Planning for a Comfortable Retirement
As a 67-year-old married man with three homes, I’m eager to retire next year and enjoy a comfortable lifestyle with my wife. We’ve worked hard to accumulate a substantial nest egg, including $175,000 in savings, $280,000 in our 401(k), and a $500,000 retirement villa on a Caribbean island, which we own outright.
Managing Our Properties
In addition to our Caribbean villa, we have two other properties with outstanding mortgages. Our primary residence has a mortgage balance of $327,000, and our rental property has a balance of $334,000. The rental generates $4,100 per month, but we’re responsible for taxes, insurance, and landscaping fees totaling $1,200 per month. We’d like to pay off the mortgage on the rental property, but we’re hesitant to withdraw from our savings due to potential tax implications.
Creating a Sustainable Income Stream
Our goal is to have $6,000 per month in cash to live comfortably and travel during retirement. However, we’re unsure how to achieve this without selling one of our properties or renting out our primary residence. A senior financial planner suggests that we might need to consider these options if our savings, 401(k), and Social Security income aren’t sufficient to cover our expenses.
The 4% Rule: A Retirement Strategy
One approach to determine our sustainable income stream is to apply the 4% rule. This strategy assumes that we can withdraw 4% of our investments annually, taking inflation into account, for the next 30 years. By applying this rule, we can estimate how much we can withdraw from our investments each year. We’ll need to factor in our Social Security income, which we’ve recently started collecting, as well as any other sources of income.
Getting to $6,000 per Month
To reach our goal, we might need to sell one of our properties or adjust our investment portfolio. A financial planner can help us determine the best course of action. We could also consider renting out our primary residence while living in our retirement villa, which would allow us to maintain ownership and provide a steady income stream.
Seeking Professional Guidance
Ultimately, we recognize that achieving our retirement goals will require careful planning and expert advice. We’ll need to consult with a financial planner and possibly a real-estate agent to determine the value of our properties and identify the best strategies for achieving our desired income stream. By working together and exploring our options, we’re confident that we can create a comfortable and sustainable retirement lifestyle.
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