I'm mostly interested in peoples ideas about what to do with an old whole life policy, how it figures into a personal investor policy statement if I keep it, and generally I'm eager for a face punch or advice in any other area.
Life Situation: IRS filing status - single, no dependents, US Resident, Mid-30's and healthy
Gross Salary/Wages: $82k/annual before any deductions
Individual amounts of each Pre-tax deductions:
401k $18k/yr (~$1500/yr match)
HSA - not eligible
Medical - $1,920/yr
IRA (Trad) - $5,500/yr
Other Ordinary Income: None (occasional CC bonus, craigslist sale, but that is it)
Qualified Dividends & Long Term Capital Gains: Minimal
Rental Income, Actual Expenses, and Depreciation: N/A
Adjusted Gross Income: ~$56,700
Taxes:
Federal - Last ywar about $5k but I got a raise since during the year - in any case, I'm on the low end of the 25% bracket due to itemizing
State - none in my state
Local - just property tax
FICA - ~$6,100
Current expenses:
HOME:
PITI - ~$13,500 ($3,840 = TI)
Home Remodel/repair - $2,000 (decided to fix some things this year, previous year spending was $300)
subtotal = $15,500/yr
Food - Groceries and eating out $5,000/yr (I'll face punch myself, plead beer and leave it at that)
Transportation:
Car - $2000/yr (includes gas/repairs/insurance/parking/tolls/etc)
public transit and occasional uber - $200
Student loan - $1800/yr
Bills - $1800/yr (internet/phone/electric/water/garbage)
Shopping - $1,500/yr (clothes, electronics, books, some gear might get put into health/fitness)
Gifts/Donations - $1,000
Health/Fitness/Entertainment - there is a lot of overlap, but does include massage copayment - $500/yr
Travel - this varies but a goal of roughly $2,000/yr for an international trip (yes, I may be able to travel hack some of this)
Total: $31,300 (this has a little padding - I've typically closer to $29k/yr)
Assets:
401k - $135k - in Vanguard 2045 (VTIVX)
Roth - $6,000 VTSMX (basically VTI)
Trad IRA- $22,000 VTSAX (basically VTI)
HSA - $7,000 cheapest S&P index available
Taxable Brokerage - $8,000 VTI
Subtotal - $171k
Cash -$15-10k on average
Paid up whole life policy - value $92k - cost basis $39k past years gain in value $4k and "dividend" $1k - NW mutual Started ~25 years ago; this is really the one that I would like advice on.
Car - $4,000 maybe
House - $420,000 semi-conservative estimate
Liabilities:
Student loan - 1% interest $19k remaining
Mortgage $3.88% interest $150k outstanding
Cash savings/yr - roughly $32-33k/yr
debt pay down - roughly $5,250/yr
FI goal - Undetermined
Option 1) Stay in house - pay off loans bring down annual budget to ~$20k - I need a $400k in additional savings and debt repayment (>10 yrs if markets cooperate)
Option 2) Sell house - My stash would be roughly $500k and I think I would let the student loan ride. . . the plan would be some international travel, maybe move to a LCOL place, and/or do some seasonal or part time work. (this could happen whenever I want really).
Specific Question(s):
1) Main question: The old whole life policy what do I do with it? Last year it increased in value 4.5% This is pretty good as a bond substitute but I really don't have a need for life insurance and feel like the best course of action might be for me to pull the cost basis out -
invest that in a vanguard taxable account (or possibly a rental) and move the rest to a variable annuity through vanguard to defer taxes and leave that as part of my 59.5 stash. For those that think I should leave this as a bond fund, would appreciate your thoughts on the role it plays in a larger portfolio. I can't easily rebalance with it.
2) I've gotten myself at least semi-mustachian - but am very open to critique/face punch. What stands out other than my food/beer budget?
3) I've made a draft IP statement, but basically I try maximize tax deferred funds, and stick with low expense ratio funds. I want some international exposure and an ability to rebalance between stock/bond a little (hence the target date fund) and try to make the overall portfolio more aggressive to counterweight the whole life policy. Is there a better way to handle this if I keep the whole life policy?