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Old 12-04-2019, 04:09 PM   #1
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Going to Fee based Financial Counselor but what would you do?

I'm retiring next year and here is the situation;

Plan; Retire next year at 56 (Wife retired 6 years ago at 51)

Rental #1 125k, paid off rent only 500 month (80 year old in-laws)
Rental #2 95k, paid off rent 800 month
Rental #3 110k, owe 45k rent 1000 month
(The prices are the estimated value)
My home 130k no equity
Other debt; 45k to friend, 12k auto loan/ low interest rate

Guestimated income after retirement;
1500 from rental property
3000-3500 monthly pension after Blue cross comes out
2000/month from investments if using the 4% rule. No penalty for withdrawal after retirement other than taxes.
No emergency fund. Not smart but itís the truth.

Subject to FC approval....
Take lump sum from FERS (gov't 401k) and pay off friend and rental #3. Also take out enough for registration, etc.
Plan on financing a 100k DP and likely pay off after selling a rental in the future.
Sell my house and maybe break even or lose a little. My daughter wants to rent it but understands if we sell.
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Old 12-04-2019, 04:15 PM   #2
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No Tax guy but 10% penalty on ira 401k ( assuming investments are is a sheltered fund) isnt gone at retirement ... it goes away at 59 1/2 . Not before "retired" or not if I remember correctly. any of it the DW's ? ...even longer to wait. Of course you can always just take the hit... but then that 4% number isn't accurate
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Old 12-04-2019, 04:37 PM   #3
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No Tax guy but 10% penalty on ira 401k ( assuming investments are is a sheltered fund) isnt gone at retirement ... it goes away at 59 1/2 . Not before "retired" or not if I remember correctly. any of it the DW's ? ...even longer to wait. Of course you can always just take the hit... but then that 4% number isn't accurate
There is no penalty for Gov't FERS employees using their investment after full retirement. In my case 36 years and 56 years old meets the requirement. Of course it will be taxable. No 10% penalty though.

I know the 4% rule is not exactly perfect. Our thought is that we will want/need more money in our 50's and 60's while traveling then when we settle down in our 70's. So if we slowly chip away at the investments than it's ok.

Trust me, we've made lots of mistakes and we are willing to listen to great advice. The counsel of many.....
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Old 12-04-2019, 04:53 PM   #4
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Originally Posted by BillJinOR View Post
No Tax guy but 10% penalty on ira 401k ( assuming investments are is a sheltered fund) isnt gone at retirement ... it goes away at 59 1/2 . Not before "retired" or not if I remember correctly. any of it the DW's ? ...even longer to wait. Of course you can always just take the hit... but then that 4% number isn't accurate
No penalty on 401k if retiring at 55 or later, if you take it in substantial equal payments.
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Old 12-04-2019, 05:39 PM   #5
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You're in the full-time forum so I assume you plan on full-timing.

Personally, it doesn't seem like you have a good handle on managing money. I would sell everything; pay off your debts and not draw down your investments. You can live on $35 - $45,000/year easily. You've got a long time to live off your investments since you're young.
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Old 12-04-2019, 06:22 PM   #6
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How much are you going to have to pay for management of those rentals while you are full timing. Since you won't be around, you have to have someone on call for responses, etc. So you need to cut that income down by some factor. You think you won't need as much in your 70s? Only if you stay healthy.

How much RVing have you done. Do you currently have a rig, if so what? Why do you want to RV?
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Old 12-04-2019, 08:29 PM   #7
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I am fiscally conservative .

It seems like a bit much debt to service in retirement. You are planning on the future sale price of real estate. Yes, I am doing that also, I plan on recieving 60% of the current comparable sales in the area. If the market turns, I'm still good to go.

I do not feel confident with the Trinity study. My personal safe withdrawal rate is .0327 vs .04. As I age I will be able to afford to adapt my environment or move to one more compatible.

IRS Rule T is on taking equal withdrawals over five years from a 401k.

Do your tax planning. Sketch it out for the next few years. It appears your first year of retirement you'll be at 135k plus your spouse. What it's your marginal tax rate? Remember the tax rates set by the trump cuts change then expire. Also IRMMA, that is a look back of two years income of top set your Medicare premiums.

If I were to pay a financial advisor, I would pay by the hour.
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Old 12-04-2019, 09:12 PM   #8
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The TSP is the best 401K for saving and building your nest egg, but it is the worst payout program. Regardless of your other assets, my best advice is to immediately roll your TSP when you retire to a private IRA in a non-taxable event (means the bank or financial organization receives the money and you do not touch it). Then, you can withdraw on your own terms instead of being forced into a payout schedule with the TSP that can never be changed.

Your bank probably has an investment side. They can give you advice on how to make this happen and suggest various programs and funds to put the money into that makes the most sense for your situation. Their fees generally are based on the value of the portfolio and not on transactions.

Since you are FERS, the TSP has some rules pertaining to when you can touch it based on full retirement vs early retirement. Check with your benefits folks and the TSP website.

My other advice concerns Social Security. Delay applying for that as long as you can. Your benefit goes up 8% each year that you delay until age 70 1/2. There is not other program out there that pays a guaranteed 8% so it actually makes sense to draw down your 401, IRA or TSP during the delay period as those funds may or may not see that kind of permanent growth.

I'm not smart enough to discuss your real estate and rental properties.

Good Luck with your retirement plans. Enjoy life after your years of toil.
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Old 12-04-2019, 10:28 PM   #9
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I had planned to retire by 55, but the great recession of 2008-9 spoiled those plans. I ended up retiring in 2016 at 59 in much better financial shape. My point being is that it's good have specific goals, but they shouldn't be cast in stone. Assuming you don't have to retire at 56, I suggest working and saving big time, for another 3 or 4 years. But, here's the secret to making it a happy time.


Go Rv'ing as much as possible during this time!


Despite not retiring, we capitalized on the free falling RV prices, and purchased our current DP in 2009. We then spent countless happy nights on the road during those additional 8 years in the work force. Even used it for business travel a few times! Extra days on the road per year!



My advice for you: Be flexible and realistic with your retirement date.


Side notes:
- don't pay off a low interest (AND deductible) real estate loan, and replace it with a high interest RV loan.
- consider signing up with various state parks to host. Benefits are free Full Hookup RV sites while hosting, and also free when you are in between gigs. This, along with boondocking, could greatly reduce your annual need for cash in retirement.

- be wary of the financial hit from Financial Advisors. Simply keeping your investment cash in a Target Date mutual fund at Vanguard will likely yield you more return and safety, than what your adviser can do after deducting his fee.
- I agree with paying off friend, but not rental 3.
- Sell your home when you retire and go full time. It will be a drain on you, if you rent it.


Feel free to PM me, if you want to chat further. I'm NOT fee based planner.
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Old 12-05-2019, 08:04 AM   #10
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Why do you feel you need to go to a paid financial advisor? Where are your assets invested? We have Vanguard and are very pleased with them and their financial advice. A few years ago we consolidated all investments with them, had to make a withdrawal from the IRA and had a couple other things going on. They thought of stuff I didn't think of and took the necessary steps to make everything work with no impact on our cash flow.



I agree with getting rid of all the houses(except in laws) if you are going full time. These will just be an unnecessary burden. As long as medical is covered, you have an emergency fund you should be OK. I think you should work the next few years and implement all the plans, get your ducks in a row. Then you can go full time.



We have simplified our financial life, Vanguard and a credit union. Use only 1-2 credit cards, paid off every month. As much as possible we have everything auto-paid. Took us a while to get everything running smooth but it is now and our life is so much better.
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Old 12-05-2019, 08:26 AM   #11
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Federal employees are eligible to join Navy Federal Credit Union.

Their financial advisers are free.. They really helped me!!!!!!! They pointed out a few holes in our plan and now we are good to go!!!!!!

Also at USAA, but you will have to check your eligibility to join....
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Old 12-05-2019, 08:31 AM   #12
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Originally Posted by twogypsies View Post
You're in the full-time forum so I assume you plan on full-timing.

Personally, it doesn't seem like you have a good handle on managing money. I would sell everything; pay off your debts and not draw down your investments. You can live on $35 - $45,000/year easily. You've got a long time to live off your investments since you're young.
Your assessment of my previous budgeting, etc. is fairly accurate. We've made several mistakes and have pretty much always lived paycheck to paycheck.
We do plan on FT'ing and don't currently have an RV.
The good news is; With just our pensions and SS (when we get older) we should be debt free and have 50k plus income.
We can't/won't sell the rentals as we have family living in them. They take great care of the houses and pay the rent. We have chosen to subsidize for my Mother and Father in-law.
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Old 12-05-2019, 08:46 AM   #13
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Just a couple of things to think about with rental property. First it can be managed from the road, except for repairs. Get your bills electronically and have them debited from your account if possible. Get someone that can do easy repairs (a handyman) and have some backup for more difficult one. Get your properties in good shape before you leave. The second is that rents continue to increase while financial investments generally don't. There are also satellite based messaging systems where you can get text messages is you are out of cell phone range. The cost is about $250 for the device and $12-20/mo for the service. Just some things I have figured out planning my retirement with 10 rental units. Good luck.
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Old 12-05-2019, 08:53 AM   #14
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How much are you going to have to pay for management of those rentals while you are full timing. Since you won't be around, you have to have someone on call for responses, etc. So you need to cut that income down by some factor. You think you won't need as much in your 70s? Only if you stay healthy.

How much RVing have you done. Do you currently have a rig, if so what? Why do you want to RV?
We have family living in all three rentals. They are all diy'ers and we have an HVAC guy that we use for that. If I outlive my in-laws we plan to sell that house when it's empty.
Why will I need more if I'm not healthy and not traveling? Will 50k be enough? I currently don't take any meds and have above average health. I know this can all change tomorrow. We have Blue cross through my wife's Postal retirement.
I had a Class C; Repaired/replaced the AC, fridge, toilet, vents, dash AC, floor, etc.
" Why do you want to RV? " There is not one particular reason why we are going to Full or part time. Ultimately this is not applicable IMO. I'm better informed to make this decision than anyone on this forum. It may be for a year or 10 years. Only time will tell. I predict it will be closer to the latter.
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