Eugene and his wife are retiring with a $10 million net worth and a guaranteed income that exceeds their annual budget. Do they still need things like life insurance and a financial advisor?
An anonymous caller’s HOA costs have doubled since she bought her condo. She’s wondering if it’s still a good investment. Should she keep it or sell it?
Nandini and her husband save tons every month toward no goal in particular. What should they do with all their extra cash?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Eugene asks: I’m 55, my wife is 56, and our two children are 20 and 17. We each make over $1 million a year as physicians.
We have $1.14 million in a joint brokerage, $3.5 million in our 401k’s, and $1.1 million in our Roth IRAs for a total of $5.6 million in retirement funds.
Our children’s education is fully funded with 529 plans. When my wife retires in four years, she’ll receive a $1 million payout from her employer.
Our primary home has a $197,000 mortgage at a 2.55 percent interest that’ll be paid off in four years. Our three homes are worth a total of $2.53 million.
At age 60, we’ll have a combined pension of $272,000 annually. At age 71, we expect to collect $96,000 a year from Social Security. We have free healthcare for life.
Our total retirement expenses, including travel, will be $265,000 a year.
What should we think about as we prepare for our retirement years? Should we pay for a financial planner that’ll cost $52,000 to $70,000 a year? What about our life insurance policies?
We have four indexed universal life policies with a cash value of $873,477. We stopped paying the premium on our two children, but we’re still paying ours at $1,000 and $500 a month.
My policy death benefit is $1.5 million and my wife’s policy is $750,000. We have separate term life insurance policies from our employers for $500,000 and $2 million respectively.
The policy has a downside protection of one percent and an upside cap of 7.5 percent. The 20-year rate of return is 5.64 percent compared to the S&P 500 return of 7.62 percent.
Some financial planners have wanted us to buy more life insurance. Others are using the asset under-management model.
We presently use a DIY financial planner that charges $4,000 a year, but we’re looking for other options. What should we do?
Anonymous asks: My husband and I plan to purchase a single-family home in late 2024 but we’re unsure what to do with our condo amid rising HOA costs.
I originally purchased my condo intending to rent it out one day. It’s a 1000 square foot, two bed, two bath in a walkable area with lots of development activity.
I bought it for $385,000 at a three percent interest rate. I have $285,000 left on the mortgage. The monthly payment is $1420 and it’s worth $440,000.
The HOA fees started at $350 a month. They’ve now risen to $640. It covers water, gas, trash, maintenance, landscaping, snow removal, insurance, and management fees.
We had a major plumbing repair that drained our community reserves and resulted in a special assessment. The building also anticipates a boiler replacement in five years.
My neighbor rented out a comparable unit for $2,350 a month, including all utilities except electricity. My cash flow at this rate would be tight after accounting for expenses and vacancies.
On the other hand, if I sell, I’m concerned that the rising monthly fee and recent special assessment would be a red flag to any buyers.
What should I do?
Nandini asks: My husband and I save $5,000 post-tax per month. How should I invest this money?
We contribute to our 401k, max out our Health Savings Accounts (HSA) and backdoor Roth IRAs, and put 10 percent towards an employee stock purchase plan (ESPP).
We have $50,000 cash in a high-yield savings account earning 4.3 percent interest. Our only debt is a primary mortgage of $390,000 at 3.8 percent interest.
Here are some investment options I’m considering:
- Max out our 401k’s. We both have traditional and Roth 401k options.
- Utilize a mega backdoor Roth offered through our companies. The annual limit is $44,000.
- Invest in index funds or mutual funds through a brokerage. We’re both very busy, so we’re thinking of picking easy index funds like the S&P 500.
Apart from these options, what else would you suggest?
*Timestamps will be available by 12 PM Eastern on Monday, and can be found by viewing the episode description on Apple Podcasts, Spotify or wherever you listen.
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