Fairly new here so I still have a lot to learn!
Life Situation: I’ve always been frugal and live a pretty simple (low-cost) life. I am 56, have always been a low-wage earner (thus the frugal-ness!), and the bulk of my wealth was inherited from my sweet (also frugal and simple) mother. It’s been a big learning curve going from broke single mom all those years (qualifying for all the low income things), to kids moving out (sorta! but did lose my HOH tax status which hurt), and then inheriting a house and money.
I *think* I may have enough to retire soon, but am nervous because SS and Medicare won’t kick in for a while. So tired of working every day! I never had a career - just a job - I work so I can have an after-work life. I want to spend more time with my granddaughter, sewing, gardening, working on the house, biking, camping, and going on (not luxurious) trips. Will add in volunteering if all that doesn’t keep me busy enough.
At some point, I would likely sell my properties and downsize, maybe to a less expensive state (I live in California). So I would get some cash out of the properties then. I also have a disabled older brother who lives off the income from a (currently 1.3m) trust fund that I will inherit ½ of someday. I’m kinda counting on that to help fund my later years. Maybe I shouldn’t do that? He is a hermit, so is not even spending all of the income he gets from it.
Salary/Income/deductions: I currently make just barely $30K as a part time office manager. Single, no dependents - although my grown son is disabled (very slow growing brain tumor - 17 yrs so far) and when he lived at home I could claim him. I’ve been begging him to move back, to no avail! I have been thinking about renting out a spare bedroom. About a year ago, I qualified for a 403b at work and am contributing just $50/month that is being partially matched , and they also contribute an amount equal to 5% of my earnings each period (whether I contribute or not). There’s only about $3500 in there now. My future Social Security income is projected to be $950 if I take it at 62, $1410 at 67, $1800 at 70.
Qualified Dividends & Long Term Capital Gains: I have withdrawn a few times from the investment account to fund some house projects, so the Cap Gains vary depending on if, and how much, I withdrew that year. Dividends are about $18/$19K and Cap Gains were $8500 in 2019. They were much more in previous years, because I withdrew and also I think the Manager was buying/selling too much.
AGI = $55 – 60K.
Taxes = Federal $4000, State $1400 in 2019
I have no debt whatsoever. Yay!
Expenses: Detailed breakdown below. I ride my bike to work most days, so car expenses are low. I’ve owned car for 12 years, and one before that for 14. I don’t get my hair or nails done, I shop for clothes at the thrift store, and don’t watch cable TV (but do tap into my son’s Netflix account sometimes!). I’ve been living like this for decades. I like to go on a couple of mountain bike destination trips per year. I don’t have a lot of medical expenses (knock on wood!), except I pay cash for my dental cleanings. My employer is paying all of my health insurance premium, so that would change if I quit. So with health insurance costs and a bit more travel, my post-retirement expenses will be more than pre-retirement. And will increase in the golden years as my health declines, especially if I need to move into a nursing home. Yikes!
I spend probably too much money on my 7 yr old granddaughter’s various lessons and activities (and yes, on eating out too!). I have a dream of taking her on a year-long RV trip around the US and “road-schooling” her, hopefully in a year or two. Am I crazy? I guess I’m not opposed to going back to work after that year, if it seems like I need to.
Questions:
I have read some JLCollins and am thinking about moving my investments to Vanguard, away from it’s current Bank Managed account at 1%. Every time the statement comes and I see how much was taken out in fees it upsets me! I could take that amount as income each month instead. Now that I already have a portfolio of stocks, funds, etc. Is it a good idea to try to move some of those assets to index funds? Or would it be too costly to sell and not worth it to do that? I guess I would need to do a lot of research into each item I own to figure out the answer to that for each item.
My sister also has an investment account at the same bank and is talking to me about moving my account to Fidelity (with Advisor service) with her for .6% fees. She thinks “being solely in index funds does not allow for meaningful decisions during times of market volatility.” I thought one of the points of index funds is to “smooth out the ride” of any market volatility. Thoughts on that?
I talked to a Retirement Planner recently and they didn’t think I was near being able to retire. Work till you’re 65, they said. But my expenses are less than 30K and my net worth is 1,500,000 (if I include the paid off house and land). So I meet the 25-30 times expenses rule. I’m afraid the Fidelity advisors are going to give me more of the same “age old wisdom”. I’m weighing the pros and cons of going with a Financial Advisor with my sister, or moving to Vanguard and managing it on my own. Would appreciate advice on this.
Maybe I need to just trust my intuition, and learn more so I can manage my own investments. But I would like to get some advice (and direction) from you learned folks! Am I close? I know I don’t have a lot, so maybe I’m trying to cut it too close and should work/save more? But on the other hand, I feel like I don’t need a lot.
What things would you suggest I focus on / research / do? Thank you so much for reading my story!
My Assets are:
730, 000 – investment account
93,000 – traditional IRA (In VG 2030 Target date fund)
650,000 – current house value
130,000 – 2nd property value (empty lot next door)
Monthly Average Expenses (copied from the Case Study spreadsheet):
Property Tax $255
Home Insurance $88
Car Insurance $67
Car Maintenance, Registration, etc. $17
Charitable contributions $50
Child activities $300
Christmas/Holidays $25
Clothing/Shoes $40
College Savings 529 for granddaughter $40
Computer (paper/software/etc.) $5
Dentist $25
Dining out $200
Gifts $10
Electricity $25
Entertainment $40
Fuel/Public Transport $20
Gas/Oil for heating $40
Groceries $400
Household; Maintenance $100
Internet $23
Medical (Doctor, Hospital, etc.) $20
Miscellaneous $100
Pets $50
Phone (cell) $44
Recycling/Trash $39
Sports/Recreation $50
Subscriptions (paper/magazines/etc.) $28
Travel/Vacation $100
Water/Sewer $48
Wine/Beer $25
Total $2,269