Where to go from here

[chinchilla]

Im 41 F, divorced, one child in college and live in a lower cost part of California. I own a home that I bought Jan 2023 with a 2/1 buy down. Payments will increase from 1850 to 2150 when the buy down is over.

I’m in a somewhat strange situation due to the fact that I was a government employee who was injured on the job, will not be cleared to return and am in the final stages of a medical retirement. That should gross me 5200 a month. Some deductions like health insurance will be taken from that but not much. I was/am a licensed professional with a doctorate and I held private disability insurance which I’m drawing about 6400 a month post tax.

I have about 50k in various debits but most are zero interest or so low interest that it pays to put money elsewhere, with the biggest chunk being a solar loan for 36k at 3.49% stuff like that.

Anyway that’s the picture. Here’s where I’m not sure how to proceed. I will likely never get back to work in my professional capacity unfortunately. Returning for anything I could do would loos that 6400 and not pay more than what was lost so there’s that. But at 67 I will no longer get that 6400 as the assumption in that policy is that I can draw SS. However I am or was a government employee that didn’t due to classification pay into SS therefore I get no SS.

I have about 130k in a HYSA.

So how do I grow my wealth now with the set amount of funds I have so that when I get to 67 I have enough to get me through retirement. The medical retirement from my gov job will not ever go away. So that 5200 ish (COLA raises will happen but not as often as say SS gets them) always be there. How do I wisely grow wealth ?

 

[resjudicata]

@chinchilla So you are going to be taking home over 10k/mo until 67 and then it drops to 5200? This is easy. You invest as much of that income as possible over the next 26yrs. It sounds like you are already living ok on the 6700 so i would i advise you invest the medical retirement when it starts and any excess from the 6700 you dont need. Assuming you’re expense are in check, youre set to end up w 1.5-2M and 5200/mo at 67 if you put 5-6k in sp500 index fund. That is a pretty choice retirement.

 

[chinchilla]

@resjudicata Yes that is correct.

Nice. Thank you ! That is what I was looking for. Like “here do this “ !! lol I might be smart but due to schooling and my former job I just never paid much attention to investing. So S&P500 is what you’d recommend? I opened a vanguard and Wealthfront accounts. Would those do?

 

[dobsonsdogs]

@chinchilla I would put as much money as you can into VOO/VTI at Vanguard until you reach the age where you only get $5200 a month.

VOO - S&P 500

VTI - Total market

I think Wealth front charges fees. Is there a reason you opened an account with them?

 

[resjudicata]

@chinchilla Yea vanguard is good. Wealthfront has a good high yield savings but makes sense to use vanguard for the brokerage stuff.

Autopilot for you would be just putting it VTI (total stock market) or VOO(sp500). Vanguard also has the mutual fund versions of these which are easy to set up for automatic deposit.

Or you can do a target date fund if you’re more conservative. Target date fund allocation will gradually reduce equity exposure over time automatically. Will yield lower long term but will see less volatility compared to all equities

This really depends how risk averse you are. You don’t wanna put it in VOO then realize you’re gonna panic sell when it falls 25%. So probably want to ease into whatever you end up doing.

Maybe see if you can speak w advisor/planner at vanguard to help point you in right direction. Not to manage your money but to help develop a financial plan.

r/bogleheads or bogleheads.org would be good place to see what experiences have been like dealing w vanguard advisor/planner.

But like another comment said, if you do speak w someone it should be a fiduciary and a financial planner. Not someone looking to manage your money for you.

Im not sure if you still qualify in your situation since you’re getting disability insurance and a pension instead of working but, if you’re still eligible to contribute traditional/roth ira accts then it would be wise to take advantage of tax savings provided by those.

Worth doing some reading/poking around before you make any big decisions.

 

[bensherie]

@resjudicata Here's a sneak peek of /r/Bogleheads using the top posts of the year!

#1: Hit a major milestone today: $100K net worth! | 178 comments

#2: $2,000 to $200,000 in 4 years as a Boglehead! (26M) | 305 comments

#3: Buffett: "It doesn't take brains; it takes temperament." | 95 comments

[sup][sup]I'm[/sup][/sup] [sup][sup]a[/sup][/sup] [sup][sup]bot,[/sup][/sup] [sup][sup]beep[/sup][/sup] [sup][sup]boop[/sup][/sup] [sup][sup]|[/sup][/sup] [sup][sup]Downvote[/sup][/sup] [sup][sup]to[/sup][/sup] [sup][sup]remove[/sup][/sup] [sup][sup]|[/sup][/sup] [sup][sup]Contact[/sup][/sup] [sup][sup]|[/sup][/sup] [sup][sup]Info[/sup][/sup] [sup][sup]|[/sup][/sup] [sup][sup]Opt-out[/sup][/sup] [sup][sup]|[/sup][/sup] [sup][sup]GitHub[/sup][/sup]

 

[joettastaysblessed]

@chinchilla In your situation, and with the payments you'll be receiving, if it were me, I'd be meeting with a financial planner that is a fiduciary and asking them for their advice on investment vehicles.

You could theoretically manage this yourself but you shouldn't have to at the level of income you'll have to invest monthly.

Additionally, I would decide whether or not you're going to stay in California long-term or if you would consider moving to a lower cost area elsewhere in the country.

That's something that you could evaluate and decide based on what home prices are doing in your area and how much equity you have in your home at any given point in time in the future.

 

[bradleyhiggins]

@chinchilla How? You need exposure to low cost index funds. Spread them out and diversify.

 

[chinchilla]

@bradleyhiggins Ok is there a particular one that you’d suggest ?

 

[butterfly2222]

@chinchilla Instead of HYSA you could buy short term new issue treasuries to avoid paying state income tax on the interest. In the long term, you need equities exposure, put what you have to spare into index funds.

 

[chinchilla]

@butterfly2222 Several votes for index funds. I guess these should top my research list. New issue treasuries I’ve not heard much about. I will look into those. Thank you

 

[murderer]

@chinchilla Given your stable income and unique circumstances, consider investing in a diversified portfolio of stocks, bonds, and other assets tailored to your risk tolerance and financial goals. Maximize contributions to tax-advantaged retirement accounts, such as IRAs or a Solo 401(k), to supplement your income in retirement. Additionally, explore real estate investments for rental income, but carefully evaluate the risks involved. Continuously monitor and adjust your investment strategy as needed to ensure long-term growth and financial security. Consulting with a financial advisor can provide personalized guidance on investing options suited to your situation.

For long-term financial growth and tax efficiency, look into tax-advantaged retirement accounts, tax-efficient vehicles like index funds and municipal bonds, tax-loss harvesting, HSAs and 529 plans, and estate planning strategies.

 

[chinchilla]

@murderer Thank you. I will look into all of these. Any financial planner that you’d recommend for further in person consultation?

 

[joettastaysblessed]

@chinchilla For me, I have always asked my local friends and family for recommendations of a financial planner in your area who is also a fiduciary.

Them being a fiduciary means that legally they are required to give advice on investments and choices with your money that are in your best interest.

 

[maviella]

@chinchilla Not related to what you are asking for in the post, but if you are 41 and can’t go back to work due to losing the medical retirement payment, what do you plan on doing the rest of your life? Are you able to get other jobs outside of your previous area of employment or does that also forfeit your payment?

In a way you are kind of already retired.

 

[chinchilla]

@maviella I can do a bit of consulting type work but that is not frequent and the pay can vary. Due to my medical issues now that also limits my ability to take some work due to my own medical follow ups.

lol yes I guess I am “retired” not by choice. I guess I was just hoping for ideas on how to grow wealth for the time when I’m truly only on the medical retirement.

Trust me I’d rather be working still but here we are

 

[maviella]

@chinchilla I was genuinely curious what you’d do with your time, that’s all. Wasn’t being a smartass

 

[chinchilla]

@maviella Oh I didn’t take it that way lol. I’m bitter still about not being able to work. It’s my own issues.

As for recreational pursuits I garden, thrift, paint, read, foster an animal. That and my medical appointments take about all my time. My kiddo is luckily a well adjusted young person so that’s a plus also.

 

[andyjlovatodimasallajesus]

@chinchilla Why 130k in a hysa? 3-6 months expenses is all you need there. Invest the rest.

 

[illusions]

@chinchilla I'm sorry to hear about your medical issue.

Aside from that - dude, you're in such a good spot. Just to echo the sentiments being shared here, VOO and/or VTI is the way to go. I'd personally be pretty aggressive about investing in those over the next 26 years, especially if you are netting 5 figures/mo. Are your annual expenses super high?