Anonymous, 60, recently lost her job and is worried about retirement. She owns a paid-off triplex, living in one unit and renting the others for $30,000 a year. She used her 401(k) funds to buy the triplex and now has $50,000 in retirement savings and $150,000 in cash. She expects only $2,400 a month from Social Security at age 67. After losing her son two years ago, she’s seeking advice on managing her underfunded retirement.
Noelle, 40, and her husband, 49, want to cancel his whole life insurance policy. They are debt-free, own their home, and plan to retire soon, relying on Noelle’s $80,000 income. They have $504,000 in retirement savings. Should Noelle keep her $100,000 term life policy until she retires?
Sleepless in San Antonio, age 35, plans to retire at 45 but is concerned about how this will affect Social Security benefits, which is calculated based on the top 35 earning years. Should they work longer in order to boost their Social Security benefits?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Anonymous asks (at 02:13 minutes): I was recently laid off from a job I held for three and a half years. I’m 60 and not feeling confident about my ability to become re-employed.
I have $50,000 in 401k retirement funds, $150,000 in cash, and a paid-off triplex. I live in the smallest unit and rent out the other units short-term which generates $30,000 net per year.
It’s a long story, but I used my 401k funds as a down payment when I purchased my triplex. At the time, I was a single mom struggling to support kids during an economic recession.
It enabled me to generate income from a 401k that I otherwise couldn’t touch and it was vital to my survival then. Overall, it’s proved to be a positive move.
However, I’m 60 now and don’t have enough saved for retirement. I use the Rollover as Business Startups (ROBS) account and haven’t yet figured out an exit strategy.
I can probably get by on some part-time work and the $30,000 income from my triplex, but I feel uneasy. Do you have any thoughts on ROBS and my underfunded retirement account?
I lost my 24-year-old son to cancer nearly two years ago. And everything has changed. I don’t expect much Social Security, maybe $2,400 a month when I turn 67.
I have no real pile of money, but I have a house that makes a decent amount and I live here happily. What are your suggestions for me?
Noelle asks (at 43:15 minutes): How do you know when you no longer need life insurance?
I’m 40 and my husband is 49. We don’t have any children. We own our home and we don’t have debt. We plan to retire at 50, which would be next year for him and in 10 years for me.
We have $33,000 in cash savings and $504,000 in investments between our 401k, Roth IRA, brokerage account, and Health Savings Account (HSA).
We plan to live off my $80,000 annual income until I retire. When I retire at 50, he’ll be 59 and a half and we can start taking minimum distributions from his retirement accounts.
We want to cancel his whole life insurance policy and invest the money instead. I’m not a fan of whole life and it’s expensive. We pay $52 monthly for a $100,000 policy.
But we’re not sure about my life insurance policy. I have a $100,000 term life insurance policy for myself. We pay $16 a month for it.
I’m leaning toward keeping it until I retire. If something happens to me in the next ten years, he might need that income so he doesn’t have to return to work.
How do we think through this?
Sleepless in San Antonio asks (at 1:01:14 minutes): How do you think about the impact of early retirement on Social Security benefits?
I looked up my Social Security benefit recently. The government estimates I’d receive $3,800 monthly in Social Security if I retired at full retirement age.
The calculation is based on the average of the top 35 earning years of work. But if I’m 35 and plan to FIRE at 45, I’d have less than 35 working years.
In this case, should I lower the amount of Social Security benefits in my calculations of what I could expect for early retirement? How would I make this calculation?
Does it make sense for someone to delay their early retirement plans to achieve more Social Security earnings in their later working years?
Resources Mentioned:
- #472: Happiness Habits, with Harvard Professor Arthur Brooks – Afford Anything | Podcast
- #363: Two Types of Intelligence, with Harvard Professor Arthur Brooks – Afford Anything | Podcast
- From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life | Book
- The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future | Book
- The Creative Habit: Learn It and Use It for Life | Book
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