Author Topic: Case Study - Low Income Grandma wants to quit working! ??  (Read 2791 times)

mycottagelife

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Case Study - Low Income Grandma wants to quit working! ??
« on: October 18, 2020, 01:19:09 PM »
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Qualified Dividends & Long Term Capital Gains:  I have withdrawn a few times from the investment account to fund some house projects, so the Cap Gains vary depending on if, and how much, I withdrew that year.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
« Last Edit: October 18, 2020, 02:19:09 PM by mycottagelife »

lhamo

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #1 on: October 18, 2020, 01:48:33 PM »
I would move your investment accounts (both taxable and IRA) out of the bank managed option ASAP.  With a 1% fee on your assets, you are paying them over 8k/year in fees -- which is nearly 1/3 of your current expenses!  You also do not need the Fidelity management services if you move things there.  Fidelity has several 0 fee index funds, or if you want a simple way to diversify you can use their target retirement funds -- the fees are a bit higher, but you get instant allocation across various types of investments and it is a really easy way ensure you are diversified.

Fidelity and Vanguard are both good options for self-managed investments -- I use both, since my last job's retirement accounts were there and I like maintaining access to some of their calculators.  Their Retirement Income Planner (may be called something different now) is pretty robust.

Since you can tap into your investment account without penalties, you should be ok from a cashflow perspective if your expenses don't go up too much.  The big wildcard is healthcare costs, both immediately for insurance and for future long-term planning.  Plus travel.  Have you looked at what an ACA plan would cost you, including factoring in subsidies if you can keep your on-paper income low?

Your home and the second property don't really factor in in terms of living expenses -- though could be used to top up the other funds were you to need long-term care.  I personally would not county on getting anything from the family trust -- those funds won't last long if your brother starts to need more support/hands on care as he ages.

In short, you have done very well with your limited income and it should be feasible for you to stop work now if you can control your expenses, especially healthcare.  Since your retirement account balances are low compared to your investment accounts, it would be good to start maxing those out now so that you can keep your taxable income low.  Since your living expenses are so low you will be able to pretty quickly convert your traditional retirement accounts to Roths once you stop working -- if you want to maximize your ACA subsidies you could also wait to do those conversions starting at age 65 when you will be able to go on Medicare.


firestarter2018

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #2 on: October 18, 2020, 01:57:43 PM »
Definitely move your investments into low-cost funds at Vanguard or Fidelity - a 1% management fee vs. a 0.2% Vanguard fee is ~$5,000 --not chump change!

Are you willing to sell your house + lot sooner rather than later? Or is that a move you see when your granddaughter is older and you can move somewhere cheaper? If you could sell, purchase an inexpensive condo in a walkable/bikeable area, and then add the rest of the proceeds to your investments, it will make a huge difference.  $30K expenses on a $1.4 million nest egg looks a lot better than an $800K next egg, especially considering the unknowns around healthcare and long-term care.

Finally, do you know what your estimated Social Security income will be, and at what age you plan to take it?  Definitely work out that piece soon, because if your SS benefits can cover half or more of your basic expenses, then I would say you're in a much better position to stop working today (or soon).  Along with it, price out the cost of an ACA plan with subsidies, using your estimated retirement income.  You will likely need a savings buffer to deal with deductibles and co-pays if you have a "bad" year, healthcare-wise, but the premiums may end up being cheaper than you think at your income.

mycottagelife

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #3 on: October 18, 2020, 02:35:24 PM »
Thank you both for your quick replies!  I modified my OP to include future SS earnings and a bit more info on where my IRA is.  It is separate from my managed account.

Good point about brother's future need for care.  And another good point about selling property, downsizing sooner, and getting that money invested and growing sooner rather than later.   I don't want to move too far from my kids at this point. 

I quit working for a year about 6 yrs ago when my son was going through chemo/radiation and didn't qualify for ACA -I had to get Medi-Cal since I had no income.  It's based on income, not assets they said.  I thought that was weird at the time.  Although now I think I might have made a mistake by not listing the CG and Div income on the application (I had just inherited the $ around that time and didn't understand yet how it would change my financial picture).  Anyway that has left me with the impression that I might get free healthcare for low income people.  But I could be wrong about that. 

I need to learn more about Roth conversations - the how and why. 

Thanks again!  I will definitely look into all the questions/suggestions you have made! 

dandarc

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #4 on: October 18, 2020, 02:37:40 PM »
You're probably fine already. If you sold your real-estate and moved to a less expensive area, for sure sitting pretty. For example, you could be sitting in the house I am writing this from, in-town, just 2 miles from a state capitol (the actual building I mean), 3-4 miles from 2 universities, and you'd have no mortgage, and have an additional $500K for investments. And you could easily spend even less in our city, or go the condo-route for similar or less than we have tied up here. And you're only 6 years from being able to take social security. You're gonna be fine as long as you don't go into "I'm gonna start spending $10K per month! I've earned it!" territory.

Agree to get away from bank investment accounts ASAP - 1 to 3 fund portfolio at Vanguard is all the complicated investing needs to get.
« Last Edit: October 18, 2020, 02:41:55 PM by dandarc »

dandarc

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #5 on: October 18, 2020, 02:47:55 PM »
Oh yeah - if you really like your house / extra lot, you could also further secure your (in my opinion already quite safe) retirement situation by taking out a mortgage (might have to shop for a bank that has half a brain though - low income means you probably need a loan officer who will actually think about your situation). Might seem counter intuitive as you'd be adding a payment, but a fixed-rate, 30 year mortgage where you invest the proceeds, you're near guaranteed to come out better than keeping that money tied up in the house. Most expenses wind up increasing with inflation over time - a fixed rate loan payment, however, does not. And you'd have another $500-600K working for you.

lhamo

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #6 on: October 18, 2020, 02:48:42 PM »
I quit working for a year about 6 yrs ago when my son was going through chemo/radiation and didn't qualify for ACA -I had to get Medi-Cal since I had no income.  It's based on income, not assets they said.  I thought that was weird at the time.  Although now I think I might have made a mistake by not listing the CG and Div income on the application (I had just inherited the $ around that time and didn't understand yet how it would change my financial picture).  Anyway that has left me with the impression that I might get free healthcare for low income people.  But I could be wrong about that. 

Yes, in expanded Medicaid states you can qualify for the no-cost programs as soon as you have $0 to whatever the monthly limit is in predictable income for your household size.  But you do have to provide copies of your previous years tax forms and an estimate of what your annual investment income -- which includes dividends and capital gains, but not return of principal -- will be.  As a single individual the limits are fairly low, so if you are getting significant investment payouts you likely will be over the Medical thresholds.  But there are ways to set things up if that is something you want to tinker with. 

ysette9

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #7 on: October 19, 2020, 12:31:00 PM »
Where would you like to live? I wouldn’t be so quick to bail on the state of California because it can be a réally good place if you are low income. If your property is too much or you want to sell the lot next door, for example, to invest the proceeds instead, fine. But if you have held the main property for a long time and have low property taxes, then it may make a lot of sense to stay put and live off of your invested assets.

@Nippycrisp talks about the benefits he gets from being FIREd on a low income in CA, if you want to wander over to his journal.

merula

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #8 on: October 19, 2020, 01:14:04 PM »
You're in a really great spot, thanks to your frugality and your mother's legacy. Your sister is wrong about index funds and that retirement advisor is absolutely off their rocker.

In a nutshell, you need enough money to last you the 14 years until you're 70 in order to max out Social Security, and then you need enough to cover the gap between your expenses and SS from there.

At your current expenses of ~$27,500 (I'm rounding up and using 2020 dollars), you need $385,000 for the next 14 years, and then you'll need ($27,500-$21,600)*30 years = $177,000 to last until you're 100. Since you have $823,000 in your accounts, even if you never earned another dime you could expect to have $261,000 plus your house and the empty lot at age 100.

Or, since you would like to increase your expenses, you could look to spend an extra $6,000 every year from now until 100, and still have your house and property.

And all of that is completely discounting any investment earnings beyond inflation. In actuality, you can likely spend much more than that; a safe 4% withdrawal rate on $823k would generally be $33k and that would be over your entire life and preserve your capital.

The advice on moving to Fidelity or Vanguard is great. I have accounts with both (work 401k is through Fidelity) and I find Vanguard much easier to use, but that's just personal preference.

mycottagelife

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #9 on: October 19, 2020, 11:22:06 PM »
Quote
Where would you like to live? I wouldn’t be so quick to bail on the state of California because it can be a really good place if you are low income. If your property is too much or you want to sell the lot next door, for example, to invest the proceeds instead, fine. But if you have held the main property for a long time and have low property taxes, then it may make a lot of sense to stay put and live off of your invested assets.

@nippycrisp talks about the benefits he gets from being FIREd on a low income in CA, if you want to wander over to his journal.


Thank you @ysette9 for your input!  I'm not sure where I'd want to live, and yes, I have lived in this house off and on since the mid-70's when mom bought it.  I've been here about 25 yrs now, since I divorced.  I do love this house and the prop taxes are low (I assume anyway. Haven't compared to other places (yet).  But that is a good point.  One problem around here is the persistent drought and constant issues surrounding water (and lack thereof).  Another is it gets damn hot sometimes! 

Thanks for the tip about nippycrisp.  I will definitely check that out! 

@merula Thank you as well!  Very reassuring.  :-)   


mycottagelife

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #10 on: October 20, 2020, 12:48:01 AM »
@lhamo
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The big wildcard is healthcare costs, both immediately for insurance and for future long-term planning.  Plus travel.  Have you looked at what an ACA plan would cost you, including factoring in subsidies if you can keep your on-paper income low?

Can only look up 2020 costs on the ACA website, so for my age if I wanted coverage for this or next year, at $30K income , would be anywhere between $1 and $900+ per month.  I would most likely choose the high deductible/low-cost options since my health is good.  So the $1 or maybe $20, or even $40 options.  Looking good!

Quote
Since your living expenses are so low you will be able to pretty quickly convert your traditional retirement accounts to Roths once you stop working -- if you want to maximize your ACA subsidies you could also wait to do those conversions starting at age 65 when you will be able to go on Medicare.

What would be the benefit of converting my IRA to a Roth? I don't think my tax bracket will change much over my lifetime if I keep to the $30K a year spending/withdraw plan.  So I would pay taxes now to convert vs. pay taxes when I withdraw from Td'l IRA later.  I know there's no RMD with a Roth, but since I'll be withdrawing from "somewhere" every year I might as well take from the Td'l IRA if/when I need to.  I guess there's the fact that with the Td'l IRA I'd pay tax on the growth that occurred.  If I did the conversion, I'd have to pull funds from the investment account to pay the taxes. Not sure if that would be worth it?  I'm still trying to understand the complexities and art of strategizing, so forgive me if there's something obvious that I'm missing!   

lhamo

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #11 on: October 20, 2020, 09:21:07 AM »
No need to apologize -- this stuff is complicated!

There might not be a huge tax benefit in immediate terms for converting to Roths now, but at least for the moment taxes are as beneficial as they are likely to ever be for low-level, gradual conversions.  And then that money is permanently in the tax free bucket for you AND for anyone you might leave it to, though I think the rules are now that an heir has to draw down the account over 10 years.  Still, 10 years of guaranteed tax-free capital that they could use to convert their own traditional accounts to Roths, or otherwise invest, is nothing to sneeze at.  Paying 5-15% in marginal taxes on my money while I'm still alive, and while I have plenty of money to cover it, seems like a good call.

We are currently living off savings, so what I am trying to do is convert a bit (10-20kish) of our traditional accounts over to Roths every year -- staying below the level where it would mess with our health coverage.  Once I get to Medicare age I will likely convert in larger chunks, enough to reduce my future RMDs to the point where those + Social Security should cover most of my regular expenses.  Then the money that is in the Roths can just continue to grow indefinitely, or be tapped tax-free for large one-off expenses or long term care, as needed. 

ericrugiero

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #12 on: October 20, 2020, 09:52:55 AM »
No need to apologize -- this stuff is complicated!

There might not be a huge tax benefit in immediate terms for converting to Roths now, but at least for the moment taxes are as beneficial as they are likely to ever be for low-level, gradual conversions.  And then that money is permanently in the tax free bucket for you AND for anyone you might leave it to, though I think the rules are now that an heir has to draw down the account over 10 years.  Still, 10 years of guaranteed tax-free capital that they could use to convert their own traditional accounts to Roths, or otherwise invest, is nothing to sneeze at.  Paying 5-15% in marginal taxes on my money while I'm still alive, and while I have plenty of money to cover it, seems like a good call.

We are currently living off savings, so what I am trying to do is convert a bit (10-20kish) of our traditional accounts over to Roths every year -- staying below the level where it would mess with our health coverage.  Once I get to Medicare age I will likely convert in larger chunks, enough to reduce my future RMDs to the point where those + Social Security should cover most of my regular expenses.  Then the money that is in the Roths can just continue to grow indefinitely, or be tapped tax-free for large one-off expenses or long term care, as needed.

+1

Converting does two things. 

For you, when you reach the age of RMD's (required minimum draws) you could be forced to draw a larger amount from your accounts which means higher taxes.  It's usually better to convert lower amounts over a longer time to stay in a lower tax rate. 

For your heirs, any money still in a traditional IRA or 401K is taxed as income when they take it out (must be within 10 years).  If you convert it to Roth the entire amount is tax free for them.  If your tax rate is lower than theirs they would get more money at the end of the day.  (Your income would probably be lower since their income at the time AND the withdraw from traditional IRA/401K both count toward their income). 

The only reason not to gradually convert is if it messes up your healthcare options. 

nippycrisp

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #13 on: October 20, 2020, 11:06:26 AM »
You're getting good advice, especially the parts about shifting investments from high to low fee. Think of it this way: the SP500 returns what, 7-8% a year on average. Giving away 1% of your assets each year reduces this to 6-7%, which means you're giving up 12-15% of your gains.

I've found CA is very friendly to low-income people, having FIREd in-state a couple years ago. You have to stop thinking like a worker to really analyze the tax and COL stuff. For example, state income taxes are a lot less important, while sales and property tax become things you can't avoid. CA has Prop 13 keeping your property taxes under control. CA also has a graduated tax rate, where small levels of income are taxed less than in places with a flat tax. For health care, Medi-Cal should cover you up to 148% of the federal poverty level (all the countable income sources can be found here: https://www.dhcs.ca.gov/services/medi-cal/eligibility/Documents/Co-OPS-Sup/Income_Deductions_Chart_010119.pdf). If you wind up on ACA for some reason, I can tell you that my 2021 premium will be $2.XX higher than last year's (I use ACA, long story). You may also notice a few types of income have exemptions for what counts for Medi-Cal (e.g., clinical trial volunteering), so loopholes are possible.

Also, let's save you some money right off the bat: CA has a low income auto insurance program that'll probably trim your insurance down quite a bit (here, I think: https://www.mylowcostauto.com/). There's sometimes a low-income utility discount as well. Just search your local provider + low cost. I use SDGE and they do it. In general, look for "low income" or "Medi-Cal" plus CA or your county/city and see what comes up. You might be surprised.

To summarize: you're fine to quit, I believe. Merula's point where you have to support yourself for 10-ish years before your life gets subsidized by SS is how I'd look at it. Easy peasy.

Small note: I didn't see a slush fund for major purchases (computer, car, etc). 

mycottagelife

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #14 on: October 21, 2020, 09:22:34 AM »
Thank you everyone!  First order of business... get the investments moved ASAP.   Then I have lots of notes I've taken that I need to research and learn more before I feel comfortable enough to quit the job. 

This is an awesome community!  I'll be diving in and reading lots of past blogposts and forum topics.  It's great to get objective opinions and advice from those that are living the life!   

mycottagelife

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #15 on: October 21, 2020, 09:42:02 AM »
Quote
..........For health care, Medi-Cal should cover you up to 148% of the federal poverty level (all the countable income sources can be found here: https://www.dhcs.ca.gov/services/medi-cal/eligibility/Documents/Co-OPS-Sup/Income_Deductions_Chart_010119.pdf).

Also, let's save you some money right off the bat: CA has a low income auto insurance program that'll probably trim your insurance down quite a bit (here, I think: https://www.mylowcostauto.com/). There's sometimes a low-income utility discount as well. Just search your local provider + low cost. I use SDGE and they do it. In general, look for "low income" or "Medi-Cal" plus CA or your county/city and see what comes up. You might be surprised.
............

Small note: I didn't see a slush fund for major purchases (computer, car, etc).

@nippycrisp thank you for your insight!  Yes, I have been on the low income gas and electric before.  Especially when my son who gets SS Disability pymnts lived with me, so he automatically qualified us.  Then I felt guilty for staying on it when I had "lots" of money in the bank (I didn't consider myself poor and needing assistance).  Once I quit working and my income actually goes way down I will look into it again.  Same with the car insurance - thanks for that link!  But I don't think I can qualify until I stop working.  My AGI was $55K last year, due to job earnings, dividends and cap gains. 

And yeah, no slush fund at the moment.  I've usually gotten that from withdrawing 5-10K every year or so, but I've spent up most of my last draw. On a good note, I have not withdrawn from the invest account since April 2019.  Trying to live smaller in 2020 (thank you pandemic!) and not withdraw if possible so won't have so much cap gains.  Each year I do my taxes is a learning experience. 

Thanks again!  I still have lots to learn!

MrThatsDifferent

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #16 on: October 21, 2020, 12:23:30 PM »
Congrats on getting yourself this far. I’d echo the advice you’ve already received. I’d read MMM’s main, most popular articles if you haven’t already. From what you’ve written you’re definitely fine to retire yesterday. You currently have enough in invested money to satisfy the 4% rule alone, plus a paid off house. In addition you’ll be getting SS and $750k from a trust fund? You really only need to sort out healthcare by getting on the lowest ACA plan. When do you get your share of the trust? Oh, and what’s the value of not selling the empty lot? I’d consider getting rid of that and investing that money instead.
« Last Edit: October 21, 2020, 12:25:41 PM by MrThatsDifferent »

ysette9

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Re: Case Study - Low Income Grandma wants to quit working! ??
« Reply #17 on: October 21, 2020, 01:18:06 PM »
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Where would you like to live? I wouldn’t be so quick to bail on the state of California because it can be a really good place if you are low income. If your property is too much or you want to sell the lot next door, for example, to invest the proceeds instead, fine. But if you have held the main property for a long time and have low property taxes, then it may make a lot of sense to stay put and live off of your invested assets.

@nippycrisp talks about the benefits he gets from being FIREd on a low income in CA, if you want to wander over to his journal.


Thank you @ysette9 for your input!  I'm not sure where I'd want to live, and yes, I have lived in this house off and on since the mid-70's when mom bought it.  I've been here about 25 yrs now, since I divorced.  I do love this house and the prop taxes are low (I assume anyway. Haven't compared to other places (yet).  But that is a good point.  One problem around here is the persistent drought and constant issues surrounding water (and lack thereof).  Another is it gets damn hot sometimes! 

Thanks for the tip about nippycrisp.  I will definitely check that out! 

@merula Thank you as well!  Very reassuring.  :-)

I understand your concerns about heat and drought because I share exactly the same concerns. In fact, we are test driving a relocation to Seattle right now and for me personally, that was part of what attracted me to this area. That said, having a CA house bought in the 70s, that is a gold mine for property taxes so you wouldn't want to walk away from that lighty.

Good luck, whatever you do. You are getting good advice and this forum has tons more. I've learned a lot hanging around these parts.