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Josh, at 31:14 when you have him “cutting out early” when you clicked on the retirement button you have his age and the spouse’s age reversed, I think. That could possibly make a difference in your outcome.
So is it best to buy a SPIA out of 401k/IRA funds or out of investment account assets?
An interesting solution for a baffling "problem". Frankly I'm still trying to wrap my head around their real difficulty which is their spending. Not only is it hampering their retirement plans but it's clearly put a large dent in their investments as they could have built far more wealth with their higher income. My mind reels at the thought of all of the income taxes they've paid over the years thanks to their income inefficiency and going forward it's all tax deferred income…yikes! I've never seen a situation where working another year actually drops your chances of success, what craziness.
What about the taxes on the 2,000 per month from the annuity? Maybe I missed it, I think you took the annuity purchase price, approx. 460k, out of the IRA and then excluded the mortgage from the plan. I think you should include the annuity as income so taxes can be calculated and put the mortgage back in the plan.
Great video Josh, interesting how an SPIA allowed them to retire even he has to work for 2 more years. I have been thinking about doing the same thing.
Wade Pfau has not updated his RM calculator the maximum claim amount was raised to $726.500 earlier this year . By withdrawing 180k from portfolio after paying about $20k for the cost of the loan and 30k for the tax (24%) this will leave them with $130k this can go towards paying down the principal from $425 to $295k they will now qualify for a reverse Mortgage to pay off the loan This strategy will save them $279k(vs the annuity option)that can be left in equity's for long term growth the growth on this 279k will more than make up for the cost of the negative amortization of the RM.I might be off a little on the taxes owed but this is still an option to consider.
Where did the money go from the sale of their current house???
I really like seeing these case studies, very helpful in seeing the overall planning process.
Property tax that low sounds kind of off and you should increase property taxes by at least 2.5% a year (Some areas 5-10% a year) to be on the safe side. People forget City and County workers to include teachers get COLA's and additional benefits (medical/retirement) every year as well. If the minimum wage goes to 15 an hour then go with 13% a year for planning.
Forget working 2 more years. Buy a cheaper house.
If I were them, I would prefer to have Josh ask if I really need to live in a $875k home (with big mortgage)? Moving to a less expensive home without a mortgage would be more attractive to me than being told to work two more years.
How about moving the money out of the IRA into a taxable account over a few years enough to pay off the loan without getting out of the tax bracket. Will that help them?
So when you take $459k to purchase the SPIA do you have to pay taxes on the IRA withdrawal of that amount?
Good case study. Wonder why don't you add fed and state income taxes as an expense? You add medicare, Long term Care but not income taxes. Even if you have zero income and only distributions, there is a tax expense every year. Isn't it?
Reverse mortgage?….Joint Single Annuity with 20 Year Certainty!
Thanks Josh good case study.