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I am 70 years old, have $500,000 in savings, receive $1352 net SS. I will soon need a new smaller house that I would like to buy with down payment and financing. How much can I withdraw annually for the rest of my life with this scenario.

Married six years. Getting divorced or separated. Scenario presented would be my current assets if I settle today without any compensation whatsoever. Husband has alzheimers and sons took my POA and rights away from me in December. Deed is in husband's name where I currently reside. He was placed in independent living in January. Want to move because house is too much for me to handle and I don't like attitude of sons.

May 30, 2013 by Gloria from Madison, AL in  |  Flag
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5 votes

One option you may want to consider is a combination of a Fixed Indexed Annuity with an Income Rider. Unlike the Variable Annuity that carries with it market risk, this can potentially offer you a combination of a lifetime cash flow and potentially an account value that you could pull out in an emergency. Always speak to a Fiduciary Licensed Registered Investment Advisor to consider your options.

Comment   |  Flag   |  Jun 13, 2013 from Everett, WA

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Hi Gloria, the reason everyone is encouraging you to seek full counsel is because the sustainability of an income stream depends on many different factors possibly occurring simultaneously. A variation in one of those factors can wreck your plan if you haven't accounted for it from the beginning. I like the fact that Prateek tried to give you some answer to your question. An example of one of those factors is market fluctuation. If you are pulling 4% out of a variable account and the market drops then you pull 4 % more and this occurs multiple years, you will run out of money before you planned. Another example mentioned is future healthcare cost. Have you prepared for that?

So, the income that the $500,000 can produce long term is a function of many factors. The professionals mentioned above are trained to think about all of these things and many of us have had people come to us after the "kitchen is on fire" because they didn't think of important pieces of the puzzle. Thank you and God Bless.

Comment   |  Flag   |  May 30, 2013 from Franklin, TN

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To answer the question you asked requires more detail then a quick answer from those of us who participate with Bright Scope. The answer should only be offered after an analysis of your total situation has been completed. I strongly recommend that you see a Certified Financial Planner before making your dedcision. You need to be very careful at this stage of your life.

Comment   |  Flag   |  May 30, 2013 from Calabasas Highlands, CA

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Gloria,

I am sorry to hear about your situation. I agree with my peers that working with an Advisor is your best bet, given your age and personal circumstances.

You have to carefully evaluate your spending budget before you decide whether you should buy a home or rent. Also, the simple answer to your question about how much you can spend from your retirement portfolio, is 4%. So if you have $500,000, most Advisors will tell you that can spend $20,000 per year without having to worry about running out of money during your lifetime.

So if you add what your get from SS to the above amount you have over $3,000/ month to spend. You should carefully make a budget and then decide about a home.

If you need help, feel free to give us a call at 920-785-6010.

Best regards.

Comment   |  Flag   |  May 30, 2013 from Appleton, WI

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3 votes

Hi Gloria, The best advice has been written more than once above, seek the advice of an elder planning attorney in your county where you reside. Good luck to you and best wishes.

Comment   |  Flag   |  May 30, 2013 from Grand Blanc Township, MI

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Gloria, I'm sad to hear about your situation. It is obviously very troubling and complex. I have to agree with Alan - a good planner can make all the difference to you. We really don't even have enough information (hard numbers) to give an answer, and we can't predict how long you may live.

I can give you some things to consider as you work through this. First, think about your own health status. Do you want your money tied up in a mortgage if you need medical care? Also, if you were to take out even a 15 year mortgage, you would 85 before it would be paid off. Do you really want to carry that type of debt this late in life? If you are considering a separation/divorce, are you entitled to any compensation? This is a legal question, of course, so consult with an attorney, particularly since there seems to be some bad blood between you and the children.

Don't try this one on your own, Gloria. You can find fee-only planners online at http://www.napfa.org/. Good luck to you!

Comment   |  Flag   |  May 30, 2013 from River Hills, SC

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Gloria,

These are always tough questions to answer without actually knowing all the details of your situation. I have to agree with the above postings, that you should seek out professional advice in this situation. Find a local Certified Financial Planner to help you with the financial aspects of your situation. and, enlist the aid of a good attorney and CPA as well. These three disciplines will be able to best advise you as to which way to go at this point. Also, make sure the three of them are aware of what the other is doing... a team approach should work best to protect your interests at this point.

Best Regards,

Rod Miller

Comment   |  Flag   |  May 30, 2013 from Springfield, MO

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Gloria, the specific question you are asking is how much can you withdraw annually. As Prateek aptly pointed out, 4% of $500,000 is a safe amount to calculate so that you do not spend into the $500,000 of principal. It is reasonable to expect that you can earn enough on your investment to keep up with your withdrawals.

But there are other variables to consider. You are apparently at odds with your sons. Are they your only heirs? Upon your demise, who will inherit your estate? Are things patchable with your sons? As your sons took POA from you, are there legal options? Seek an advisor that is a CFP® that can help you plan your overall financial future and will help you plan for your retirement.

With the little I know about your situation, it seems there is a possibility that you have a strained relationship with your sons. If you have no other potential beneficiaries, and you are absolutely certain that situation will not change, there may be some options with variable annuities with an income rider, but tread carefully. Annuities should not be more than a small part of a well-diversified financial plan. They can provide a guaranteed income for life, but your initial investment may or may not be available when you pass. Is that an acceptable option in your situation? There are a lot of unanswered questions, and you really should seek professional financial advice to help you.

The negatives first; they are more costly than other investments and have limited investment choices. My rationalization that it might be suitable, would be that you wanted a positive income stream, and not have a need for the principal. I would not recommend investing in an annuity if you expect to need withdrawals other than the income stream. Further, annuities have many moving parts, and can be tricky. If you speak to an advisor about an annuity, be sure it is someone who has your best interests at heart; not someone just looking for a quick commission. If you find an annuity is suitable, invest just a small percentage of your money. Remember, this is for income and I repeat, it is not liquid. If there emergencies, you may need to access some of your money.

With that said, annuities are really the only variable investment that offers a guarantee of income. If you really have no family that you eventually want to leave your money to, and you have thoughtfully determined that you will not change your mind about this, you may consider a portion, less than 50% of your assets as part of a defined financial plan. Seek advice of a financial advisor in your area to show you how this will provide for your current needs, as well as the needs for the rest of your life.

Comment   |  Flag   |  Jun 10, 2013 from Delray Beach, FL

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