New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
Bankrate.com
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Equity
Auto CDs &
Investments
Retirement Checking &
Savings
Credit
Cards
Debt
Management
College
Finance
Taxes Personal
Finance

How much is enough for retirement?

Dr. Don TaylorDear Dr. Don,
I am 61 and would like to retire in two years. I have two homes. The main residence is worth about $750,000 and the other is a condo in Florida worth about $250,000 -- with no mortgage on either property. I have a 401(k) that's worth about $250,000 and about $700,000 in CDs. My Social Security benefits at age 63 will be about $20,000 a year. Can I afford to retire and keep both homes? Thank you. -- Bob Bountiful

- advertisement -
Dear Bob,
You've got the concept of net worth down pat. Your net worth is within spitting distance of $2 million. Now you need to work on building a cash flow statement and developing a spending plan to see if your income will adequately fund your lifestyle in retirement.

Property taxes, homeowners insurance, condo fees and auto insurance are bound to burn through your Social Security income. What are you going to do for health care insurance and groceries?

What are your monthly expenses? How do you expect them to change in retirement? Will you travel more? Play golf more? Eat out more? Track your current spending to gain clues on how you'll spend money in retirement. Build a household budget for retirement and then see how easily your income will fund that budget.

If your only income sources in retirement are Social Security and investment returns, you need an investment plan that will give you a level of confidence that you can earn a high enough return to meet your needs for income. What kind of yield are you earning on your CD portfolio and on your 401(k) investments? How is the 401(k) invested?

A reverse mortgage is something to keep in your back pocket when you are considering how to fund your retirement. You have more than half your wealth invested in real estate. If you need to tap that equity in retirement without losing use of the home, a reverse mortgage could be the answer. Bankrate has more on reverse mortgages.

Making retirement work at your age with your asset base shouldn't be difficult, but you may need to rearrange your thinking as to how those assets are invested. I suggest you meet with a financial planner to discuss your budget and how your money is invested. A recent column on choosing a financial adviser can help you find someone in your area.

 
-- Posted: Jan. 7, 2005
     

 

 
 

 

Looking for more stories like this? We'll send them directly to you!
Bankrate.com's corrections policy
Print   E-mail
30 yr fixed mtg 3.93%
48 month new car loan 3.22%
1 yr CD 0.71%
Alerts
BASICS SERIES
Begin with personal finance fundamentals:
Auto Loans
Checking
Credit Cards
Debt Consolidation
Insurance
Investing
Home Equity
Mortgages
Student Loans
Taxes
Retirement
- advertisement -
 
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here.

Bankrate.com ®, Copyright © 2014 Bankrate, Inc., All Rights Reserved, Terms of Use.