Trigger warning: Seeking advice for thinking through long-term finances with a terminally ill spouxe.
Background: We (early 50's, less than 55) currently have $1.6 million in investments (1m in retirement, 500k in a brokage, 100k in an inherited IRA with about a 12-15k annual RMD which I have been reinvesting each year), and about $150,000 in savings/emergency fund. My salary covers about 80-85% of monthly expenses and 100% of annual retirement investments (about 40k per year). Expenses will go done when just me as less insueamce needs (medical and car), down to 1 car, etc. We have no children or other dependents. Spouse is no longer working. No debt and own our house. We have good health insurance with a annual max out of pocket of $12,000 (goes up a bit each year) that I will be able to keep into reitrement as long as I work at leat to 57 and the full cost of the insurance will come out of my pension. Depending on when I retire (57 or 60 or later), my pension would be 1500-4k a month after insurance costs. We don't have much/any room in the budget for fun/discretionary spending. Spouse has a life insurance plan with a $650,000 death benefit that can't be accessed until a few months prior to death/upon death. Spouse may live 1 more month to possibly (with all fingers crossed) up to ten-ish years. Lots of unknowns regarding illness progression. We have a financial advisor and I will ask him the same question as below but I would appreciate your thoughts in advance so I can be better prepared for that conversation/have time to do some of my own research.
Question: As our budget is tight and I would like to provide some 'fun' options/opportunties/experiences during spouse's remaining years, what are the pros/cons/awarenesses I need to have about possibly withdrawing from our brokerage investments now (random starting number - perhaps between 10-50k a year) and then 'payback' those withdrawals via the death payment when that time comes. I would continue to annually fully fund retirement investments (about 40k a year, 30k is pre-tax from my salary and reduces my taxable income) for the tax benefits. What are the pros/cons of such a idea? I know compounding interest is the key so also wondering if reducing the investment portfolio amount slowy over time would have lasting negative impact. Concerns are having enough money to cover whatever medical expenses/ needs we may have plus enough money to cover me for another 30ish years.
TIA for your thoughts/suggestions on this unfortunate and awkward situation/topic/question.
Background: We (early 50's, less than 55) currently have $1.6 million in investments (1m in retirement, 500k in a brokage, 100k in an inherited IRA with about a 12-15k annual RMD which I have been reinvesting each year), and about $150,000 in savings/emergency fund. My salary covers about 80-85% of monthly expenses and 100% of annual retirement investments (about 40k per year). Expenses will go done when just me as less insueamce needs (medical and car), down to 1 car, etc. We have no children or other dependents. Spouse is no longer working. No debt and own our house. We have good health insurance with a annual max out of pocket of $12,000 (goes up a bit each year) that I will be able to keep into reitrement as long as I work at leat to 57 and the full cost of the insurance will come out of my pension. Depending on when I retire (57 or 60 or later), my pension would be 1500-4k a month after insurance costs. We don't have much/any room in the budget for fun/discretionary spending. Spouse has a life insurance plan with a $650,000 death benefit that can't be accessed until a few months prior to death/upon death. Spouse may live 1 more month to possibly (with all fingers crossed) up to ten-ish years. Lots of unknowns regarding illness progression. We have a financial advisor and I will ask him the same question as below but I would appreciate your thoughts in advance so I can be better prepared for that conversation/have time to do some of my own research.
Question: As our budget is tight and I would like to provide some 'fun' options/opportunties/experiences during spouse's remaining years, what are the pros/cons/awarenesses I need to have about possibly withdrawing from our brokerage investments now (random starting number - perhaps between 10-50k a year) and then 'payback' those withdrawals via the death payment when that time comes. I would continue to annually fully fund retirement investments (about 40k a year, 30k is pre-tax from my salary and reduces my taxable income) for the tax benefits. What are the pros/cons of such a idea? I know compounding interest is the key so also wondering if reducing the investment portfolio amount slowy over time would have lasting negative impact. Concerns are having enough money to cover whatever medical expenses/ needs we may have plus enough money to cover me for another 30ish years.
TIA for your thoughts/suggestions on this unfortunate and awkward situation/topic/question.
Statistics: Posted by Kmh — Tue Jul 23, 2024 11:38 pm — Replies 2 — Views 409