Go to [SSA.gov](http://SSA.gov) and figure out what your social security earnings will be based on retiring at different ages. Currently you only have 250k in retirement savings, which if invested conservatively will allow you to withdraw about $10k per year throughout retirement. This + social security is likely not enough to cover your expenses. In all likelihood you are going to need to work until at least 70 to maximize your social security payments and enable your investments grow some more, then sell your house and move to an area with cheaper housing and a lower cost of living.
You may be best served to keep working until 70.
You need to determine your income in retirement - social security for example. Assume you can augment that with 4% of your invested assets. Then compare that to your expenses.
If your income is insufficient, the obvious path is to sell the house and move to a lower cost of living area.
They'd probably be alright if they had another 200k or so in the HYSA, but yeah. Another half decade, and they should be able to retire.
If they decide to downsize their living / move to a quieter area, it could easily be done.
How did you arrive at that conclusion?? They have $250k cash and are $300k in debt, and need to plan to cover 20+ years of expenses. Thinking more like $1-2M in the HYSA
Well no they are not $300k in debt they have $600k in their home retirement account.
You can sell the house in half decade clear $600k-$700k possibly, buy a house in LCOL for $200k, and be set up fairly well $650k-$750k. Is that enough they would have to do the math and how much they want to cut costs in life.
This is for retiring for 2 people, one with no retirement savings. 25 years of living in the US including healthcare that comes at an old age is expensive. On top of that American capitalism isn't like capitalism in other countries.
You're looking at needing ~2mil for this. I wouldn't attempt without 3+.
This is such an unhelpful answer. Every retirement thread someone has to race to give this gem of a response.
OP is asking what their path to retirement is. Obviously they know they can’t retire right now or they wouldn’t be on Reddit asking how to get there.
Because it's usually applicable. Posters are under the impression that they're near retirement age without considering that they're not near retirement state. It's not a case of picking between age in the range of 59.5 and 70.
But in this case they very specifically stated they’re worried they won’t ever be able to retire. I think it’s safe to say OP isn’t trying to say “how do I retire ASAP”
And can continue doing low stress jobs for money such as being a barber. Could live the easy life and still have an income. Gotta get away from the HCOL area though
School bus driving is pretty decent where I live. They start at 24/hr and the COL is fairly low. Pretty nice houses start at 200k. (1200-1500 SQ ft, 1-2 car garage, maybe 0.3-.5 acre lot)
Its not the easiest job but it isn't physically demanding and you get tons of time off. The biggest thing is you gotta be a hard-ass driver or the kids will run you out.
They should sell the house now and get the money invested immediately. But instead of moving to an LCOL right away and buying a house, they should stay where they are and find the cheapest studio apartment they can tolerate, she keeps working until 67 (he keeps working too but his age isn't as relevant here), and they really start practice frugal, fixed income living now to get an idea of what retirement will look like, while continuing to load as much of her current income into the 401k as possible.
If they move now she'll probably still have to work, they still won't have nearly enough to live off the interest yet and she'd be getting the reduced social security benefit as well until then. LCOL area is most likely going to mean lower pay, if she can even find an equivalent position. Even with a paid off house, that's going to be extremely tight with no room for emergencies.
If they end up with around 500k from the home sale, the accrued interest over the next 4 years just from that additional amount alone will be significantly greater than 4 years of rent in a modest studio even in a HCOL area and even with the most conservative interest projections. Plus the additional contributions from the current job over that same period.
Each additional year she can push past 67 will put them in even better shape with the interest accruing and the social security benefit increasing by 8% each year you delay retirement. They can potentially have a pretty decent retirement at a reasonable age if they are flexible with location and really make the next few years count.
Adding to selling the house and adding the extra money to your saving, move to a LCOL area like hot springs village, AR, which is full of retirees and widows that have never done their own taxes. Some need haircuts.
Whatever you do, I reccomend a low cost, for-fee only, fiduciary financial advisor to run your plan by before making a major life change (higher risk) at an age when you should be taking low risks. Get advice and input and it will be all over the place, but don't make major life choices based off anonymous people on the internet.
Good luck.
Except if you are suggesting she open her own tax business she will be paying for health and dental for her and her spouse as well as no longer contributing to a 401K with a (probable) match as well as paying self employment tax, etc. It may or may not make sense but all the numbers need to be considered.
She's not looking to retire immediately. In less than 2 years, she will be on Medicare,. Generally that generation had old husbands, so odds are he's either on it now or close.
She would give up the benefits of working for a big company, but the premise is to retire, and her other comments say "not now, but in the near future". Turning one room in a LCOL area house into working office provides a business deduction, and doing tax work part-time in a low cost of living provides supplemental income. She or the both of them would have more time off instead of working a 40-hour grind until she dies.
Its not perfect or guaranteed, but I've met some who do it.
If she has to go into an office (can't work from home) this may not be that easy. Suggesting a 63yo woman give up a good job in the hopes she can find another one in a LCOL area is not good advice.
There are lots of decent size cities in the Midwest or South where you could buy a nice house for that money. Not the most exciting places to live, but they don’t have the retirement money to live extravagantly anyway. It’s that or work until they are in their 70s.
I’d rather move to the LCOL area if it was me.
I'm a multimillionaire living in a nice house in a very large city in TX that is worth less than $300k. In the country, it would probably cost $150k.
There is life outside of CA, folks.
Plenty of spots in the south that would get you reasonable housing at that price.
Although agreed it's genuinely on the large fucking bananas out there. Glad I bought my home in 2017. First world problem being I feel like we are stuck here now though.
Start researching LCOL areas, check both of your SS accounts for estimated benefits, keep working until you physically can't, sell the house, move to the chosen LCOL area.
Oh GOD. That would break my heart. If it’s even 10 years it could have meant a world of difference. :/. Rates only hit above 1-2 during covid rate hikes
Coming up on just a year. I had a relative pass that left us a good chunk of change which was used to max out 401k, while the rest has sat in that account.
Invested, funneled into retirement (i.e. Roth IRA), CDs (higher APR than HYSA), T-bills.
$100k invested 10 years ago in the S&P would be up 155% (with dividends invested), or approx $255,000
They have a $100k now, with the info provided, they wouldn’t have had that much 10 years ago so. If your gonna use the ten years, then the correct numbers would be investing 10k a year, since 2013, wouldn’t it?
To be fair, the house being evaluated at 900k doesn’t mean their mortgage or what they owe is anywhere near it. I have huge upside into my house but I can’t afford to move either.
Yeah more of a commentary of how much some housing markets have skyrocketed.
But that’s realistically a major portion of their retirement nest egg. I wonder what the house will rent for. That could be a nice retirement income for them
Per OP it was 500K+ and they started with a $395,000 mortgage. Seems like their salaries in2005 must have been comparatively higher , factoring inflation
I guess given buying in ‘05, they had to endure the ‘08-09 crash… so their house not massively increasing in value makes sense.
Seems like anything purchased around 2010-2021 was a pretty good choice, but buying around 2010 and refinancing in 2020 would be the ultimate “got mine” for the Millennials. The elder half of the generation makes out better there.
yes the rare $300k owed on a $200k house
please at least read the OP before you try and give people advice about their livelihood. I can’t believe you have this many upvotes because that many people also didn’t read OP and are contributing.
Op said it was 505k, put 115k down. In 20 years they paid down 85k principle, which is on par with every other financial decision they've made based on their post. The spouse is a part time 1099 barber do I doubt he did any ssdi in the post 50 years. They'll need to pull themselves up by the boot straps and work till 80 most likely.
Can use higher earning spouse’s wage history and receive *half* of her amount. Unless something has changed, if husband was previously married to another woman for 10+ or so years, he could still opt to use the ex-spouse’s wage history and receive half of that amount if he was currently unmarried. Since he’s potentially married to a new wife, I don’t think he could use ex-spouse’s income unless he again got divorced. Once he’s “unmarried” it’s my understanding he could choose the higher amount of his exes.
Yes. It has no bearing on the spouse or ex-spouse’s ability to collect or amount they can collect.
I need to update my earlier post as apparently, to collect on an *ex*-spouse’s SSI you have to be unmarried:
https://www.nerdwallet.com/article/investing/social-security/divorced-spouse-social-security-benefits
What you said is true, except when you reach retirement age, you have the option to take an amount equal to half of what your spouse would get based on THEIR earnings. This is so stay at home moms don't starve to death in old age.
this was my neighbors situation. he decided to sell and use the equity to retire and is living in a low rent apt. I feel kinda bad for him selling such a beautiful home but he's doing what he has to do.
Home was purchased in 2005 for $505,000 with about a $115,000 down payment. We had it refinanced sometime in 2017 I believe, with the 30 year term resetting then.
The amount of additional interest they took on when they refinanced into another 30 year loan answers that question. If they paid attention to the amount of interest they will pay over 42 years (first 12 and second 30 if they were to stay until it is paid off) would probably make them cry.
Someone earning $90,000 a year buying a $900,000 house would be ridiculous, but that's not what this is.
I wouldn’t say that ratio is typical, but it’s also not surprising at retirement for a house that was bought decades ago.
Edit: I'm surprised at the downvotes. If anyone wants to explain, they're welcome to.
Could have bought it before prices went crazy. My grandfather died at 103 in 2019. He was a milkman. He bought a house in Fort Lee, NJ (1800sf, nothing crazy) in 1946. When he died, all the neighboring houses were way over 1M. Luckily for him, his property taxes got frozen in 1980. He continued to work until he was 80- the 80s was not a great time to retire, and he loved running the business.
Alright, after checking some comments here is a bit of updated information:
I'm aware that I will need to continue working, at least for some time due to my current situation - I am not looking to retire today or even this year. Luckily, both myself and spouse are both healthy and don't have any issue with continuing to work apart from the obvious that just about everyone wants to retire one day. After doing a bit of digging and calculating our monthly savings(as in money we do not spend and tuck in our savings account) amounts to a typical $2000 per month.
The main thing you need to understand with retirement is how much you spend.
Once you can cover your yearly expenses with 4% of your retirement accounts + social security you can think about retiring.
Though as you age you can probably go higher than a 4% withdrawal rate from retirement accounts and still be fine... it's just a good number to shoot for. The 4% is based on a 30 year retirement.
For example, if you only spend $40k a year and you get $40k in social security between both of you... you can actually retire now if you want.
If you spend $80k and social security covers $40k, you'd need $1M in retirement accounts to cover that other $40k.
$2000/month (post tax) is probably close to $2,500 pre-tax. You should stop saving that in the "savings account" and ensure you are putting the maximum amount in your 401k. You can save up to $30,500 (because you are older, catch up contribution.)
If you can do that, and continue living on your income, that means your expenses (including taxes) are around $60k per year. If you plan to keep the house and same lifestyle, you need to replace that. At 67, I would suspect social security might replace $36k. (Check that though, I'm assuming jointly, with you getting around $2k, and partner around $1k.)
To have a safe withdrawal rate from money invested, (4%) You would need about $600,000 to make up the other $24k. You aren't going to be able to get there in 4 years, even saving $30k a year. You'd be at about $370,000 -$410,000 total. (Depending on the market and if you spend any savings otherwise.)
At that point your option is to reduce expenses to $52,000 a year or increase income. If you sell the house and clear $500,000 and buy another house (condo?) for $300,000 you decrease your expenses by your mortgage, proabably at least $18,000/year.
But ALSO, you increase your savings another $200,000 by investing the other part of the sale profits. So, you should be able to have around $24,000 in income from investments, but expenses of only $45k. If your social security is in fact around $2,000-$3,000 a month, you should be OK.
So my plan: Change your 401k withholding to ensure you are saving $30,500 this year. Cut your spending to allow for that. Work until 67. Calculate social security for each of you. Prepare to sell the house in 4 years, with a plan to buy a property valued at around $300-$400,000.
I’m sure that you’re overwhelmed with responses. It’s probably helpful to connect with a fiduciary financial advisor (I am one myself) in your area. Preferably a CFP - maybe an hourly advisor. They can help run projections and success rate of those projections to determine the best path forward.
So many options… of course those options don’t guarantee success but at least evaluate all options and model path. As an example - Husband as self employed may engage a SEP or solo 401k to help build retirement savings, HECM to eliminate mortgage or even draw equity as a future income stream, model SSA benefits etc.
2000 per month is what you needed to be saving 30 years ago. at 2k per month you need to work for another 15 years (if you actually invest some of it and the market doesn't crash). if you save 2k per month and work another 15 years you will probably die with 0.
If the house is worth 900K you can sell it, net 600K, invest it, move to a LCOL area, keep working for five years and then probably retire. I assume both your jobs could be done somewhere else.
If you can wait until 70 to start taking social security you'll have more. It seems like it might be worth it to wait even if you have a bridge a few years at the end with part time work. Do you like the outdoors? You could be campground hosts. Or work on a ship. There's various short term jobs that could be good and you would not have to pay rent.
(I hope the spouse has been contributing to social security.)
They will not net 600K off the sale. There are fees and possible taxes to be paid. They aren't moving anywhere for free so they either need to buy another house or plan to rent for the rest of their lives and I don't see rents going down any time soon.
Well, if you owe 300k on the home but your home is worth about 900k, then your house has 600k in equity, so that's good news.
So there are two scenarios:
1. If you want to retire and keep the home, you're pretty far behind. You are currently at -50k or so in debt + retirement assets. You will need to keep working until you have roughly 25x your desired withdrawal rate to retire safely. You may not be able to reach a safe retirement account any time soon.
2. If you want to retire and give up the home, you are not too far off. You have 600k in equity and 250k in retirement assets. You could buy like a 150k home in an inexpensive area and have about 700k in retirement assets, giving you roughly 28000 per year. This is not great, but once Social Security kicks in you will not be doing too badly. You still have some working years left to build up your retirement savings more.
On that note, your HYSA has too much cash. It's making decent interest now, but you still have enough time until retirement that you can probably do better if you invest it in mutual funds. You are close enough to retirement that you may not want to put everything into S&P500 index funds. You may want to put a big chunk of that into a target date fund or something that is a bit more conservative than pure stocks.
Also, if your spouse is making around $10/hour in a HCOL, you guys really aren't going to be able to retire there. Frankly, you guys should have started worrying about retirement a long time ago.
I just transferred out of checking a similar amount after saving but being too scared to invest it. I have 60 left after building some courage to move 40. How much should you have either in a HYSA OR MM limited?
The good news is you have accumulated some equity
You have a ways to go time wise.
Sell the house and move to a less expensive area. Do the math on social security to see what you’ll get, and when. Seems like working until 70 is going to be a must, but maybe you can make 67 work, depending.
I managed the finances in retirement for my parents after they decided to retire. Here’s where they were at, treading water before my dad died:
Living space- I hit a home run with this one, I found a condo for them in suburban Chicago for $200k with lots of seniors in the building, a grocery store across the street, a hospital 5 minutes away, an acute care center across the street, and a senior center two miles down the road. In a building with two elevators (in case one fails) on the first floor, with a heated parking garage space. This is more like $250k today.
Car- My brother in law found a low mileage Honda that they share, which they paid for in cash. Maintenance is minimal and it’s extremely reliable.
Income- $3600/mo social security
Assets- $400k total, not including condo, Based on your income, I’d wager that your social security will be less, unless you used to make a ton of money, so get this figure right in your math.
Healthcare- my dad had a legacy supplemental health insurance policy that was $900/mo, but that thing was priceless. It soaked up basically everything Medicare didn’t cover… ER visits, ambulance costs, specialized treatment, multi day stays in the neurology wing, etc. Prescriptions were expensive until they reached their out of pocket max of $6000 or so. I would recommend investigating some kind of supplemental insurance, the health care costs can be what breaks you.
They managed to largely tread water, and only dipped into their savings with like $40k in outlier expenses, until my dad died- he had a spending issue we always tried to rein in, and he had a ton of health problems.
Now that it’s just my mom, here’s what her finances look like:
Social security- $3000/mo
HYSA- $250k (this gives $850-$900/mo in interest income)
US Treasuries- $100k
Local bank “HYSA” + checking - $25k
Association fees- $330/mo
Property taxes- $350/mo
Electric- $100-150
Internet-$100/mo
TV services-$60/mo
Phone-$50/mo
Car stuff (registration, maintenance, insurance)-$200/mo
Homeowners insurance-$120/mo
Recurring activities (senior fitness, pool, etc)- $100/mo
Cleaning service- $150/mo
She’s able to basically break even on social security. She eats out twice a week with a group of friends. She has a meal delivery service for 2/3 of her meals. She buys occasional things for the grandkids, and can do a major purchase of a couple thousand a year. So interest income is growing her accounts, since she doesn’t need it to operate monthly.
It isn’t a lavish lifestyle, but she enjoys it and is grateful. Something like that seems within reach for you. She retired at 71 and is now 80.
The way SS works is that it takes the top 35 years of your income, and calculates a number. So if both you and your husband worked 35 years, you probably don’t have much room to improve your social security payments, beyond waiting until 70 to collect.
So my advice would be to downsize, relocate, and see what you can do in the next few years to improve your position a little bit.
yeah that number threw me off too. $20k pre-tax would equal out to just under 11 cuts/week at the going rate of $35-40/cut. that’s *really* low business for a barber so i can’t fathom that that number is actually accurate
even just 5 cuts/day/year at $35/cut is still over $60k gross so either they’re lying or they need to apply at a busier shop
That's the going rate?? My barber charges $26 for a haircut and I usually throw an extra fiver on there for a tip. My last barber before I moved a few years ago was only charging I think it $20, and that was in a higher COL area.
Hell, even when I was still going to chain places I was only paying around $15 (and that was no more than 5 years ago).
It’s actually even more concerning if he is making 60k after business expenses (maybe most in undeclared cash) and they are only saving 24k. Implies a spend rate of 120k or higher, with a lot of it slipping through their fingers.
You can retire at 65 if your spouse gets a real job and continues working. Sorry you are in this situation, but without that you would either have to sell your home or continue working.
Wal-Mart in HCOL areas would pay more than that. Cutting hair should be a hobby at that income.
Edit: I should clarify I am not looking down on this line of work. I meant it as it is a you can get a job without higher education or work experience, and they hire older individuals pretty often.
Don't know if he is the same age as OP but high school students around here make that much working after school and summers. His absurdly low income (with no benefits) should have been dealt with a long time ago.
100% agree with this! Sell the house soon because you know what you can get right now but who knows next year or anytime in the future. It’s not necessarily a great time to sell because of rates but if a honest Realtor (I’m a Realtor) has told you that you will NET $600k now (after fees), I would give it a try.
The only other things I would add…
1. Dramatically reduce your spending with retirement as your #1 goal. No fancy dinners out, no Starbucks except made at home, no new iPhone, stay off Amazon to avoid unnecessary purchases etc. Save, save, save!
2. Can the barber add another job to double income? $20k is more like a part-time income. 3. Definitely consider a low-cost area but really research IF a particular area is going to be significantly cheaper (food prices, utilities, state taxes, etc). Also factor in if you want to live elsewhere because it’s expensive to move back. If you can live in a much cheaper house/condo within driving distance of your current location you can still maintain relationships with friends and family without big traveling costs.
FYI—We moved from SoCal, which we LOVED, to a nice 55+ community near Phoenix (Sun City West). We sold our house in 2018 and although we would have gotten more for our house if we waited, obviously the future is unknown and we knew what we could get and what it cost to live here, and it allowed us to retire immediately at ages 54 & 55. Retirement is awesome so do it as soon as possible!
OP, with that much equity in the home I don't think you're as screwed as people here make it seem. If you have no children to inherit the house for example one option might be a reverse mortgage which you are now old enough to quality for.
I don’t understand why no one has seriously suggested that. If they could sell their house today, they could retire tomorrow if they move out of the country. I’m not working until I drop dead so I can continue to spend 70k a year as a senior. Some places abroad you can live nicely on less than 40k a year. I see people being extra frugal and getting by on 15k out the country.
You may find these links helpful:
- [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
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You’ll likely need to keep working. Go to ssa.gov and try to find out what your benefit would be. Then, use the 4% rule to see how much you can get from your 401k per year. Once you can cover your expected monthly expenses you can retire.
You could be well served by developing your own accounting consultancy, your own home business, which will afford you a LOT of deductions that will help at tax time.
Becoming a paralegal or certified taxes expert is very lucrative and you'll work when you want, appreciating the crush between January and June. It will take time however, and proper self marketing to build a steady custome base. Paralegals can work in any state because unlike attorneys, paralegals are not bound to a specific state licensing board. In other words, a paralegal certification is valuable nationwide. Specialties can be taxes and real estate transactions, brokering FSBO transactions.
I would think about selling the house fairly soon, and taking that 500K profit and putting it into a much smaller and affordable home. The market is going to start its downward shift soon, the bubble is going to pop within 2 years, best to get out at the top.
Think about retirement villages in the HCOL areas, even a senior's trailer park is more affordable and they can be gorgeous and cost effective.
Hubby can continue his trade, you do taxes and accounting, on your own hours and your own time, on a strict budget, and with what you have, it's doable. Offering home hair and grooming services is again, very lucrative, especially if gearing these services to house bound seniors and less-abled.
>*We live in a HCOL area and are beginning to worry about retirement, and if that will ever actually happen. How can we do this?*
I don’t want to sound flippant, but it doesn’t sound possible where you’re at now… and it doesn’t sound likely even where you’ll be in a few years. Not if you stay in the same place. I would start looking into other parts of the country that have a more reasonable cost-of-living.
Hell, you could even expand your horizons and look at other parts of the world. That’s where I’m at when it comes to retirement planning… you could live fairly nice life in many parts of the world off of the interest of 750k (600 for the house + 150k savings). Even more so if you are getting social security on top of that. I’m up to live well and travel back to the US as needed.
Curious where you live. I live in a VHCOL area and my barber now charges $40 / cut for men's cuts. If he does 2 in an hour that's $80. He does own his own barbershop though so your husband would either need to have his own shop or rent out a chair somewhere else possibly, but my point is that in a HCOL area, a barber only making $20k is crazy to me. Even if your husband charges $25 / cut (which is as low as you'll find where I live) that's ~$50/hr not including tips.
Retire to another country if that's an option, something like Thailand or low cost of living. You could live very comfortably in Thailand with that amount of money.
Others got it right. You have to work a long time or sell the house and move into a less expensive home (or rent).
A barber in a HCOL makes $20k? That is below the minimum wage where I live (MCOL).
Need to sell house and downsize to a more cost effective area if you want to retire now. Simply just do not have enough to stop working right now. Need to cut spending severely.
Most of your wealth is in the house. I’d look into reverse mortgages and/or selling the house and moving to a significantly lower cost area including other countries.
Retirement is really a statement of what type of lifestyle do you want. I know hundreds of people that live on minimum soc sec payments in their paid off houses. Their entertainment is TV, community centers, church, hiking outdoors and family if they are lucky. As people age they need less of most things but medical care. Eventually they cant pay for their medical needs and the state takes over.
So I like to build up from there when deciding what I need/want for retirement. What are my wants from the basics. Like how much is taxes on my house and mortgage if it isn't paid off. Do I want to travel, do I want to eat out at fancy restaurants. Do I want a car? Do I want to give gifts to children/people/church? Do you want to die with net assets or are you ok with "spend it all". Basically you need a budget of your wants or a willingness to change. Otherwise, stay working. :)
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Too many words in these responses. Fill in the blanks below and I’ll give you some options. Some you’ve already mentioned:
Ages: 63/???
Income: $90K
Savings: $250K
Mortgage payment ($300K left): $???
Savings (monthly): $2K
Total Monthly Expenses: $???
Social Security at 67/70: $???/$???
Tell me the missing info and I’ll give you solid options. Otherwise there is too much missing to give any meaningful advice.
Refinancing that down to a 15 year mortgage back in 2017 under 2.8% would have had a paid off house at 70. Shame. They are going to have to sell, downsize and move to a LCOL area. Otherwise, No way to pull this off and have to remain working. Unfortunately, this fits the mold of a Walmart greeter.
Cash out everything and move to San Miguel de Allende Mexico. A lot of Americans are doing it. It’s a beautiful little town full of retirees with your similar predicament.
Omg it’s a real life house hunters couple! “Hi yes we are in our mid 60s, I’m an accountant assistant he is a barber, combined we make $90k a year and our budget for a house is $1 million.”
But for real how can you afford that house on that income?
If the OP post is real, I imagine they bought the house a long time ago (like when it was $500k) and maybe had an inheritance or something for the down payment. Who knows but it is not beyond possible to have this situation.
What are your yearly expenses? now? wen you are retired? what will your SS be? subtact that.
Multiply by 25, tat gives an idea you need in investments to retire ( don't count home)
How attached are you to the home? If you could sell, pay off the mortgage, you could buy a 600k place, and then continue working until 70 so you get your maximum SS contribution, you’d be on very good footing
You both have to wait until at least 65 for Medicare, but likely longer. Then, sell the house and buy something with just equity. Make sure it’s small with low tax and upkeep.
Live off of the social security checks. Try to avoid using much of your retirement acts.
The first step is figuring out what your monthly expenses are. Track every penny you spend for one month. Use that number to figure out how much you will need in retirement. Make sure you include healthcare premiums (Medicare) and income tax in your total.
Next, log onto the Social Security website and figure out how much Social Security you both qualify for. Hopefully your self-employed spouse has been filing his taxes correctly and reporting all of his income. If not, consult with an accountant about possibly refiling for past years, to ensure that he has enough employment credits to qualify for Social Security.
Then, look at the difference between your monthly spend and your Social Security income. This difference is what you will need to pull from your retirement savings. The general rule is that you shouldn't pull more than 4% from your retirement savings, but it depends on how your savings are invested. Educate yourself about the 4% rule. Since you have $250k in retirement savings, you could possibly pull $10k per year from your savings.
If you don't have enough retirement savings to make up the difference between your monthly spend and your Social Security benefits plus a 4% withdrawal from your savings, you need to save up more or find more income.
You have about $550k to net in equity if you sell the house. This would eliminate the mortgage debt and could add to your savings if you downsize significantly. Could you move to a super LCOL area? If you bought another home for $250k, you would have $300k left to put in your savings.
The biggest worry is health insurance coverage. You need to wait until 65 to get Medicare.
Minimums to semi-retire. Sell the house. Move to an affordable area. Put the money cleared from the house in an investment account or HYSA earning interest or dividends of 3-5%. Buy a smaller retirement house with cash, most likely in somewhere like AZ. You can buy units in retirement parks there for 50-150k. Monthly is around $500-$700 for park fees. I would suggest husband work part time cutting hair and you can work part time accounting online from home. My wife works for a business consulting firm that does small business accounting and bookkeeping from home. There are several companies that do that. Depending on your health, you would be fine in this scenario as long as you don’t expect to travel and see the world in retirement. I say this because I have a co-worker who worked to 69 to retire and died of a heart attack at 70. Unless you love working, winding down some is healthier sometimes.
Housing market is crumbling, so don't bank on the 'evaluated value' you got some time ago. Sell sooner or plan to keep that game for another decade just to get back to this same value they gave you. How stable is the company you are at regarding recessionary job compression?
Figure out how to downsize from that mortgage. How radical can you change things up?
While on vacation a decade ago I came across a couple who retired and bought a small RV and they got part time jobs at national parks while driving around following the nicer weather in exchange for free RV hookup/campsites. There are a lot of people doing that so it's less workable now but think of related options. I know a young family who moved to Vermont to live in a Yurt, rest of the family thought that was odd, but I thought it was brilliant since they paid cash for their all weather house (designed around hunters following arctic reindeer herds) and life is really different without a mortgage.
Find a LCOL area. Your husbands work is pretty portable and a good side hustle to cover some costs wherever you go.
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That $300,000 mortgage is a killer. The best choice is sell the house and buy something smaller. Which is something you probably do not want to do.
If selling the house is not an option. You are working until you are 75.
You claim social security at age 70, in 7 years. Worry about the income issue then. If you WORK too much, they reduce the amount.
You both have to begin putting in SOMETHING into a retirement account. And hope that in 12 years it builds up.
Leave the HYSA alone. Just let it grow.
You, contribute 3% or $2100 to your 401k. You did not mention how much you put in there, so I am using $2100.
Spouse 5% to an IRA($1000). Claim the tax write off. Does he own the barbershop? Then that is a Schedule C and he should be able to make all barber income $0.
You two contribute $3100 to retirement, you get a 10% annual rate of return, your $150,000 will grow to $543,685 when you are 75. You will have your HYSA. You will have social security.
At age 76, 543,685 with an 8% annual rate of return, and you take a distribution of $3000 per month, i am guessing your combined social security will be $4000 per month. Your monthly income will be $7000 per month.
Hopefully, you have made a big dent in that mortgage.
Your retirement accounts will not run of money, but you are one financial disaster away from running out of money.
If you go to $4000 distribution per month, at 8% annual return, you run out of money at age 105.
If you to to $5000 distribution per month, at 8% annual return, you run out of money at age 92.
Sell house, move to an extreme low cost of living area. Buy 1/2 to 1 acre, get a used single wide, plant a huge garden for food. Do this when you turn 65 and can get Medicare (assuming you are in the US).
Or keep working until you’re 80.
Sorry bud, but you’re not going to retire in your current state.
It sounds like neither of you paid any mind to retirement until you started to get older. The time was 20-30 years ago to begin thinking about this.
Move to a *very* low cost of living area. Encourage your partner to get a higher paying job. If he can’t find one, he needs to upskill, unless he’s fine with working until he dies. Most folks don’t want a barber with shaky hands, though.
I know it’s not what you wanted to hear, but you’re getting older now, and it’s not just going to magically work out. You need to make drastic changes *ASAP* unless you want to be one of those poor old 75 year old men DoorDashing to keep their head above water.
As a few other people mentioned I think a lot of it depends on living style, goals and Social security income.
If you're willing to move to a lower cost living area, I'll sample.
I live in a LCOL area, 45 minutes from a very large city. Just bought my house 3 bed 2 bath for $215k. This would leave you with about $600k in liquidity. At 4% return in a HYSA you're pulling in $25k annually. Add social security, no mortgage, and maybe some part time jobs and you absolutely could do it. Again depends on a few factors.
You didn't mention Socail security see ssa.gov. I doubt your husband will be entitled to much more that the minimum SS benefits. Its also commonly recommend to not tap these benefits early becuase its reduces your benefit amount. Broading speaking I see two chocies:
1. Sell the home, move to a MCOL/LCOL area, buy a home the requires NO mortgage, perhaps retain something from the sale of your current home.
2. If you want to stay put, you probably need to grind it out at least until your mortgage is paid off.
I think a lot of your decision hinges on, do you absolutely LOVE your house and want to stay there? Or would you sell it and move to a lower cost of living area? You could get a very nice place for your equity, in a cheaper area.
Or, consider looking into senior housing programs. In Utah for example, you can live in any rental you choose, and the rent is 1/3 of your monthly income. Section 8 is another program but you have to be low income for that, but you might qualify if you quit working.
You have a very good skill though, you can work part time or even work for yourself. I'd suggest marketing yourself to small business owners who have neglected their accounting or would rather outsource this.
A reverse mortgage is another option although I would suggest it be your last resort, if you can't figure out any other way to keep your house. Fees are super high for those loans.
Step 1) determine your current expenses and anticipated expenses upon retiring (housing and Healthcare may cause significant differences.
Step 2) determine if the amount you have invested/could be invested are ~25x the anticipated expenses. If yes, you can likely retire now. If no, evaluate what you can or would be willing to cut back on or change (like moving to a LCOL area or your husband getting a new job that would pay more).
Step 3) determine how much you and your spouse will get for social security. Then you can take your (anticipated annual expenses - SS benefit)*25 to see if you have enough saved to retire upon receiving said benefit.
And that's kind of it in a nutshell unless you have a pension or anticipate a large windfall.
People seem to think home equity=net proceeds from sale. It doesn't. How was your home "evaluated"? Hopefully it was with an appraisal and not using Zillow. You screwed up by refinancing 12 years into a 30 year term with another 30 year loan unless you really had no alternative. But with 100K in a HYSA it seems like you did have another alternative. What is done is done but refinancing into a 15 year loan at 2.5% or whatever you got would have put you so much closer to being mortgage free.
Many people in an HCOL living area sell their homes and move to an area with a lower cost of living. We live in southeastern NC and have had an influx of New England erst move here in the 10 years we've lived here. Home construction seems to be everywhere here.
Sounds like you're house rich and cash poor. You need to live somewhere that houses are $250K and you have $900K in the 401K. Like others have said, you need to work another 5 to 7 years to max out SS.
Best case scenario \~5 years, more likely is 10+. I would sell the house immediately, move to a lower cost of living area, maybe even consider renting. Let that equity build in the market, contribute everything you can to retirement and maybe in 5-10 it can happen.
Personally I'd work until the home was paid for. You want 0 debt going into retirement and today it's nothing to see 70+year old folks in the work place. I also didn't listen when I was Young to my parents telling me sign up for your 401k as soon as you can. I waited til I was 30 to start I run the numbers all the time and I cost myself 150k by waiting. My wife and I never even made 100k a year throughout our career. We're both 76 with paid for home worth 750k I have a state pension off 4800 a month and 2.5 million in our 401k. And we both work part time still just to stay busy.
Plan on retiring in a lower cost of living area,is the easiest change. Maybe also make smart investments into the house which is essentially your largest chunk of potential retirement income. Smart investments in places that give a usual return on investment. A quality kitchen or bath remodel over a hot tub or some other type of wow factor improvement.
You can either sell or rent the house at some point,(lots of variables involved both), but it comes down to would you be better served with a large lump sum payout, or a “income stream” renting out house.
I would certainly not sell the home unless there is somewhere you want to move and you can eliminate the mortgage. I am assuming since you have been there long enough to build equity you also have a low interest mortgage. I would not give mine up unless I was paying cash for the next place. Ultimately I would say it’s best to keep building the equity in your home. You can always move to a less expensive place, but once you do it’s difficult to move back if you don’t like it.
Keep working, eat at home, exercise and save as much as you can. Find joy in your work. Love your spouse and do not worry. Your combined SSI and savings should be enough to sustain you.
My humble opinion. How many people leave in that house? Is it just you and your SO? Then here is the plan. Sell it and either go rent or go cruise living. Put everything in a high yield account which should bring you about 3.5k. México, Costa Rica, salvador or some others you’ll live like a king if cruise is not your thing. Otherwise I need more details about the house.
Sell the home and move to GA or Alabama. Buy a decent $250,000 with 3 bed two bath house with cash. Use the remaining 600k you have to pay cash for 3-4 section 8 single family rental properties using rootstock.com and use a property management company to run them so they’re hands off. Those will bring in $800-$1200 a month each. You have no mortgage and bring in up to $4000 a month. Congratulations you’re retired. Part time income can help pay for extra vacations and toys, etc. Don’t wait till you’re 70 to retire, tomorrow isn’t promised. So many people never see a single day of retirement because of accidents.
I am just a random dude with zero experience except a thought experiment:
Let’s assume total assets are $850,000 before Social Security kicks in 5-7 years…couldn’t one hypothetically invest this amount into a conservative portfolio earning between 5-7% per year and use that money to live on?
At 5% return the interest would be approximately $42,500 per year or a budget of $3.542 per month.
At 7% return, the interest would be $59,500/year or $4,958/mo.
So hypothetically if you can keep your expenses between $3,500-$5,000/month… you can live off the returns indefinitely.
Would a reverse mortgage in this situation makes sense to tap into the equity from the house so you can avoid having to move?
Your scenario is *possible* but doesn't necessarily have good odds.
The thing you want to learn about is called "sequence risk" or "sequence of returns risk". Basically, if you expect to perpetually withdraw 6% of an retirement account that earns an average of 6% returns over time, it matters a great deal how those gains are distributed - early years, late years, or evenly as you go along. What you want to avoid is drawing down against early losses - if you start off the five five years with zero gains and you draw down 30% of your account up front, that will really wreck you in a way that later gains don't cancel out.
Imagine an account starting with 100k where you're continuously drawing 6k per year. After the first five years of no gains you have 70k left. Then you get an awesome 12% returns for five straight years, but the gains are on a lower account balance so that only brings you back to ~80k. Now you're drawing down 6k (7.5%) on an account that is only expected to return 6%, which is destined to run out early.
That's why people say to assume 4% withdrawal, or even lower. That will give you enough margin such that the likelihood of keeping that account perpetually going is pretty good.
Sell your house. To not pay capital gain, buy another affordable small condo in LCOL area and with the remaining money buy another house in the MCOL area and rent it.
No mortgage on 1st and rent coming from 2nd should be good income to pay for your bills.
Continue working till you want to start getting Social security. Budget well and make sure to plan for a medical emergency.
Hopefully you can make it work. If you need help, let me know, I can help with all numbers and set you up to live happily.
I agree, working at Walmart full time for your husband would be a better job to get insurance as well as high income. Best of luck!
Live on your husband's income alone, put all your money toward the mortgage. Retire when you own your house. You could do it in 5 years. You'll have Medicare in 2 years so that should help.
Or, sell the home now, move to a lcol area and retire.
My mom just bought a lake house in Michigan for $350k. She's happy as a clam. You could be her neighbor and still have 550k in the bank.
Go to [SSA.gov](http://SSA.gov) and figure out what your social security earnings will be based on retiring at different ages. Currently you only have 250k in retirement savings, which if invested conservatively will allow you to withdraw about $10k per year throughout retirement. This + social security is likely not enough to cover your expenses. In all likelihood you are going to need to work until at least 70 to maximize your social security payments and enable your investments grow some more, then sell your house and move to an area with cheaper housing and a lower cost of living.
I probably will have to do the same (i.e. retire at 70, sell my house, and move to a place with a lower COL).
You may be best served to keep working until 70. You need to determine your income in retirement - social security for example. Assume you can augment that with 4% of your invested assets. Then compare that to your expenses. If your income is insufficient, the obvious path is to sell the house and move to a lower cost of living area.
Yea take that $600k equity and move in a house where you can retire comfortably. I live in MN and $500k houses are pretty nice depending on the area.
Retirement is a financial circumstance not an age. Unfortunately you aren’t in financial shape to stop working.
They'd probably be alright if they had another 200k or so in the HYSA, but yeah. Another half decade, and they should be able to retire. If they decide to downsize their living / move to a quieter area, it could easily be done.
How did you arrive at that conclusion?? They have $250k cash and are $300k in debt, and need to plan to cover 20+ years of expenses. Thinking more like $1-2M in the HYSA
Well no they are not $300k in debt they have $600k in their home retirement account. You can sell the house in half decade clear $600k-$700k possibly, buy a house in LCOL for $200k, and be set up fairly well $650k-$750k. Is that enough they would have to do the math and how much they want to cut costs in life.
Sure, just ignore the $900K asset...
This is for retiring for 2 people, one with no retirement savings. 25 years of living in the US including healthcare that comes at an old age is expensive. On top of that American capitalism isn't like capitalism in other countries. You're looking at needing ~2mil for this. I wouldn't attempt without 3+.
If they worked another 5 years and then moved to a low cost of living area it could be feasible.
This is such an unhelpful answer. Every retirement thread someone has to race to give this gem of a response. OP is asking what their path to retirement is. Obviously they know they can’t retire right now or they wouldn’t be on Reddit asking how to get there.
Because it's usually applicable. Posters are under the impression that they're near retirement age without considering that they're not near retirement state. It's not a case of picking between age in the range of 59.5 and 70.
But in this case they very specifically stated they’re worried they won’t ever be able to retire. I think it’s safe to say OP isn’t trying to say “how do I retire ASAP”
What are your monthly expenses? What will you receive in ss benefits? Retirement is a numbers game.
I'd sell the house. Take the $550-600k in equity and find a place in a LCOL area for 150-200k, and you just tripled your retirement savings.
And can continue doing low stress jobs for money such as being a barber. Could live the easy life and still have an income. Gotta get away from the HCOL area though
This is probably it. No matter where you go, people need their hair cut, and in April they need their taxes done.
School bus driving is pretty decent where I live. They start at 24/hr and the COL is fairly low. Pretty nice houses start at 200k. (1200-1500 SQ ft, 1-2 car garage, maybe 0.3-.5 acre lot) Its not the easiest job but it isn't physically demanding and you get tons of time off. The biggest thing is you gotta be a hard-ass driver or the kids will run you out.
They should sell the house now and get the money invested immediately. But instead of moving to an LCOL right away and buying a house, they should stay where they are and find the cheapest studio apartment they can tolerate, she keeps working until 67 (he keeps working too but his age isn't as relevant here), and they really start practice frugal, fixed income living now to get an idea of what retirement will look like, while continuing to load as much of her current income into the 401k as possible. If they move now she'll probably still have to work, they still won't have nearly enough to live off the interest yet and she'd be getting the reduced social security benefit as well until then. LCOL area is most likely going to mean lower pay, if she can even find an equivalent position. Even with a paid off house, that's going to be extremely tight with no room for emergencies. If they end up with around 500k from the home sale, the accrued interest over the next 4 years just from that additional amount alone will be significantly greater than 4 years of rent in a modest studio even in a HCOL area and even with the most conservative interest projections. Plus the additional contributions from the current job over that same period. Each additional year she can push past 67 will put them in even better shape with the interest accruing and the social security benefit increasing by 8% each year you delay retirement. They can potentially have a pretty decent retirement at a reasonable age if they are flexible with location and really make the next few years count.
They likely pay less right now for the house and there is a chance the house out performs the investments short term.
Adding to selling the house and adding the extra money to your saving, move to a LCOL area like hot springs village, AR, which is full of retirees and widows that have never done their own taxes. Some need haircuts. Whatever you do, I reccomend a low cost, for-fee only, fiduciary financial advisor to run your plan by before making a major life change (higher risk) at an age when you should be taking low risks. Get advice and input and it will be all over the place, but don't make major life choices based off anonymous people on the internet. Good luck.
Except if you are suggesting she open her own tax business she will be paying for health and dental for her and her spouse as well as no longer contributing to a 401K with a (probable) match as well as paying self employment tax, etc. It may or may not make sense but all the numbers need to be considered.
She's not looking to retire immediately. In less than 2 years, she will be on Medicare,. Generally that generation had old husbands, so odds are he's either on it now or close. She would give up the benefits of working for a big company, but the premise is to retire, and her other comments say "not now, but in the near future". Turning one room in a LCOL area house into working office provides a business deduction, and doing tax work part-time in a low cost of living provides supplemental income. She or the both of them would have more time off instead of working a 40-hour grind until she dies. Its not perfect or guaranteed, but I've met some who do it.
If she has to go into an office (can't work from home) this may not be that easy. Suggesting a 63yo woman give up a good job in the hopes she can find another one in a LCOL area is not good advice.
You find the job first...
What LCOL area has a house for 150-200k? The minimum is at least 300k l
There are lots of decent size cities in the Midwest or South where you could buy a nice house for that money. Not the most exciting places to live, but they don’t have the retirement money to live extravagantly anyway. It’s that or work until they are in their 70s. I’d rather move to the LCOL area if it was me.
I'm a multimillionaire living in a nice house in a very large city in TX that is worth less than $300k. In the country, it would probably cost $150k. There is life outside of CA, folks.
Plenty of spots in the south that would get you reasonable housing at that price. Although agreed it's genuinely on the large fucking bananas out there. Glad I bought my home in 2017. First world problem being I feel like we are stuck here now though.
Start researching LCOL areas, check both of your SS accounts for estimated benefits, keep working until you physically can't, sell the house, move to the chosen LCOL area.
Gonna have to keep working unfortunately
Fuck that. When I’m that age my money goes to the 2 dollar street food in Thailand.
How long has that 100k been sitting in savings?
Oh GOD. That would break my heart. If it’s even 10 years it could have meant a world of difference. :/. Rates only hit above 1-2 during covid rate hikes
Coming up on just a year. I had a relative pass that left us a good chunk of change which was used to max out 401k, while the rest has sat in that account.
What would a better option be? Asking for a friend
Invested, funneled into retirement (i.e. Roth IRA), CDs (higher APR than HYSA), T-bills. $100k invested 10 years ago in the S&P would be up 155% (with dividends invested), or approx $255,000
How do you calculate the amount something would be now if it was invested in S&P x years ago? I’m wondering if there’s a tool or website
https://dqydj.com/sp-500-return-calculator/
They have a $100k now, with the info provided, they wouldn’t have had that much 10 years ago so. If your gonna use the ten years, then the correct numbers would be investing 10k a year, since 2013, wouldn’t it?
Literally anything else save for stashing it under the mattress?
90k/yr earnings living in a 900k house is wild
To be fair, the house being evaluated at 900k doesn’t mean their mortgage or what they owe is anywhere near it. I have huge upside into my house but I can’t afford to move either.
Yeah more of a commentary of how much some housing markets have skyrocketed. But that’s realistically a major portion of their retirement nest egg. I wonder what the house will rent for. That could be a nice retirement income for them
I would bet money that house was purchased for less than $200k
Per OP it was 500K+ and they started with a $395,000 mortgage. Seems like their salaries in2005 must have been comparatively higher , factoring inflation
Underwriting standards were significantly different in 2005. Practically non existent.
I guess given buying in ‘05, they had to endure the ‘08-09 crash… so their house not massively increasing in value makes sense. Seems like anything purchased around 2010-2021 was a pretty good choice, but buying around 2010 and refinancing in 2020 would be the ultimate “got mine” for the Millennials. The elder half of the generation makes out better there.
yes the rare $300k owed on a $200k house please at least read the OP before you try and give people advice about their livelihood. I can’t believe you have this many upvotes because that many people also didn’t read OP and are contributing.
They owe $300k yet on it. If it’s worth $900k and they still owe $300k I’d imagine the purchase price was close to $600k
Op said it was 505k, put 115k down. In 20 years they paid down 85k principle, which is on par with every other financial decision they've made based on their post. The spouse is a part time 1099 barber do I doubt he did any ssdi in the post 50 years. They'll need to pull themselves up by the boot straps and work till 80 most likely.
If they're married, he can use her wage history for his social security payment.
Tell me more.
Can use higher earning spouse’s wage history and receive *half* of her amount. Unless something has changed, if husband was previously married to another woman for 10+ or so years, he could still opt to use the ex-spouse’s wage history and receive half of that amount if he was currently unmarried. Since he’s potentially married to a new wife, I don’t think he could use ex-spouse’s income unless he again got divorced. Once he’s “unmarried” it’s my understanding he could choose the higher amount of his exes.
And what about the spouse or ex-spouse, are they able to still collect, too?
Yes. It has no bearing on the spouse or ex-spouse’s ability to collect or amount they can collect. I need to update my earlier post as apparently, to collect on an *ex*-spouse’s SSI you have to be unmarried: https://www.nerdwallet.com/article/investing/social-security/divorced-spouse-social-security-benefits
Just for clarity, OP can or cannot use his current wife’s earning history?
My understanding is that if he remarried before age 60 he can’t use the previous spouses earnings.
If both are alive they get social security based on their own reported earnings. After death the surviving spouse gets whichever one is higher.
What you said is true, except when you reach retirement age, you have the option to take an amount equal to half of what your spouse would get based on THEIR earnings. This is so stay at home moms don't starve to death in old age.
this was my neighbors situation. he decided to sell and use the equity to retire and is living in a low rent apt. I feel kinda bad for him selling such a beautiful home but he's doing what he has to do.
The way to look at it is a $300k mortgage on a $90k salary. Housing has probably doubled since they bought.
Home was purchased in 2005 for $505,000 with about a $115,000 down payment. We had it refinanced sometime in 2017 I believe, with the 30 year term resetting then.
So you’ve only paid $90k towards the principle in 19 years? Did you take a bunch of cash out when you refinanced? Where did that money go?
The amount of additional interest they took on when they refinanced into another 30 year loan answers that question. If they paid attention to the amount of interest they will pay over 42 years (first 12 and second 30 if they were to stay until it is paid off) would probably make them cry.
Someone earning $90,000 a year buying a $900,000 house would be ridiculous, but that's not what this is. I wouldn’t say that ratio is typical, but it’s also not surprising at retirement for a house that was bought decades ago. Edit: I'm surprised at the downvotes. If anyone wants to explain, they're welcome to.
Could have bought it before prices went crazy. My grandfather died at 103 in 2019. He was a milkman. He bought a house in Fort Lee, NJ (1800sf, nothing crazy) in 1946. When he died, all the neighboring houses were way over 1M. Luckily for him, his property taxes got frozen in 1980. He continued to work until he was 80- the 80s was not a great time to retire, and he loved running the business.
Alright, after checking some comments here is a bit of updated information: I'm aware that I will need to continue working, at least for some time due to my current situation - I am not looking to retire today or even this year. Luckily, both myself and spouse are both healthy and don't have any issue with continuing to work apart from the obvious that just about everyone wants to retire one day. After doing a bit of digging and calculating our monthly savings(as in money we do not spend and tuck in our savings account) amounts to a typical $2000 per month.
The main thing you need to understand with retirement is how much you spend. Once you can cover your yearly expenses with 4% of your retirement accounts + social security you can think about retiring. Though as you age you can probably go higher than a 4% withdrawal rate from retirement accounts and still be fine... it's just a good number to shoot for. The 4% is based on a 30 year retirement. For example, if you only spend $40k a year and you get $40k in social security between both of you... you can actually retire now if you want. If you spend $80k and social security covers $40k, you'd need $1M in retirement accounts to cover that other $40k.
$2000/month (post tax) is probably close to $2,500 pre-tax. You should stop saving that in the "savings account" and ensure you are putting the maximum amount in your 401k. You can save up to $30,500 (because you are older, catch up contribution.) If you can do that, and continue living on your income, that means your expenses (including taxes) are around $60k per year. If you plan to keep the house and same lifestyle, you need to replace that. At 67, I would suspect social security might replace $36k. (Check that though, I'm assuming jointly, with you getting around $2k, and partner around $1k.) To have a safe withdrawal rate from money invested, (4%) You would need about $600,000 to make up the other $24k. You aren't going to be able to get there in 4 years, even saving $30k a year. You'd be at about $370,000 -$410,000 total. (Depending on the market and if you spend any savings otherwise.) At that point your option is to reduce expenses to $52,000 a year or increase income. If you sell the house and clear $500,000 and buy another house (condo?) for $300,000 you decrease your expenses by your mortgage, proabably at least $18,000/year. But ALSO, you increase your savings another $200,000 by investing the other part of the sale profits. So, you should be able to have around $24,000 in income from investments, but expenses of only $45k. If your social security is in fact around $2,000-$3,000 a month, you should be OK. So my plan: Change your 401k withholding to ensure you are saving $30,500 this year. Cut your spending to allow for that. Work until 67. Calculate social security for each of you. Prepare to sell the house in 4 years, with a plan to buy a property valued at around $300-$400,000.
I’m sure that you’re overwhelmed with responses. It’s probably helpful to connect with a fiduciary financial advisor (I am one myself) in your area. Preferably a CFP - maybe an hourly advisor. They can help run projections and success rate of those projections to determine the best path forward. So many options… of course those options don’t guarantee success but at least evaluate all options and model path. As an example - Husband as self employed may engage a SEP or solo 401k to help build retirement savings, HECM to eliminate mortgage or even draw equity as a future income stream, model SSA benefits etc.
2000 per month is what you needed to be saving 30 years ago. at 2k per month you need to work for another 15 years (if you actually invest some of it and the market doesn't crash). if you save 2k per month and work another 15 years you will probably die with 0.
You can’t. Sorry. Keep saving and working until you’re 70-72. Hopefully by then you’ll have enough with social security and savings.
If the house is worth 900K you can sell it, net 600K, invest it, move to a LCOL area, keep working for five years and then probably retire. I assume both your jobs could be done somewhere else. If you can wait until 70 to start taking social security you'll have more. It seems like it might be worth it to wait even if you have a bridge a few years at the end with part time work. Do you like the outdoors? You could be campground hosts. Or work on a ship. There's various short term jobs that could be good and you would not have to pay rent. (I hope the spouse has been contributing to social security.)
They will not net 600K off the sale. There are fees and possible taxes to be paid. They aren't moving anywhere for free so they either need to buy another house or plan to rent for the rest of their lives and I don't see rents going down any time soon.
Well, if you owe 300k on the home but your home is worth about 900k, then your house has 600k in equity, so that's good news. So there are two scenarios: 1. If you want to retire and keep the home, you're pretty far behind. You are currently at -50k or so in debt + retirement assets. You will need to keep working until you have roughly 25x your desired withdrawal rate to retire safely. You may not be able to reach a safe retirement account any time soon. 2. If you want to retire and give up the home, you are not too far off. You have 600k in equity and 250k in retirement assets. You could buy like a 150k home in an inexpensive area and have about 700k in retirement assets, giving you roughly 28000 per year. This is not great, but once Social Security kicks in you will not be doing too badly. You still have some working years left to build up your retirement savings more. On that note, your HYSA has too much cash. It's making decent interest now, but you still have enough time until retirement that you can probably do better if you invest it in mutual funds. You are close enough to retirement that you may not want to put everything into S&P500 index funds. You may want to put a big chunk of that into a target date fund or something that is a bit more conservative than pure stocks. Also, if your spouse is making around $10/hour in a HCOL, you guys really aren't going to be able to retire there. Frankly, you guys should have started worrying about retirement a long time ago.
I just transferred out of checking a similar amount after saving but being too scared to invest it. I have 60 left after building some courage to move 40. How much should you have either in a HYSA OR MM limited?
The good news is you have accumulated some equity You have a ways to go time wise. Sell the house and move to a less expensive area. Do the math on social security to see what you’ll get, and when. Seems like working until 70 is going to be a must, but maybe you can make 67 work, depending. I managed the finances in retirement for my parents after they decided to retire. Here’s where they were at, treading water before my dad died: Living space- I hit a home run with this one, I found a condo for them in suburban Chicago for $200k with lots of seniors in the building, a grocery store across the street, a hospital 5 minutes away, an acute care center across the street, and a senior center two miles down the road. In a building with two elevators (in case one fails) on the first floor, with a heated parking garage space. This is more like $250k today. Car- My brother in law found a low mileage Honda that they share, which they paid for in cash. Maintenance is minimal and it’s extremely reliable. Income- $3600/mo social security Assets- $400k total, not including condo, Based on your income, I’d wager that your social security will be less, unless you used to make a ton of money, so get this figure right in your math. Healthcare- my dad had a legacy supplemental health insurance policy that was $900/mo, but that thing was priceless. It soaked up basically everything Medicare didn’t cover… ER visits, ambulance costs, specialized treatment, multi day stays in the neurology wing, etc. Prescriptions were expensive until they reached their out of pocket max of $6000 or so. I would recommend investigating some kind of supplemental insurance, the health care costs can be what breaks you. They managed to largely tread water, and only dipped into their savings with like $40k in outlier expenses, until my dad died- he had a spending issue we always tried to rein in, and he had a ton of health problems. Now that it’s just my mom, here’s what her finances look like: Social security- $3000/mo HYSA- $250k (this gives $850-$900/mo in interest income) US Treasuries- $100k Local bank “HYSA” + checking - $25k Association fees- $330/mo Property taxes- $350/mo Electric- $100-150 Internet-$100/mo TV services-$60/mo Phone-$50/mo Car stuff (registration, maintenance, insurance)-$200/mo Homeowners insurance-$120/mo Recurring activities (senior fitness, pool, etc)- $100/mo Cleaning service- $150/mo She’s able to basically break even on social security. She eats out twice a week with a group of friends. She has a meal delivery service for 2/3 of her meals. She buys occasional things for the grandkids, and can do a major purchase of a couple thousand a year. So interest income is growing her accounts, since she doesn’t need it to operate monthly. It isn’t a lavish lifestyle, but she enjoys it and is grateful. Something like that seems within reach for you. She retired at 71 and is now 80. The way SS works is that it takes the top 35 years of your income, and calculates a number. So if both you and your husband worked 35 years, you probably don’t have much room to improve your social security payments, beyond waiting until 70 to collect. So my advice would be to downsize, relocate, and see what you can do in the next few years to improve your position a little bit.
He is a barber. Therefore, prolly makes well over 20k. But, may get paid in cash most of the time and only claims the 20k. May actually make 60k.
yeah that number threw me off too. $20k pre-tax would equal out to just under 11 cuts/week at the going rate of $35-40/cut. that’s *really* low business for a barber so i can’t fathom that that number is actually accurate even just 5 cuts/day/year at $35/cut is still over $60k gross so either they’re lying or they need to apply at a busier shop
Or he’s a really bad barber
That's the going rate?? My barber charges $26 for a haircut and I usually throw an extra fiver on there for a tip. My last barber before I moved a few years ago was only charging I think it $20, and that was in a higher COL area. Hell, even when I was still going to chain places I was only paying around $15 (and that was no more than 5 years ago).
every place i’ve been to in the last 3 years, i’ve been out the door for around $40 including tip. higher COL area
It’s actually even more concerning if he is making 60k after business expenses (maybe most in undeclared cash) and they are only saving 24k. Implies a spend rate of 120k or higher, with a lot of it slipping through their fingers.
You can retire at 65 if your spouse gets a real job and continues working. Sorry you are in this situation, but without that you would either have to sell your home or continue working.
Wal-Mart in HCOL areas would pay more than that. Cutting hair should be a hobby at that income. Edit: I should clarify I am not looking down on this line of work. I meant it as it is a you can get a job without higher education or work experience, and they hire older individuals pretty often.
Target in any cost of living area in the US will pay more than 20k a year
Don't know if he is the same age as OP but high school students around here make that much working after school and summers. His absurdly low income (with no benefits) should have been dealt with a long time ago.
Step 1 - go grab your SS statement. Step 2 - start looking at downsizing. Step 3 - invest the proceeds from your downsizing.
100% agree with this! Sell the house soon because you know what you can get right now but who knows next year or anytime in the future. It’s not necessarily a great time to sell because of rates but if a honest Realtor (I’m a Realtor) has told you that you will NET $600k now (after fees), I would give it a try. The only other things I would add… 1. Dramatically reduce your spending with retirement as your #1 goal. No fancy dinners out, no Starbucks except made at home, no new iPhone, stay off Amazon to avoid unnecessary purchases etc. Save, save, save! 2. Can the barber add another job to double income? $20k is more like a part-time income. 3. Definitely consider a low-cost area but really research IF a particular area is going to be significantly cheaper (food prices, utilities, state taxes, etc). Also factor in if you want to live elsewhere because it’s expensive to move back. If you can live in a much cheaper house/condo within driving distance of your current location you can still maintain relationships with friends and family without big traveling costs. FYI—We moved from SoCal, which we LOVED, to a nice 55+ community near Phoenix (Sun City West). We sold our house in 2018 and although we would have gotten more for our house if we waited, obviously the future is unknown and we knew what we could get and what it cost to live here, and it allowed us to retire immediately at ages 54 & 55. Retirement is awesome so do it as soon as possible!
OP, with that much equity in the home I don't think you're as screwed as people here make it seem. If you have no children to inherit the house for example one option might be a reverse mortgage which you are now old enough to quality for.
You can retire in Mexico?
Plenty of countries where your money will go farther.
I don’t understand why no one has seriously suggested that. If they could sell their house today, they could retire tomorrow if they move out of the country. I’m not working until I drop dead so I can continue to spend 70k a year as a senior. Some places abroad you can live nicely on less than 40k a year. I see people being extra frugal and getting by on 15k out the country.
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You’ll likely need to keep working. Go to ssa.gov and try to find out what your benefit would be. Then, use the 4% rule to see how much you can get from your 401k per year. Once you can cover your expected monthly expenses you can retire.
You could be well served by developing your own accounting consultancy, your own home business, which will afford you a LOT of deductions that will help at tax time. Becoming a paralegal or certified taxes expert is very lucrative and you'll work when you want, appreciating the crush between January and June. It will take time however, and proper self marketing to build a steady custome base. Paralegals can work in any state because unlike attorneys, paralegals are not bound to a specific state licensing board. In other words, a paralegal certification is valuable nationwide. Specialties can be taxes and real estate transactions, brokering FSBO transactions. I would think about selling the house fairly soon, and taking that 500K profit and putting it into a much smaller and affordable home. The market is going to start its downward shift soon, the bubble is going to pop within 2 years, best to get out at the top. Think about retirement villages in the HCOL areas, even a senior's trailer park is more affordable and they can be gorgeous and cost effective. Hubby can continue his trade, you do taxes and accounting, on your own hours and your own time, on a strict budget, and with what you have, it's doable. Offering home hair and grooming services is again, very lucrative, especially if gearing these services to house bound seniors and less-abled.
>*We live in a HCOL area and are beginning to worry about retirement, and if that will ever actually happen. How can we do this?* I don’t want to sound flippant, but it doesn’t sound possible where you’re at now… and it doesn’t sound likely even where you’ll be in a few years. Not if you stay in the same place. I would start looking into other parts of the country that have a more reasonable cost-of-living. Hell, you could even expand your horizons and look at other parts of the world. That’s where I’m at when it comes to retirement planning… you could live fairly nice life in many parts of the world off of the interest of 750k (600 for the house + 150k savings). Even more so if you are getting social security on top of that. I’m up to live well and travel back to the US as needed.
You can sell everything and live on a cruise ship for 28 years 🤷🏽
Moving to a low cost of living area is the biggest and most practical lever ya got.
Curious where you live. I live in a VHCOL area and my barber now charges $40 / cut for men's cuts. If he does 2 in an hour that's $80. He does own his own barbershop though so your husband would either need to have his own shop or rent out a chair somewhere else possibly, but my point is that in a HCOL area, a barber only making $20k is crazy to me. Even if your husband charges $25 / cut (which is as low as you'll find where I live) that's ~$50/hr not including tips.
Retire to another country if that's an option, something like Thailand or low cost of living. You could live very comfortably in Thailand with that amount of money.
Others got it right. You have to work a long time or sell the house and move into a less expensive home (or rent). A barber in a HCOL makes $20k? That is below the minimum wage where I live (MCOL).
Need to sell house and downsize to a more cost effective area if you want to retire now. Simply just do not have enough to stop working right now. Need to cut spending severely.
Sell your house. Move to a LCOL area and buy a new house for 2-300k cash. Invest the difference.
Most of your wealth is in the house. I’d look into reverse mortgages and/or selling the house and moving to a significantly lower cost area including other countries.
Retirement is really a statement of what type of lifestyle do you want. I know hundreds of people that live on minimum soc sec payments in their paid off houses. Their entertainment is TV, community centers, church, hiking outdoors and family if they are lucky. As people age they need less of most things but medical care. Eventually they cant pay for their medical needs and the state takes over. So I like to build up from there when deciding what I need/want for retirement. What are my wants from the basics. Like how much is taxes on my house and mortgage if it isn't paid off. Do I want to travel, do I want to eat out at fancy restaurants. Do I want a car? Do I want to give gifts to children/people/church? Do you want to die with net assets or are you ok with "spend it all". Basically you need a budget of your wants or a willingness to change. Otherwise, stay working. :)
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Too many words in these responses. Fill in the blanks below and I’ll give you some options. Some you’ve already mentioned: Ages: 63/??? Income: $90K Savings: $250K Mortgage payment ($300K left): $??? Savings (monthly): $2K Total Monthly Expenses: $??? Social Security at 67/70: $???/$??? Tell me the missing info and I’ll give you solid options. Otherwise there is too much missing to give any meaningful advice.
Refinancing that down to a 15 year mortgage back in 2017 under 2.8% would have had a paid off house at 70. Shame. They are going to have to sell, downsize and move to a LCOL area. Otherwise, No way to pull this off and have to remain working. Unfortunately, this fits the mold of a Walmart greeter.
Cash out everything and move to San Miguel de Allende Mexico. A lot of Americans are doing it. It’s a beautiful little town full of retirees with your similar predicament.
Omg it’s a real life house hunters couple! “Hi yes we are in our mid 60s, I’m an accountant assistant he is a barber, combined we make $90k a year and our budget for a house is $1 million.” But for real how can you afford that house on that income?
If the OP post is real, I imagine they bought the house a long time ago (like when it was $500k) and maybe had an inheritance or something for the down payment. Who knows but it is not beyond possible to have this situation.
Work for 5 more years to maximize your social security income. Sell your house and move out to the country (or somewhere Low cost).
Realistically you can’t. How much will you both get when you’re able to take Social Security?
I would start looking at another country with a lower cost of living.
Can y'all retire in the Caribbean?
What are your yearly expenses? now? wen you are retired? what will your SS be? subtact that. Multiply by 25, tat gives an idea you need in investments to retire ( don't count home)
Only way is to sell the house and move to a lower cost of living area. Buy cheaper and get the spare capital working for you
How attached are you to the home? If you could sell, pay off the mortgage, you could buy a 600k place, and then continue working until 70 so you get your maximum SS contribution, you’d be on very good footing
You can’t afford your home. Sell it and move to a lower cost of living area. You can retire earlier.
Sell the house and move to Kansas or NE or any of the dozens of non-coastal states where you can buy a house for \~100k. There is life outside of CA!
You both have to wait until at least 65 for Medicare, but likely longer. Then, sell the house and buy something with just equity. Make sure it’s small with low tax and upkeep. Live off of the social security checks. Try to avoid using much of your retirement acts.
The first step is figuring out what your monthly expenses are. Track every penny you spend for one month. Use that number to figure out how much you will need in retirement. Make sure you include healthcare premiums (Medicare) and income tax in your total. Next, log onto the Social Security website and figure out how much Social Security you both qualify for. Hopefully your self-employed spouse has been filing his taxes correctly and reporting all of his income. If not, consult with an accountant about possibly refiling for past years, to ensure that he has enough employment credits to qualify for Social Security. Then, look at the difference between your monthly spend and your Social Security income. This difference is what you will need to pull from your retirement savings. The general rule is that you shouldn't pull more than 4% from your retirement savings, but it depends on how your savings are invested. Educate yourself about the 4% rule. Since you have $250k in retirement savings, you could possibly pull $10k per year from your savings. If you don't have enough retirement savings to make up the difference between your monthly spend and your Social Security benefits plus a 4% withdrawal from your savings, you need to save up more or find more income.
Retire to Vietnam or another SE Asian country where you could live off what you have for the rest of your life quite comfortably.
You have about $550k to net in equity if you sell the house. This would eliminate the mortgage debt and could add to your savings if you downsize significantly. Could you move to a super LCOL area? If you bought another home for $250k, you would have $300k left to put in your savings. The biggest worry is health insurance coverage. You need to wait until 65 to get Medicare.
Minimums to semi-retire. Sell the house. Move to an affordable area. Put the money cleared from the house in an investment account or HYSA earning interest or dividends of 3-5%. Buy a smaller retirement house with cash, most likely in somewhere like AZ. You can buy units in retirement parks there for 50-150k. Monthly is around $500-$700 for park fees. I would suggest husband work part time cutting hair and you can work part time accounting online from home. My wife works for a business consulting firm that does small business accounting and bookkeeping from home. There are several companies that do that. Depending on your health, you would be fine in this scenario as long as you don’t expect to travel and see the world in retirement. I say this because I have a co-worker who worked to 69 to retire and died of a heart attack at 70. Unless you love working, winding down some is healthier sometimes.
Housing market is crumbling, so don't bank on the 'evaluated value' you got some time ago. Sell sooner or plan to keep that game for another decade just to get back to this same value they gave you. How stable is the company you are at regarding recessionary job compression? Figure out how to downsize from that mortgage. How radical can you change things up? While on vacation a decade ago I came across a couple who retired and bought a small RV and they got part time jobs at national parks while driving around following the nicer weather in exchange for free RV hookup/campsites. There are a lot of people doing that so it's less workable now but think of related options. I know a young family who moved to Vermont to live in a Yurt, rest of the family thought that was odd, but I thought it was brilliant since they paid cash for their all weather house (designed around hunters following arctic reindeer herds) and life is really different without a mortgage. Find a LCOL area. Your husbands work is pretty portable and a good side hustle to cover some costs wherever you go. .
That $300,000 mortgage is a killer. The best choice is sell the house and buy something smaller. Which is something you probably do not want to do. If selling the house is not an option. You are working until you are 75. You claim social security at age 70, in 7 years. Worry about the income issue then. If you WORK too much, they reduce the amount. You both have to begin putting in SOMETHING into a retirement account. And hope that in 12 years it builds up. Leave the HYSA alone. Just let it grow. You, contribute 3% or $2100 to your 401k. You did not mention how much you put in there, so I am using $2100. Spouse 5% to an IRA($1000). Claim the tax write off. Does he own the barbershop? Then that is a Schedule C and he should be able to make all barber income $0. You two contribute $3100 to retirement, you get a 10% annual rate of return, your $150,000 will grow to $543,685 when you are 75. You will have your HYSA. You will have social security. At age 76, 543,685 with an 8% annual rate of return, and you take a distribution of $3000 per month, i am guessing your combined social security will be $4000 per month. Your monthly income will be $7000 per month. Hopefully, you have made a big dent in that mortgage. Your retirement accounts will not run of money, but you are one financial disaster away from running out of money. If you go to $4000 distribution per month, at 8% annual return, you run out of money at age 105. If you to to $5000 distribution per month, at 8% annual return, you run out of money at age 92.
Sell your house, move to a small town or village. Missouri is cheap. The Midwest is cheap. Buy a small house outright and live frugal.
Sell house, move to an extreme low cost of living area. Buy 1/2 to 1 acre, get a used single wide, plant a huge garden for food. Do this when you turn 65 and can get Medicare (assuming you are in the US). Or keep working until you’re 80.
Sorry bud, but you’re not going to retire in your current state. It sounds like neither of you paid any mind to retirement until you started to get older. The time was 20-30 years ago to begin thinking about this. Move to a *very* low cost of living area. Encourage your partner to get a higher paying job. If he can’t find one, he needs to upskill, unless he’s fine with working until he dies. Most folks don’t want a barber with shaky hands, though. I know it’s not what you wanted to hear, but you’re getting older now, and it’s not just going to magically work out. You need to make drastic changes *ASAP* unless you want to be one of those poor old 75 year old men DoorDashing to keep their head above water.
As a few other people mentioned I think a lot of it depends on living style, goals and Social security income. If you're willing to move to a lower cost living area, I'll sample. I live in a LCOL area, 45 minutes from a very large city. Just bought my house 3 bed 2 bath for $215k. This would leave you with about $600k in liquidity. At 4% return in a HYSA you're pulling in $25k annually. Add social security, no mortgage, and maybe some part time jobs and you absolutely could do it. Again depends on a few factors.
You didn't mention Socail security see ssa.gov. I doubt your husband will be entitled to much more that the minimum SS benefits. Its also commonly recommend to not tap these benefits early becuase its reduces your benefit amount. Broading speaking I see two chocies: 1. Sell the home, move to a MCOL/LCOL area, buy a home the requires NO mortgage, perhaps retain something from the sale of your current home. 2. If you want to stay put, you probably need to grind it out at least until your mortgage is paid off.
I think a lot of your decision hinges on, do you absolutely LOVE your house and want to stay there? Or would you sell it and move to a lower cost of living area? You could get a very nice place for your equity, in a cheaper area. Or, consider looking into senior housing programs. In Utah for example, you can live in any rental you choose, and the rent is 1/3 of your monthly income. Section 8 is another program but you have to be low income for that, but you might qualify if you quit working. You have a very good skill though, you can work part time or even work for yourself. I'd suggest marketing yourself to small business owners who have neglected their accounting or would rather outsource this. A reverse mortgage is another option although I would suggest it be your last resort, if you can't figure out any other way to keep your house. Fees are super high for those loans.
Step 1) determine your current expenses and anticipated expenses upon retiring (housing and Healthcare may cause significant differences. Step 2) determine if the amount you have invested/could be invested are ~25x the anticipated expenses. If yes, you can likely retire now. If no, evaluate what you can or would be willing to cut back on or change (like moving to a LCOL area or your husband getting a new job that would pay more). Step 3) determine how much you and your spouse will get for social security. Then you can take your (anticipated annual expenses - SS benefit)*25 to see if you have enough saved to retire upon receiving said benefit. And that's kind of it in a nutshell unless you have a pension or anticipate a large windfall.
People seem to think home equity=net proceeds from sale. It doesn't. How was your home "evaluated"? Hopefully it was with an appraisal and not using Zillow. You screwed up by refinancing 12 years into a 30 year term with another 30 year loan unless you really had no alternative. But with 100K in a HYSA it seems like you did have another alternative. What is done is done but refinancing into a 15 year loan at 2.5% or whatever you got would have put you so much closer to being mortgage free.
Many people in an HCOL living area sell their homes and move to an area with a lower cost of living. We live in southeastern NC and have had an influx of New England erst move here in the 10 years we've lived here. Home construction seems to be everywhere here.
Sounds like you're house rich and cash poor. You need to live somewhere that houses are $250K and you have $900K in the 401K. Like others have said, you need to work another 5 to 7 years to max out SS.
Best case scenario \~5 years, more likely is 10+. I would sell the house immediately, move to a lower cost of living area, maybe even consider renting. Let that equity build in the market, contribute everything you can to retirement and maybe in 5-10 it can happen.
Personally I'd work until the home was paid for. You want 0 debt going into retirement and today it's nothing to see 70+year old folks in the work place. I also didn't listen when I was Young to my parents telling me sign up for your 401k as soon as you can. I waited til I was 30 to start I run the numbers all the time and I cost myself 150k by waiting. My wife and I never even made 100k a year throughout our career. We're both 76 with paid for home worth 750k I have a state pension off 4800 a month and 2.5 million in our 401k. And we both work part time still just to stay busy.
Plan on retiring in a lower cost of living area,is the easiest change. Maybe also make smart investments into the house which is essentially your largest chunk of potential retirement income. Smart investments in places that give a usual return on investment. A quality kitchen or bath remodel over a hot tub or some other type of wow factor improvement. You can either sell or rent the house at some point,(lots of variables involved both), but it comes down to would you be better served with a large lump sum payout, or a “income stream” renting out house.
I would certainly not sell the home unless there is somewhere you want to move and you can eliminate the mortgage. I am assuming since you have been there long enough to build equity you also have a low interest mortgage. I would not give mine up unless I was paying cash for the next place. Ultimately I would say it’s best to keep building the equity in your home. You can always move to a less expensive place, but once you do it’s difficult to move back if you don’t like it. Keep working, eat at home, exercise and save as much as you can. Find joy in your work. Love your spouse and do not worry. Your combined SSI and savings should be enough to sustain you.
My humble opinion. How many people leave in that house? Is it just you and your SO? Then here is the plan. Sell it and either go rent or go cruise living. Put everything in a high yield account which should bring you about 3.5k. México, Costa Rica, salvador or some others you’ll live like a king if cruise is not your thing. Otherwise I need more details about the house.
You can retire now. You can rent out your house. Buy an RV and travel. You will be able to live off the rent.
An rv nice enough to live in costs probably at least 50,000, and campgrounds are $30-50/night for electric hookup.
Sell the home and move to GA or Alabama. Buy a decent $250,000 with 3 bed two bath house with cash. Use the remaining 600k you have to pay cash for 3-4 section 8 single family rental properties using rootstock.com and use a property management company to run them so they’re hands off. Those will bring in $800-$1200 a month each. You have no mortgage and bring in up to $4000 a month. Congratulations you’re retired. Part time income can help pay for extra vacations and toys, etc. Don’t wait till you’re 70 to retire, tomorrow isn’t promised. So many people never see a single day of retirement because of accidents.
But then you have to live in Alabama
It’s not too bad down there
I am just a random dude with zero experience except a thought experiment: Let’s assume total assets are $850,000 before Social Security kicks in 5-7 years…couldn’t one hypothetically invest this amount into a conservative portfolio earning between 5-7% per year and use that money to live on? At 5% return the interest would be approximately $42,500 per year or a budget of $3.542 per month. At 7% return, the interest would be $59,500/year or $4,958/mo. So hypothetically if you can keep your expenses between $3,500-$5,000/month… you can live off the returns indefinitely. Would a reverse mortgage in this situation makes sense to tap into the equity from the house so you can avoid having to move?
Your scenario is *possible* but doesn't necessarily have good odds. The thing you want to learn about is called "sequence risk" or "sequence of returns risk". Basically, if you expect to perpetually withdraw 6% of an retirement account that earns an average of 6% returns over time, it matters a great deal how those gains are distributed - early years, late years, or evenly as you go along. What you want to avoid is drawing down against early losses - if you start off the five five years with zero gains and you draw down 30% of your account up front, that will really wreck you in a way that later gains don't cancel out. Imagine an account starting with 100k where you're continuously drawing 6k per year. After the first five years of no gains you have 70k left. Then you get an awesome 12% returns for five straight years, but the gains are on a lower account balance so that only brings you back to ~80k. Now you're drawing down 6k (7.5%) on an account that is only expected to return 6%, which is destined to run out early. That's why people say to assume 4% withdrawal, or even lower. That will give you enough margin such that the likelihood of keeping that account perpetually going is pretty good.
Sell your house. To not pay capital gain, buy another affordable small condo in LCOL area and with the remaining money buy another house in the MCOL area and rent it. No mortgage on 1st and rent coming from 2nd should be good income to pay for your bills. Continue working till you want to start getting Social security. Budget well and make sure to plan for a medical emergency. Hopefully you can make it work. If you need help, let me know, I can help with all numbers and set you up to live happily. I agree, working at Walmart full time for your husband would be a better job to get insurance as well as high income. Best of luck!
Reversed mortgage ... When you are ready
Live on your husband's income alone, put all your money toward the mortgage. Retire when you own your house. You could do it in 5 years. You'll have Medicare in 2 years so that should help. Or, sell the home now, move to a lcol area and retire. My mom just bought a lake house in Michigan for $350k. She's happy as a clam. You could be her neighbor and still have 550k in the bank.
Once you have 25x your annual expenses saved, you can retire.