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I think the only risk I am a bit concerned about would be if both of us ended up needing nursing home care at the same time. That would start draining our savings rapidly as the cost would be above our normal monthly income (upwards of 2-3,000 dollars more per month) I am guessing, who knows what that cost may be in the future. I know that most nursing home care usually runs about 3-6 months on average. We have history in our family where my mother-in-law spent 8 years in a nursing home and that would be financially damaging if that happened with just one of us, can't imagine if both of us would be in that situation.
If only one of us is living and needs nursing home care I think the income would cover the cost. Unfortunately, because of our cancer status (both of us) it is very unlikely we would be able to get LTC insurance at this time.
As far as risk/return allocation . . . well not that I am very versed in that idea or have a highly educated understanding of that personally so have to punt somewhat. We are not overly concerned about the risk of our investments. I look at it this way, if we lose 50% of the value of our other accounts we still will be ok. Maybe not happy or thrilled but not keeping me awake at night kind of thing. I believe we are diversified enough that chances of more loss than that is highly unlikely. I believe our pensions are strong and safe in our case and hopefully social security will continue to be.
Again believe me I truly understand your situation and thinking. The biggest difference in us is that we have TLCi. However I also strategize alternatives to that if something unexpected happened with our coverage.
I chuckle at you concern about what happens if you both need uncovered nursing care. I understand that and like you look at how much can we cover. We should be good if we both needed care that wasn't insured under current cost expectations moving forward.
Let me say you are good and your present ship is well steered and you have done a good job. However there was a level of questioning that got you there and so it shall continue and that is a good thing. As Bernstein says in some ways you are at a game over stage and have done well.
What you have also learned and this I think is the key thing that I have learned. Retirement is a statement of about your employment and time allocation situation and the resulting changes.
It really isn't about your finances as you have been managing them for years and this is just a continuation of. Where to live? You first tackled that when you left home decades ago etc etc.
Maybe retirement is about a do over opportunity or a starting out again opportunity except this time you are wiser and in your case more financially grounded in resources. Perhaps as you look out over the ocean of your future life your main command is to stay course as you are cruising well and headed where you want.
I know at times many of us think because of what we read that there is more to finances at this stage of life. We are probably over thinking as for many the variables are fewer and the challenges less. Imagine three young kids and a economy that is challenging your job security. Those days are probably in the rear mirror.
So why change? Your fixed income exceeds your monthly expenses and your are still saving with a sizable reserve already in existence?
My wife and I are now retired and have almost all our savings in the stock market in various forms. We are ok with this because we feel pretty confident that our pensions and social security are enough for day to day expenses now and in the future.
Pensions -- both total $6,700 a month (after taxes), with a popup feature of about $200 a month increase when the first spouse would die.
Social Security -- $3,300 a month for both after taxes and the current Part B medicare premium and Part D.
The social security would, of course, cut in 1/2 upon the first spouse dying.
Total without touching our savings -- $10,000 take home a month. $8,500 for one surviving spouse.
We have about $800,000 in the stock market, some of which is Roth stock account ($220,000) which currently generates about $900 a month in dividends that we reinvest.
Another 400,000 is in a regular IRA which we also reinvest those dividends.
The last $180,000 is in taxable stocks.
We have some minimal life insurance -- some of which can be cashed out as it was whole life. We are still paying around $300 a month in premiums to keep them active but at our age (nearing 65) I wonder whether we should cancel them and pull the cash out of the policies that have surrender value.
We own our home worth about $300,000. We basically don't have any liabilities EXCEPT for weddings, grandchildren, help with their homes, etc. as that comes up..... being parents to two grown daughters.
Are we ok staying with the stock market?
Yes. I would lean toward dividend paying stocks. I would be conservative in my stock picks.
You need an emergency fund - replace roof, new car, new washing machine, weddings, gifts etc. I would tend to put this fund in CD's or maybe short term individual bonds (not mutual funds). Since you will not have to sell stocks in a down market you do not need a fund or two or three years expenses for a down market.
To summarize stock you never think you will need to spend can stay in the market. When you see large expense coming up and the market is up you might want to sell some stock to cover these expense and leave the emergency fund alone. I see no problem in spending the non IRA dividends.
I do not know your monthly budget but I would also consider delaying the higher paying SS check until 70 and selling some stock now to give you the necessary cash flow. Remember you SS and pensions is your fixed income (bonds) part of your portfolio so 100% equities is ok.
You might be able to get long term care insurance as part of a life insurance policy. At any rate I would look around to see if you can get it. Be careful as the history has been stiff premium increases as the product was not properly priced when it started. I would also think in terms of getting insurance that would cover part of the cost with the rest coming from your stocks.
I would get rid of the life insurance you have but first see if the company will give you LTC as part of the policy. You might want to consider prepaid funeral and cremation.
By the way I would take your annual SS and Pension and multiply by 25 and say the is my fixed income portfolio if you are concerned about equity/bond allocations.
Yes. I would lean toward dividend paying stocks. I would be conservative in my stock picks.
You need an emergency fund - replace roof, new car, new washing machine, weddings, gifts etc. I would tend to put this fund in CD's or maybe short term individual bonds (not mutual funds). Since you will not have to sell stocks in a down market you do not need a fund or two or three years expenses for a down market.
To summarize stock you never think you will need to spend can stay in the market. When you see large expense coming up and the market is up you might want to sell some stock to cover these expense and leave the emergency fund alone. I see no problem in spending the non IRA dividends.
I do not know your monthly budget but I would also consider delaying the higher paying SS check until 70 and selling some stock now to give you the necessary cash flow. Remember you SS and pensions is your fixed income (bonds) part of your portfolio so 100% equities is ok.
He has fixed income after tax of over 10k per month and spends less than that. He doesn’t need to touch his investments which leaves him a emergency fund in excess of one million dollars.
You never know in this forum! Hard to differentiate fantasy from reality! There are some posters on here who comment on everything as if they are an expert on .......well....everything. Some of their posts just stretch the limits of credibility.
You never know in this forum! Hard to differentiate fantasy from reality! There are some posters on here who comment on everything as if they are an expert on .......well....everything. Some of their posts just stretch the limits of credibility.
His situation sounds very familiar. Two professionals each with pensions and strong SS benefits coupled with a history of saving/investing. Very normal in some areas of the country.
You never know in this forum! Hard to differentiate fantasy from reality! There are some posters on here who comment on everything as if they are an expert on .......well....everything. Some of their posts just stretch the limits of credibility.
Nothing about the OP stretches credulity. It's just a solid, well funded retirement. OP didn't say he had a jet, or homes on both coasts, or anything remotely fantasy. He did say his wife has been diagnosed with a terminal illness, and I'm sure he wants to make sure that her end of life care is covered financially, and that he will have enough for his own life + EOL care.
Nothing about the OP stretches credulity. It's just a solid, well funded retirement. OP didn't say he had a jet, or homes on both coasts, or anything remotely fantasy. He did say his wife has been diagnosed with a terminal illness, and I'm sure he wants to make sure that her end of life care is covered financially, and that he will have enough for his own life + EOL care.
Bada Bing! They are a marreied couple each with a pension, SS and investments. A retiring professional with 5k a month after tax in pensions and SS along with 600k in investments isn’t surprising so if two of them marry each other and stayed married ya got a Bada Bing!
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