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Author: koipondowner Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19483  
Subject: Million Dollar Portfolio Date: 9/22/2008 4:25 PM
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My husband has invested fully with this MDP portfolio. He is retiring in 18 months, will be needing $30,000 per year to add to lifetime pension of 1900.00 monthly which pays our mortgage of 140,000 at .04875. We have 430,000 in equity in the home and live in Charlotte, NC, which through this mess has held its value very well as far in home prices. Today! we have 580,000. in the MDP, we will we together be getting $2700.00 monthly in SSI in 18 months. Currently we live on $90,000. Will be eligible for COBRA until Medicare but I take many meds per day. Is this portfolio right for us?
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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14004 of 19483
Subject: Re: Million Dollar Portfolio Date: 9/22/2008 4:39 PM
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Currently we live on $90,000. Will be eligible for COBRA until Medicare but I take many meds per day. Is this portfolio right for us?



dunno about the portfoliio..

but will warn you (if you didn't know), 'many meds per day' will likely be significant $$$ under 'Medicare'


good luck!


=

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Author: fleg9bo Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14005 of 19483
Subject: Re: Million Dollar Portfolio Date: 9/22/2008 5:27 PM
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He is retiring in 18 months, will be needing $30,000 per year to add to lifetime pension of 1900.00 monthly which pays our mortgage...Today! we have 580,000. in the MDP, we will we together be getting $2700.00 monthly in SSI in 18 months. Currently we live on $90,000. Will be eligible for COBRA until Medicare but I take many meds per day. Is this portfolio right for us?

The generally accepted safe withdrawl rate, at least by most on the TMF boards, is 4% per year from a portfolio that is approximately 75% in the S&P500 and 25% in fixed income, if you need it to last 30 years. I don't know what the MDP is, but if you are confident that it will outperform the S&P500, then you can take more than 4%, but I'd think hard about the risk.

As to the rest of what you've said, let's take a 4% withdrawl of $580k as a starting point. That's $23,200 per year, short of the $30k you say you need. Add in your SSI and that's another $32,400 per year, for a total of $55,600. That's way short of your current spending of $90k.

When you say you live on $90k, does that include the Medicare and SS taxes your husband pays on his earnings? Those expenses will go away when he retires. So will any other work-related expenses and so will any more additions to your savings. If you subtract all that out, how much does it reduce your needs?

Will your company pay for Cobra or will it come out of your pocket? If it's going to be on you, that's a significant added expense. How long until your house is paid off? If you downsize to a smaller house that's fully paid for, that will free up your mortgage payments for other living expenses and reduce your property taxes, utilities, insurance and maintenance costs. Another option for having a paid-for house is moving somewhere with lower-cost housing (what we did). That might not lower all those other housing-related expenses but will at least get rid of the mortgage. If you don't need that $1900 to pay the mortgage, that's another $22,800 per year to live on, bringing the total as far as I can see to $78,400. With the mortgage paid off, you won't need $90k.

That's the best I can come up with. Anyone else?

--fleg

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14006 of 19483
Subject: Re: Million Dollar Portfolio Date: 9/23/2008 10:02 AM
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Congratulations! You're in much better shape than the vast majority of nearly retired Americans.

Googling for "MDP portfolio," I tentatively conclude that it's a TMF newsletter (Million Dollar Portfolio). Since I'm not a subscriber, I don't know how they invest and so couldn't comment on its suitability for retirees. I suggest you raise the issue with the TMF discussion group for that newsletter--assuming I have guessed aright about MDP. Also, you mention that your husband invests with MDP--what about you? Any other investments, perhaps left behind and forgotten at previous employers?

I, personally, would not retire with any debt, including any mortgage debt. Life is uncertain enough--especially the stock & bond & real estate markets lately, and with fewer options for dealing with reversals of fortune in retirement (much harder to get a good-paying job, for example), I'm just not comfortable with squeezing myself into a corner in that way.

Your house appears to be worth $570,000 (140k mortgage + 430k equity), and your portfolio is currently worth $580,000 (since I don;t know how much you invest each month, and I don't know how your investments will do, I don't know how much you'll have when you retire in 18 months).

When you say you live on $90k/year, does that include saving for retirement, payroll taxes, income taxes, everything? If it's everything, your actual expenses in retirement will probably be much less, unless you have expensive hobbies.

My advice?

-- Determine your expenses in retirement. Start by adding up what you spend every month for the next few months, and be sure to include bills that aren't paid every month, like property taxes and home & car insurance.

-- At the moment, your house represents half of your net worth. IMHO, that's too much in retirement, especially if a mortgage is needed. If I were lucky enough to have a $1900/month pension, I wouldn't want to fork it all over on a mortgage every month. That pension, together with SSI of $2700/month, could provide a baseline income of $4600/month, or $55,200/year. Depending on the meaning of your $90k, that might be most of your income needs. If I were you, unless I had an iron-clad certainty of inheriting a goodly sum soonish, I'd sell the house and buy another for no more than 20-25% of my net worth. (Wish I'd followed this advice myself when I bought a house in 2002, but I didn't know any better--my house represents ~1/3 of my net worth.) Larger houses also cost more to heat, cool, maintain, and upgrade.

-- Verify that the MDP portfolio is suitable for retirees. Not too aggressive/risky.

-- Verify with all former employers that you haven't left behind any retirement (or other) money.

-- Do you and your husband have Roth IRAs? If not, set them up for 2008 to the max for each of you, likewise for 2009, and 2010 if your husband is still working for part of that year. Withdrawals from a Roth aren;t taxed, so a Roth is a great place to stash money needed for major expenses such as a new car, moving, medical expenses.

-- Verify that all of your prescriptions are really necessary. Investigate lower-cost drugs (generic, free samples, low-cost providers such as Wal-Mart, Canada). My mother was able to simply give up Nexium and a drug for bladder control--they are expensive and didn't help that much. Changing her diet seemed to have about the same effect as the drugs. I have also given up some of my asthma and allergy meds so that I'm only left with one expensive one and one OTC.

Good luck!

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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14007 of 19483
Subject: Re: Million Dollar Portfolio Date: 9/23/2008 10:59 AM
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-- Verify that all of your prescriptions are really necessary. Investigate lower-cost drugs (generic, free samples, low-cost providers such as Wal-Mart, Canada). My mother was able to simply give up Nexium and a drug for bladder control--they are expensive and didn't help that much. Changing her diet seemed to have about the same effect as the drugs. I have also given up some of my asthma and allergy meds so that I'm only left with one expensive one and one OTC.

-----------------------------------------------


Interesting.
I quit taking Lipitor.
Even though I have insurance that pays 80% of the cost of the drug...
I decided to take a look at it.
I never felt good while taking it.
It has a list of harmful side-effects longer than your arm.
You are not supposed to eat/drink grapefruit/juice while taking it.
I then took a look at grapefruit.
Grapefruit has a list of BENEFITS longer than your arm.
I also like grapefruit.
So I asked myself: Do you want to give up something that you like and that has a list of benefits longer than your arm in favor of something with unproven benefits and that has a list of harmful side-effects longer than your arm -- AND that costs a fortune?

Heh.

The grapefruit won.

AM

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