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If he keeps his income at 30k to satisfy his cost of living, it would be free after the tax credits for a bronze plan. He should go on the exchange to see what's available.
A lot of people have suggested that I talk to a financial advisor. My parent's financial planner is with Edward Jones, and I will be talking with him on Monday to discuss my options. He wants to know if I want to cash out or just leave it invested with Edward Jones. It sounds like most of my siblings are going to leave their inheritance alone, and just keep it invested with the Edward Jones CFP.
One question I suggest you ask is just how Edward Jones makes money off of you. This is a fair question of ANY advisor and one where you can pose it with respect. It is important for you to know how they make money off of you. It is also important for you to know just how much money they are going to make off of you.
Note that EJ making a profit off of you isn't necessarily a bad thing, as they need to stay in business. But it is important for you know things so you can do comparison shopping.
And it is always appropriate to ask for a discount.
Each and every time EJ does something, you should ask "how much money in dollars and sense are you going to make off this recommendation?"
Quote:
Originally Posted by dpow
But anyway, I'm trying to get as many different opinions as possible before I talk with him. As a fan of Dave Ramsey, I'm familiar with investing in mutual funds. But I'm trying to figure out if it's possible for me to live off of the interest of mutual funds, or if there are better options for my situation.
Rather than Mutual Funds, I suggest you instead look at Exchange Traded Funds. From your perspective, you can get the same benefits out of an ETF that you can out of a MF - but there can be important tax considerations that make an ETF a better choice for you.
So, for example, instead of invest in VTSAX, invest in VTI. The former is a Vanguard mutual fund of the total stock market, and the latter is a Vanguard ETF of the total stock market. Instead of VFIAX, invest in VOO. The former is a Vanguard S&P 500 mutual fund while the latter is a Vanguard ETF of the S&P 500. Or the same thing with Fidelity funds, etc.
The reason? Capital Gains distributions in December. Sometimes (not always) if you own a mutual fund you discover the managers of the mutual fund have generated a taxable event for you - capital gains distributions - and you'll end up paying taxes come April 15 on a paper distribution that is a surprise to you. ETFs do not do this.
There are some other reasons to invest in ETFs vs MFs.
I am under the impression that Edward Jones does not put your money into ETFs (someone correct me if I am wrong) but rather puts your money into proprietary Mutual Funds that have higher expenses.
Agreed. I'm living on $20,000 a year and able to save even. It's great the OP is getting this money, but wondering if he has enough to retire? Good grief!
But, I'm guessing thay you have Medicare
OP's insurance cost will be a fortune if not working.
Can get COBRA for 13(??) months, but very expensive then OP needs to PAY for private insurance for +/- 20 years
I never said anything about it being related to your assets. He's going to have to pay for it himself if he quits his job.
Correct. I know you didn't mention assets directly, but a lot of people do think assets matter when they don't.
If he generates 30k or 35K in income from his nest egg, he will likely qualify for a decent subsidy if that's his total income.
30K to 35K a year would be a little bit tight to me, but his house is paid for, so it may be doable. I'd probably work at least part time for a few more years just to be safe.
OP's insurance cost will be a fortune if not working.
Can get COBRA for 13(??) months, but very expensive then OP needs to PAY for private insurance for +/- 20 years
OP, PLEASE go SEE A FINANCIAL ADVISOR!
If the income from his assets is, say 35K a year, he likely will not have to pay that much for health insurance.
Probably the ideal situation would be for him to be what they call Barista FIRE (Financial Independence, Retire Early). Basically, you find a part time job that offers health insurance (like Starbucks does) and to supplement your 30-35k investment income and enjoy life.
OP's insurance cost will be a fortune if not working.
Can get COBRA for 13(??) months, but very expensive then OP needs to PAY for private insurance for +/- 20 years
OP, PLEASE go SEE A FINANCIAL ADVISOR!
Yes, healthcare for about 18 years to get on Medicare could be costly.
There are other expenses too: car insurance, car maintenance, home insurance, home expenses, food, etc. Also, what sort of lifestyle does OP want to live?
If I was OP, I would see a financial advisor, keep my job and/or find a better one.
OP did also not say if they have any 401k or IRA savings either. That is also a factor.
Briefly, I’d make no lifestyle changes if I were you and invest 100%. If you don’t like your job, consider your options on changing your job or doing a career pivot. $1M is well short of what you’d need to retire so I’d plan on working 15 more years minimum.
As for what to invest in, I agree you’ll need professional advice from a fee-only financial advisor. I wouldn’t recommend annuities, or mutual funds.
Don't trust who your cousin Joe uses, or some small firm. Go with one of the bigger investment firms that have a solid reputation.
Also, no matter who gives you advice, if it sounds too good to be true, run, don't walk away.
You will likely be told to diversify in a low to moderate portfolio that also protects much of your assets.
You are too young to retire as you will burn through too much money now that you need to build during the next few years. Certainly, consider a different occupation that is at least rewarding and less stressful, if not more lucrative.
Value your time more as well, doing things that are healthy and make your mind and body stronger.
If done right, you will be set for life and when you do retire, be able to do the things you dreamed of such as travel.
RIP to your Mom, and make sure to appreciate what she was able to do for you in both life, and now that she has passed.
OP's insurance cost will be a fortune if not working.
Can get COBRA for 13(??) months, but very expensive then OP needs to PAY for private insurance for +/- 20 years
Actually, I made the stupid decision to get Wellcare and I'm trying to get off it now instead of waiting till next November so I can go back to Medicare. I can't find a doctor within 70 miles who will take Wellcare. Thank God my old NP is still calling in prescriptions for me or I'd be really screwed. I can't believe I was so dumb as to sign up for a plan before finding out if there were doctors in my area, although I was told there were. I should have verified it, though.
At his age, unless something really drastic happens to him, the OP should be healthy enough for another 10 to 20 years. And I think if the OP spends his money on private insurance, even for 20 years, what he invests should cover most of it. Or, he can just do what the rest of us do: pay for medical care as he goes along and if the bills wipe out his inheritance, he can declare bankruptcy.
Seriously, though, I am really happy the OP got this windfall. Struggling for money isn't something I'd wish on anyone.
Actually, I made the stupid decision to get Wellcare and I'm trying to get off it now instead of waiting till next November so I can go back to Medicare. I can't find a doctor within 70 miles who will take Wellcare. Thank God my old NP is still calling in prescriptions for me or I'd be really screwed. I can't believe I was so dumb as to sign up for a plan before finding out if there were doctors in my area, although I was told there were. I should have verified it, though.
Is your Wellcare a Medicare Advantage Plan? If so, I'm surprised no one will accept it. You can drop them at any point in the year if you are unsatisfied. I did that with Humana which was horrible.
Will you choose Original Medicare with a supplement? The price is likely to go up $100-200 per month unless you gamble with no supplement and large copays.
Many Advantage plans have no monthly fee. Maybe look at others in your area.
I have a Kaiser Permanente Senior Advantage plan which costs me $210 per month on top of my Medicare fees. It's a lot of money but I live in an area with a severe doctor shortage and Kaiser is the most complete provider available. If I need treatment that is unavailable on Maui, they will fly me to Honolulu (or the mainland) at their expense. They have done that several times. I'm very happy with them.
$1M is well short of what you’d need to retire so I’d plan on working 15 more years minimum.
Not for a single guy with no children. He could take that money, stick it in an index fund, and live off the interest in Thailand. Or take that money and buy a rental property.
Not everyone plans to retire in Beverly Hills with a mortgage, 3 kids in college, 2 car notes, and annual vacations to Paris and Monaco.
This notion that everyone needs enormous sums of money to retire does not reflect reality. The man has zero kids and no wife.
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You can drop them at any point in the year if you are unsatisfied. I did that with Humana which was horrible.
