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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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