With excess income to manage, Jlyn and her husband are 20 years from retirement and considering a second home. Should they buy now or keep saving?
Reese was recently laid off, and she’s struggling to choose between two financially responsible paths. Should she continue her long-term disability insurance? Or is it wiser to save money?
Kip’s youngest has finally graduated from college, and he’s looking forward to an early retirement. But, with the eyewatering costs of long-term healthcare, is this still a viable path?
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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Jlyn asks (at 02:31 minutes): How do you balance competing financial goals when you’re doing well, but want to do even better?
My husband and I are both 41, with three kids ages 8, 11, and 13. I’m a physician, and he works as a commercial project manager. Together, we earn $350,000 a year. We tithe 10 percent, invest 18 percent, and still have a $3,000 monthly surplus — an excess income that gives us options after all our expenses.
Our primary home is worth over $1 million, with a $550,000 mortgage that we expect to pay off by retirement. We’ve already paid off $300,000 in med school debt, so aside from the mortgage, we’re debt-free.
We’ve saved $500,000 toward retirement so far, and our kids’ 529s are funded by a $980/month rental on part of our home. We’re on track to retire around age 60 to 62, and now we’re wondering whether to buy a second property.
We’d like to use it extensively in retirement, and it could also serve as a short-term rental for now. But we’re also juggling other goals—saving for college, cars, weddings, and continuing to build our retirement accounts with our excess income.
How should we prioritize between investing our excess income and purchasing a second home? And what are the biggest financial risks we should watch out for when considering a lifestyle-based second property that we hope to eventually use for part of the year in retirement?
Reese asks (at 28:51 minutes): I was recently laid off and enrolled in COBRA, which is painfully expensive—but I’ve already hit my $7,000 out-of-pocket max for the year because I tore my ACL. So, keeping that healthcare coverage makes sense while I’m recovering and job-hunting.
But should I also continue paying for the long-term disability insurance offered through my former employer?
Realistically, it could take six months to a year to find a new job. And while the risk of needing healthcare during that time feels high, the risk of becoming disabled long-term seems much lower.
So here’s my question: Should I drop the long-term disability coverage for now, and if my next employer doesn’t offer it, look into buying it on the private market? Or is there an advantage to sticking with the same plan and provider for continuity’s sake?
With health insurance, switching means resetting your deductible—but I don’t think that’s the case with disability insurance. What should I know about switching disability policies, and how should I weigh the cost versus the risk?
Kip asks (at 40:55 minutes): What’s the smartest way to prepare for the massive cost of long-term care, especially if you’d rather retire now?
I’m 47, my wife is 48, and we live in a western suburb of Atlanta. Our youngest just finished college, and I’d like to retire, mainly because I hate my job. But it pays well, so I’ve kept at it. We live very frugally, and I could cover our current expenses if I quit now.
The problem is long-term care. Skilled nursing facilities in our area cost around $10,000 a month per person. That’s $20,000 a month if both my wife and I ever needed it. Based on the four percent rule, I know I can’t afford that.
I’ve looked into long-term care insurance, but the cost, vague terms, and potential for rising premiums make me skeptical. It seems like the most responsible thing to do is to keep working so I can self-fund those future costs.
And if we never need it, the money could become an inheritance for our kids. Is that the right move—or is there a better way to approach this?
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