Larry to even get a part time job that doesn’t demean him or pay him crap. Nine times out of ten it’s not worth it unless you absolutely have to.
I thought about that. I see lots of older people working at my Home Depot. They see to enjoy helping people.
@@yankinwaoz they are wasting the last few years of good health away. Most out of fear as Sandlen explains how most dont need itn
@@Blublod even at mid fifties I get what your saying, for a bit in between jobs I stocked shelves in a grocery store overnight, now it did bring in almost 5k for 3 months which did offset some bills. Yes it sucked but I didnt drain 5k out of savings.Now what do you do with the 300k in cash? how do you maximize a safe return? as of now I bonds can give you 8 % for a year, 10k him, 10k her 10 k each gifted so thats 40k making 8% for a toatal of 3200 just there, now you still have 260k in cash well 200k means talk to banks and find best cd possible even at 1% thats another 2k for the year in interest, that alone takes a month of living expenses off the table. Done each year it adds up. Add in small PT job and there ya go. You need income to qualify for Obummer care..thats the intersest and the pt work...
Not a lot extra to go around. Don’t know the rest of the story but I would say Larry should take a part time job for a few years
Really confusing to hear a year of COBRA when this video was posted in October. If he "just got laid off" he should only need a couple months max of COBRA and be shopping now for a Marketplace plan to begin Jan 1. The income used for the Premium Tax Credit is for the current year of the insurance (for ex: 2023 income for 2023 health insurance.) You confused a friend of mine into thinking he would always need to pay for a year of COBRA before going on a Marketplace plan!
These type of videos are awesome content
He is making assumption his IRA become $400K from $250K without considering the what if it become $150K instead due to the market down turn. It's good to be optimistic but the pesimistic factors should be accounted for just in case. I would keep working (or find another job) if I were Larry until he is 65.
Courageous thx mate
If Larry has "zero" income by living on cash in 2023, won't he get pushed into medicaid rather than ACA and as such his asset base will be too high and he'll get screwed? Got to finesse the income to make at least enough to qualify for max ACA credits, right?
Idts...his health would have to take a sharp decline in order to qualify for Medicaid. Medicaid would require him to be at the point of needing skilled NH care.
Agree I went on Medicaid because of no income I am living off of cash savings til 64 or 65 when I start drawing s.s. Went from $1200 cobra to $1500 cobra to zero on Medicaid!
@@allenbazar2707 So, are you talking about being on SSDI? Everyone I've ever heard of that qualifies for Medicaid has to spend down their resources to $2,000 in order to qualify.
This is correct. One solution: "Larry" can take just enough from his IRA to qualify him for ACA credits, which IIRC would be around $20k for a family of two.
What about having Barb pay back the 6ish months of SS she has received and use a bit more cash to keep her from taking a haircut now and later on spousal benefit?
I just don't understand this. They have $ 650,000 in cash. High-yield savings accounts pay 5% so they could have around 2000$ per month after taxes just from the % without touching the money plus $750 and his ss
If they sold the house how come they have a mortgage
FYI. Med. Part B premium is now 170,10, but will be reduced to 164.90 as of 2023.
Ms. B. Churchill
Get rid of Cobra, I am laid off at 61 and found good coverage for $489/mo.
Good plan Josh but if Larry dies first like you said, that SS payment to Barb drops significantly and the mortgage doesn’t. I think she ll be in trouble if that happens. I dunno.
If he dies, Barb sells and moves in with the kids (or in a cheaper place) to be the live in grandma so the mrs can work.
All expenses you round down all income you round up like sugar coating and what about 6500 deductible for each every year on insurance plan and dump the over priced house
You are assuming he will need to reach that deductible each year. Maybe he will if he is a fat diabetic with no self control.
Im from uk none of this makes sense
Did you clean the board with vinegar? Works good for me.
Also, with low low income one might qualify for SNAP. It's income only (not an asset test) to qualify.
Another point for ACA (obamanation healthcare) GA did not opt in for medicaid expansion so one needs to have income of at least the FPL which will be 14,580 in 2023 for an individual (not sure about married) to be eligible for aca tax credits.
John is 55 Have been out of work for a long time. I am very recently being paid as a Caregiver for my elderly father. I dont see this lasting too long, and I am afraid for the future. Very unnerving.
Ty, looking at the numbers, I'm feeling hopeful. In my case, my mortgage is 575 and I'm single. I plan on working a seasonal tax acct job, which should net me 25 to 30k or so. I'm similar in age. Maybe I can get rid of the COJ airport job, once and fir all.
What income do they have to qualify for ACA?
20k or so.
Can't believe someone at that age purchasing a house with a large mortgage.
Clean the whiteboard with Mop & Glo
Why not a part time job for Larry so he does'nt draw down so much cash ?
Wouldn’t Larry’s FRA be 67?
Yes. I am 61, turning 62 in Dec, and mine is 67
@@jdgolf499 57 in Apr, gonna take it asap at 62
Good logic , some flawed figures that’s not a true, that hundred thousand is more like 80/85 k not including any un foreseen expenses.
A reverse mortgage strategy can still be used by using this simple strategy.
Step #1 take approximately 180k from the cash to pay down the principal to 60% equity.
Step # 2 use the reverse mortgage to pay off the remaining 40% equity.
Step #3 use remaining balance of cash for expenses for the next 4 years till Larry's social security kicks in.
By using this strategy Larry and Barbara eliminated the principle and intrest portion of the mortgage payment by approximately $1600 monthly which reduced the monthly expenses to $3400 .
They are receiving $4125 monthly from social security and the expenses are $3400 this is leaving them with an extra $725 a month that they can enjoy or invest back into the brokerage account .
Easy peasy .
Yourself at 70 and your spouse at 62. THat makes the most sense to me for a spouse with their own work history and trying to maximize the lifetime benefit for both of you.
Wow. Mistakes were made. Everyone knows you shouldn’t carry mortgage into retirement. I would advise them to sell that house buy a smaller less expensive house outright. I’m assuming we are attempting to get to social security because Larry didn’t save enough for retirement with his high paying job? They need to reduce their expenses pronto. 2 retired people should not be living on the same amount as a family with a mortgage. 🤦🏾♀️. Sorry. I see it. He didn’t save enough for retirement
I don’t understand where 500k in investments comes from?
Those numbers for ACA are way too low
What would happen if he dies before 66 when he files for her spousal benefit?
If Larry’s FRA is 3000, he def was making good money. He should have a ton more money than a $250k IRA. He should have had at least a million between 401k (none?) and IRA.
...my thought exactly...doesn't make sense...
You never know with somebody else's predicament sir
Depends on how long he was making the increased amount. If your career takes off in the last decade, your SS will reap the benefits, but your total savings will not due to previous years lack of compounding on a lower contribution amount. At least that is what happened to my career and I thank the heavens every day that as a single person I actually got a tad more than Larry at FRA and was very close to his investment total. I did not have a mortgage however and that was also beyond a blessing.
He says “IRA slash 401(k). He’s going to roll it to a IRA.” So i take it as this is a 401(k) that’s in the process of getting rolled over to a IRA.
Should he ladder out the cash in CD'S, or buy some relatively short term Treasuries?
Actually, because of the standard deduction, almost $28K for married couples in 2023, Larry should be reducing is taxable IRA. If he stays under the standard deduction, then his IRA distribution will have zero tax consequences despite being taxable. Then use cash to cover the difference.
I would agree OR you could do Roth conversions for the $28k. each year and end up with zero taxes. You always want to consume the standard deduction each year ~ don’t let it go to waste 💰
Am I missing something.
Why not just take out 10k from IRA and do 10k Roth conversion.
The standard deduction is 25k or so? This is old vid from 2020?
The rest come from cash.
Or do all Roth conversion of 20k or whatever the standard deduction.
20k taxable income still puts them in good ACA? Don’t do in year of retirement because there no probably already too much taxable income. Do the following year.
I would add at least 5% for inflation for his yearly needs. Did his wife have her own 40 quarters in to file for SS on her behalf at age 62? I didn't hear that she did.
A good portion of any future inflation needs will be covered by social security which makes up more than 80% of the expenses.
Well of course she did otherwise no SS.
I think getting rid of the mortgage with cash and then dipping into the IRA just enough to qualify for the ACA free premium would be ideal.
61 yo with 5% equity in house = upside-down on the casa with prices likely declining. Take a PT job?
You can have money in the market that never grows. Don't assume your money grows with investing
It may all work out, but It would be best for Larry to "reinvent" himself to create an income stream. Find a part-time job selling Medicare Advantage Plans, Insurance, some other independent contractor work for himself job. Income stream can build over time, but it will help to offset some of the money being spent from now until later.
If your wife doesn't get social security because she stayed home to take care of kids and parents would you defer collecting social security to 70 (she would get spousal benefit then)?
Is Larry in good health without pre existing conditions..? A bridge the gap STM with an indemnity supplement could cut his healthcare expense in half.
5k a month that’s a ton of money like twice what we live off now how can one have such a income and not save more
So the couple already brings in 3750 right off the bat per month. This is where this becomes a projection. There are funds (650k) that can make 10% on dividends. That would be a extra 5400/mth (minus taxes) that would be a total of 9166/mth. They good.
But personally i would drop the house and go live in a trailer and move whenever god sends me. I wouldnt want to be in a certain state for more than a few months.
He should consider putting 15,000 of the 300k in an IRA. That will lower his ACA income and probably get him a much lower premium than 1300. If, as you said, he has only made 60k so far this year, the subsidies are generous. I know in my state they are. Good luck to them both.
A $2000/mo mortgage at 60 years old. Yuck
He needed to live somewhere after selling his house to take out the cash. Better than renting in my book.
@@Blublod something more affordable
Not unusual. I’m 59 and mine in $3000. But that’s fine. I don’t mind carrying that into retirement. I’ve budgeted about $5k a month for housing for life. That’s mortgage, taxes, insurance, HOA, and sewer. I’m a bit trapped anyhow. I’ve got a fix 2.9%. Don’t want to give that up.
Some peoples lives are not textbook. Just saying. We do not know his circumstances. Not, does it matter.
Why can't his wife support him and provide for the whole family and it's future?
What happened to women's demands for equality?
Or is that just equality in the benefits, not the responsibilities?
He has the Max SS amount yet only has a small amount of savings and a less expensive home. That can’t be right
Not sure how you say is IRA will be worth 500K. That is a big unknown. Past performance is no guarantee of future performance. 😀
He has 450k between the cash the IRA and brokerage account .He only needs to get a 2.70% return over the next 4 years to get to 500k .
Currently 4year c.ds are paying over 3%.
The problem is if hes 61 his full retirement age is 67 so that's 6 more years
Great video to show that someone with a mortgage and modest retirement savings can lose his job at 61 and retire without a lot of stress. Social Security is amazing!
they are trying to get rid of social security. How they think this is their money, I cannot fathom. I have paid into it for over 45 years. I will never get what I put in out of it regardless. This is the people's money, and that isn't my opinion, it is a fact. I have to vote dem because of that. How many people want to care for, pay for their parents??? Do you have the room for them to move in with you? Are you prepared to pay their expenses, including prescriptions and then the home care? I love my parents, so if it comes to that, I will do it. But there is something very wrong with the mentality that money we put in is no longer ours.
Why not carry on working? Any income will offset against those $5k a month expenses.
What about the tax free LTCG, especially with that cash cow sitting there.
Start his retirement one year early. Next question.
Josh, stop the generalizations. Just tell everyone they need to put together a detailed plan.
I have friends whose expenses went thru the roof w travel, hobbies, golf, more dining out, home improvements, etc.
You can't generalize.
$300k in cash at any age is quite good.
LARRY NEEDS TO GET A JOB.
I wouldn't trust a financial guy who couldn't do 12 x 875 in his head
Me either
Old video…
Yes, that would account for the 2020 comment and the FRA age.
70.5 here, still working full-time. Have $300k in 401k, a small pension from another employer; am paying down a $180k mortgage balance that obviously my 401k will easily cover. Wife gets $700/mo SS and is retired. I maxed out Social Security at 70 so our income with small pension after retirement will be $5k a month with $4.5k expenses and therefore some surplus. I'm thinking to stay at my workplace to snag my employer's bonus next March (a long 5 months from now). I really could leave now, but I'm paid my lifetime maximum and saving more than ever. My health is very good so that is a draw to leave now!
ACA short for Obama care
Jabba, Jabba. 😷
Spoiler alert he should rrrrruuuunnnn.