Hello all,
I need some assistance in setting up a plan in order for my now current savings to bring in a fairly safe return to live off of. I have some medical issues which have gotten so bad that I have decided to (hopefully) correct via survey. However, the recovery is fairly long, and even then, I will still need medical care and assistance. At the very least, OT,PT weekly doctor visits and medications for pain and recovery. I will, eventually, be able to work again, but I will probably not be able to earn what I am currently earning. Therefore, I put into place the sale of my company (web developer). It should net, after taxes, around 1.5m. I already own my home outright, so that is not going to be an issue. I will need around 4k - 5k per month in income. I am married, and my wife does work. However, I do not want to burden her with my medical issues.
What would be some of the best suggestions in setting this up for income for myself to cover expenses. I do not have nor buy many things or toys. Just need to cover, property taxes, income taxes (from investments and side jobs), telephone, food, utilities, transportation, health insurance, etc. My biggest expenses are health insurance, property taxes and utilities. That alone, is half my expenses every month (Gotta love NY., no I do not live in NYC or Long Island)
Open to suggestions. Thank you.
Setting up a plan to live off of investments
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Re: Setting up a plan to live off of investments
Good luck with your health issues, divy4life.
I think that Pointedstick and WiseOne have posted on here calculations that show that you can have a safe withdrawal rate of 5% or even more, always taken from the cash portion of your Permanent Portfolio, that holds up extremely well over the long term. I hope that they check in on this as I cannot find the link right now. If true, 5% of the sale of your business would amount to $75K per year, or a little more than $6K per month, meeting your needs.
I think that Pointedstick and WiseOne have posted on here calculations that show that you can have a safe withdrawal rate of 5% or even more, always taken from the cash portion of your Permanent Portfolio, that holds up extremely well over the long term. I hope that they check in on this as I cannot find the link right now. If true, 5% of the sale of your business would amount to $75K per year, or a little more than $6K per month, meeting your needs.
Re: Setting up a plan to live off of investments
Thank you for the wishes. I am sure in time, things will resolve.Reub wrote: Good luck with your health issues, divy4life.
I think that Pointedstick and WiseOne have posted on here calculations that show that you can have a safe withdrawal rate of 5% or even more, always taken from the cash portion of your Permanent Portfolio, that holds up extremely well over the long term. I hope that they check in on this as I cannot find the link right now. If true, 5% of the sale of your business would amount to $75K per year, or a little more than $6K per month, meeting your needs.
If someone can post this link, I would really appreciate it.
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Pointedstick
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Re: Setting up a plan to live off of investments
Best wishes on a speedy recovery, divy.
The thread is http://gyroscopicinvesting.com/forum/ot ... or-a-myth/
The insights relevant to the PP's save withdrawal rate when withdrawing from cash start with WiseOne's post on page 2.
The good news is that historically, the PP has supported a 5% inflation-adjusted withdrawal rate during nearly all periods. Here's what your portfolio would look like if you started doing this in 1972:
If you're supplementing with even a bit of income from elsewhere, it's pretty bulletproof. The bad news is that as with everything in life, we can't be sure the PP will continue to be able to continue in this vain in the future. Cash yields are awfully low and bonds hit a peak last year.
The thread is http://gyroscopicinvesting.com/forum/ot ... or-a-myth/
The insights relevant to the PP's save withdrawal rate when withdrawing from cash start with WiseOne's post on page 2.
The good news is that historically, the PP has supported a 5% inflation-adjusted withdrawal rate during nearly all periods. Here's what your portfolio would look like if you started doing this in 1972:
If you're supplementing with even a bit of income from elsewhere, it's pretty bulletproof. The bad news is that as with everything in life, we can't be sure the PP will continue to be able to continue in this vain in the future. Cash yields are awfully low and bonds hit a peak last year.
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Re: Setting up a plan to live off of investments
I suggest you check out www.firecalc.com and play through some scenarios. You can't replicate a PP on there, but it'll give you an idea of what to expect with a stock/bond portfolio of your liking. Problem with trying to project future safe withdrawal rates of the PP is that historical data only goes back to 1972. We haven't seen how it'll behave during say a 20-year period of rising real interest rates.divy4life wrote: Hello all,
I need some assistance in setting up a plan in order for my now current savings to bring in a fairly safe return to live off of. I have some medical issues which have gotten so bad that I have decided to (hopefully) correct via survey. However, the recovery is fairly long, and even then, I will still need medical care and assistance. At the very least, OT,PT weekly doctor visits and medications for pain and recovery. I will, eventually, be able to work again, but I will probably not be able to earn what I am currently earning. Therefore, I put into place the sale of my company (web developer). It should net, after taxes, around 1.5m. I already own my home outright, so that is not going to be an issue. I will need around 4k - 5k per month in income. I am married, and my wife does work. However, I do not want to burden her with my medical issues.
What would be some of the best suggestions in setting this up for income for myself to cover expenses. I do not have nor buy many things or toys. Just need to cover, property taxes, income taxes (from investments and side jobs), telephone, food, utilities, transportation, health insurance, etc. My biggest expenses are health insurance, property taxes and utilities. That alone, is half my expenses every month (Gotta love NY., no I do not live in NYC or Long Island)
Open to suggestions. Thank you.
Re: Setting up a plan to live off of investments
Hey divy4life. Take care of yourself. And congrats on the profitable sale!
At a high level, your stated expenses are 3-4% of your total portfolio. Assuming you're fully accounting for taxes, you're already in great shape. So invest it all in the PP, always withdraw from cash, and rebalance when you hit the bands. Do that alone, and based on all I've researched you'll be off to a very good start.
To take it to the next step, I would recommend looking at how to creatively trim expenses. For example, health insurance, property tax, utilities, and state income taxes can all be significantly cheaper elsewhere if you're willing to move from New York. Of course, with your medical issues you may want to hold tight for a little while to see how the healthcare industry shakes out over the next year before adding a move across state lines to the equation.
At a high level, your stated expenses are 3-4% of your total portfolio. Assuming you're fully accounting for taxes, you're already in great shape. So invest it all in the PP, always withdraw from cash, and rebalance when you hit the bands. Do that alone, and based on all I've researched you'll be off to a very good start.
To take it to the next step, I would recommend looking at how to creatively trim expenses. For example, health insurance, property tax, utilities, and state income taxes can all be significantly cheaper elsewhere if you're willing to move from New York. Of course, with your medical issues you may want to hold tight for a little while to see how the healthcare industry shakes out over the next year before adding a move across state lines to the equation.
Last edited by Tyler on Fri Dec 20, 2013 5:17 pm, edited 1 time in total.
Re: Setting up a plan to live off of investments
Always been worried about money, so I started saving at an early age. I also started working at 15. Had a severe accident in the 20's, and now in my mid 30's trying to deal with the medical issues. Being in NY is the biggest obstacle. I'm in the burbs, but the COL is just insane. I would love to leave, but my wife wouldn't even consider due to the close proximity we are to our parents. I ran all different scenarios on fire calc and it says I would never run out of funds. I upped my annual expenses to 60k over 60 years and it still says I never will run out of money. Granted, I also threw in the 250k I have in regular investments as well.
Nonetheless, I find that hard to believe.
Nonetheless, I find that hard to believe.
Re: Setting up a plan to live off of investments
One good thing about New York is that you can access some excellent doctors here. Make sure that you take advantage of it.