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Age: 42

Emergency Fund: yes

Debt: none

Mortgage: none, living with family

Tax Filing Status: single

Tax Rate: 0, for now

Yearly Income: SSDI, $16K

Medicare Part A, B, D & supplement plan: yes

Future Inheritance: none

Current Allocation: 45% Stocks, 23% Bonds as a CD, 32% Cash

Desired Allocation but can't stomach it yet: 60% Stocks, 30% bonds, 10% cash

TOTAL AMOUNT in retirement, investment, savings = $125,000 -
this is it, besides an old car, furniture and personal items.

Once parents (still healthy) sell the house to pay for their long-term care I will need to find a place to live. Expenses at that juncture, will go up.

I've already educated myself on how and where to allocate the money. My question today is;

- "Will I be OK?" OK to me, means the ability to continue living indoors in a safe, quiet environment and have other basic needs met. I've gotten used to a no-frills, spartan lifestyle and although it's not that enjoyable, it's quite tolerable. If things were to get worse, then tolerable may turn into unbearable, and that's what often worries me.

- I may be able to start putting some money aside from my SSDI income in 2011. If I could put some money aside each year - how much money should I add to my total? Obviously the answer is as much as possible, but is there a specific amount to aim for that may keep me in "OK-mode"? 

-  Is there a superior online tool that may help me? The calculators I've found online are all overly basic. There is a free online Monte Carlo simulator. I run numbers, but I'm sure they're not accurate. I've never done a spreadsheet, don't know how and I don't have the energy to learn how right now.

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Forgot to add something:

Estimated Life Expectancy = 75

Is there any way to edit questions?
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You have been able to accumulate $125K in savings with fairly modest income. I think that suggests you are in pretty good shape.

When you are on your own, what will your extra expenses be? Will you rent an apartment? Buy a house? Why not look in the newspaper and find out what apartment rents are like in your area.

I would think $30K would be typical of what most people retire on once they own their homes. But it does depend on your lifestyle. If $16K does it for you now, that plus housing costs and allowance for inflation should tell you what you will need to maintain your lifestyle.

The usual rule at Motely Fool is that you can spend about 4% of your invested assets per year to make them last 30 years. So if rent and utilities come out to be $800/mo or abt $10K per year, then you can count on cost of living increases in SSDI to cover your other costs. So you need $250K to pay that $10K from investment income long term.

At a 5% rate of return, your money should double every 14.4 years. So if you allow the money you have to grow for 15 years, you have a decent shot at making your goals. Of course we all worry about keeping up with inflation. So these numbers are only approximate. But as they say, keep doing what you are doing. Work on making sure your money earns at least 5%.

If you don't do spreadsheets, its tough to do much more than that. But the Rule Your Retirement premium board has a retirement planning work sheet that helps you work this all out. Or a financial planner could put the numbers together for you. But if your parents are still in good health, perhaps there is no hurry.

And no, once you press submit, there is no way to correct an error in Fooldom.
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You have done a much better job to planing and executing than the vast majority of people. You are aware that higher returns have more risk and right now you are willing to accept lower returns. Not all bad, but in the not too distant future, inflation will ratchet up. When that happens bond prices will drop. On the assumption your bonds are mutual funds, you will be hurt. So I strongly suggest you start to lower you bond allocation to your long range target - I would do by a cost averaging approach - a little each month or two.

With regard to stocks, I would increase that also a bit at a time.

I expect you have a bit of time for self education and you certainly have the attitude. Go to the Bogleheads and start reading from the forum named "Investing - Help with Personal Investments"

Poke around the website there is a library with a lot of stuff you can read free instead of buying books.

I am a fan of William Bengen. There is a book he wrote for $65 at Amazon. It essentially tells you why and how the Safe Withdraw Rate system works. There are a lot of little details most people do not appreciate such as you get a higher rate of return if you re-balance less frequently than once a year -- max is something like once every 7 years.


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If you're going to need much more than $20K to live off of (including housing) after your parents sell the house, then you might have a little trouble doing it. You might qualify for some refundable tax credits, so I would check into that. You also might qualify for subsidized housing, and I certainly would check into that, same for food stamps and other such services. I would consider putting less in stocks, given your situation, but that's just me. Not that it's important, but I assume the $125K is from savings before you became disabled, or from a divorce or inheritance, but I guess it doesn't matter. I doubt you'll be able to save a lot from your disability, but good for you if you can. Good luck.
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Yours is a special needs situation, and your long term need is going to be based in no small part on what your future disability needs will be, and who will be providing them.

Rather than speculate on what those might be and how Medicare or SS would be able/unable to meet them, I would suggest that you go to the NAPFA web site and find a Fee-Only (hourly) advisor in your area who is knowledgable on special needs and Medicare, as well as Fed and State programs that will be available to you and if these are needs based.

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....I will need to find a place to live. Expenses at that juncture, will go up.....

I don't know about the numbers but one thing to keep in mind if you need to find a nice inexpensive place to live that it might be possible to find a position as a "live in companion" to enable an elderly person to live at home in exchange for free room and board.

In an ideal situation this would mostly just involve being there to call 911 or a relative if there is an emergency or the person needs some help. Since you have a car I would assume that you can drive so you might also be able to occasionally take the person to things like doctors appointments or shopping.

When my Mom was elderly she insisted on staying in her house, she was able function pretty well and had one of those "help I've fallen and can't get up" panic buttons but she would have been in trouble if she couldn't have pressed the button when she was alone. She usually had people like housekeepers there during the day but she was alone at night. All my siblings and myself lived out of state and we would have felt much better if there was someone there at night and she had three empty bedrooms in the house so if she had someone living there it would have really help everyone's peace of mind.

It sounds like your disability isn't enough to keep you from living on your own so even if some accommodations need to be made, it sounds like you could do this in the right situation.

Being a live in companion is different than being a live in caregiver which would be a paid position and involve more work doing things like helping the person dress and function.

You would of course need to check out the details of the disability payment rules to make sure that you that this didn't cause problems. You might need to officially rent a room at the house for a nominal amount (like $10.00) each month if that would prevent problems with the disability rules.

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Hi pauleckler,

- Most of the $125K was accumulated before...

- Rents in my area are well above $800 a month for something decent, and utilities are usually separate.

- From where did you get your $250K figure? I can't quite follow your math. (I do understand that 4% drawdown would only provide me with $5K a year from my $125K.)

- Is the 5% average rate of return you mentioned before or after inflation? I assume it's before... Can I safely use an AVERAGE inflation rate of 3.5% going forward? That would put my real return at about 2%. Is that what you meant? If I'm correct (and I bet I'm not) that would mean my money would only double every 30 years or so.

- Is the retirement planning worksheet free and online? I can't find it. Link?

- If I manage to save, for instance, $5000 a year for the next 10 years, would that make a significant enough difference for me in the long run? Again, running numbers for long term planning is not my forte.


Hi TwoCybers,

- I've read your first sentence several times because it makes me feel good. Although, I'm not sure what you mean by it.

You said, "You have done a much better job to planning and executing than the vast majority of people."

I only wish that were true. Previously, I never knew about the existence of private disability insurance and I constantly beat myself up about it. After all, several tens of thousands extra a year to sock away would have vastly saved me. If I had known about it I'm sure I would have gotten it. However, I did not grow up in a finance-oriented family and these types of things were never talked about. I'm college educated but never learned about it there. I was previously self-employed and never heard colleagues talking about it. I never read about it or saw any commercials about it. I thought that by having an IRA and private health insurance that I was duplicating all of the benefits of full-timers. Boy I couldn't have been more wrong. It's not an easy transition to go from growing up in an upper-middle class family and now facing the terror of being poor - and what's worse is that I only have my own ignorance to blame for it. OK, ranting is over.

- My bonds are a CD, not in bond funds. I'm looking forward to CD rates going up eventually. I haven't had the courage to add bond funds even though I think they would have a place in my meager portfolio. I've researched individual bonds and have decided that they are not for me. ...But for now, only CDs to balance the craziness of the stocks.

- Yes, I've been on the Bogleheads board for a few years now, reading and asking questions. I've learned a lot, but unfortunately, I should have learned these things 20 years earlier. Again, I just didn't know.

- That's an interesting stat about the rebalancing. I guess it may mean a little good news for me, as I don't even rebalance once a year.

Hi ResNullius,

- When you said less in stocks, what percentage did you have in mind? No need to go into detail, but I was just curious. I know it's a tough question. I'm not super old yet, but on the other hand I have this unique situation. I've been reading books and struggling with the asset allocation for a few years now. I'm exhausted from the subject.

- I don't have a tax liability, so I don't know if I should be concerned about tax credits. I'm largely not qualified for the social services in my area because of my savings.


Everyone who posted so far is super for doing so. I really appreciate it.
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Are you there? I had some follow-up questions for you above. Thanks.
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