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Question for the Money Doctors

Question submitted on Sep 5, 2020.

Question

62. self employed. single. no interest in a legacy. will retire at 66 to land and a small place in ky. good health. 100k in iras. 400 k net on paid for house. 50k in savings. 30k a year in wages. estimate 200 k in ss benefits. family of unhealthy mayflies and have pegged end of life at 80. getting long term health ins. soon. holes in my plan? t.u.

Answer

I am old school and I am not certain that I understood all of your abbreviations, but here goes.  You are a 62 year old single self-employed individual with no interest in leaving anyone a legacy.  Your plan is to retire at age 66, full retirement age for full social security benefits.  Your plan is to retire on land that includes a small home in Kentucky and you are in good health.  You have $100,000 in IRAs and $50,000 in savings.  The land is valued at $400,000 and is paid for.  I assume your $30,000 in wages is your income as a self-employed individual and will cease upon your retirement.  You have estimated your social security benefits to be $200,000, which I assume to be just over $14,000 per year from your retirement at age 66 until your projected end of life at age 80.  You are planning to purchase "long term health insurance" soon.  Is that "long term health insurance" long term care insurance that would help cover the costs of nursing home care or in home care?

Based on what I am assuming here, which may not be correct,  you seem to be fairly frugal to have $400,000 in land that is unencumbered by any debt and to have the funds in IRAs and savings that you do.  However, I can't know what your lifestyle is, although it again appears that you are very frugal and understand where your money goes each month.  If you are able to live on your social security benefit and the little income that you will get from your IRAs and savings, you should be fine.  If you can't and you deplete the funds in your IRAs and savings you might want to consider that end of life estimate.  If you run out of money before you pass away, you could always sell your land and home and downsize.  Someone in good health that is 62 years old has about a one in seven chance of living until 95 years old.  It could be a miserable existence if you run out of money before you die.


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