conversation: User (CuriousCatte): "I need some retirement advise  \nSituation:  Retiring at age 65 in 2 months (August 2018)  \n-Quitting work in August this year, made $40,000 after working there for 20 years   \nSAVINGS:  \n      - $175,000 in 401K (90% in stocks, 10% in bonds)  \n                    *American AMCAP R4 25%  \n                     *Fid Mid Cap idx PR    25%  \n                    * MIP CL 1                  25%  \n                    * Pnr Sel Md Cp Gr Y    25%  \n       -$105,000 in IRA with Vanguard Target Retirement 2025  \n      -$8,000 in cash/emergency fund  \nASSETS:  \n- mortgage free on current home in SC (worth $180,000)  \n                 -Taxes currently $1100 yr, will drop to about $700 yr after age 65, Insurance about 800 yr  \n- own 1 car (2006 Honda Accord 120,000 miles) no payments  \n- own 1 truck (2006 Honda Ridgeline 140,000 miles) no payments  \n- own a small travel trailer RV worth about $5000, no payments  \n- own a small bass boat worth about $4000, no payments|  \n pay off credit card in full each month  \nDEBT:  \n       $40,000 equity line at 4.74% (for expenses when we sold our previous house and bought this house at a foreclosure auction for $98,000.  This house is currently worth $180,000 but it needed some repairs which we did with the equity line. We still have $30,000 available)  \n- Health insurance:  \n      - Medicare and BCBS supplement $234/mo  \n      - Obama Care high deductible for wife 0/month (max out of pocket is $6500)  She is healthy but has severe anxiety issues which make it hard to work.  \nINCOME:    \n-  $1574 month from Social Security for husband,   \n-  next year $560 Social Security from wife when she turns 62.  \nWill be looking for part time work after retirement, but my current job is 200 miles from our new home and staying there is not an option.  Have been renting a room and living away from home for the past 2 years until I turn 65 and qualify for Medicare.  It has been a strain and we need to both live in the same house again. New home is in a fairly remote area and decent jobs are a long commute of over an hour.  It is getting hard to see at night, so I need a job close to home.  We will mostly be surviving on Social Security and our savings.  \nWe need to preserve our savings because we will need some of that each year to pay major expenses such as taxes, insurance, repairs,  and major bills.  We anticipate taking about $10,000 per year from our savings for expenses. Our kids have good jobs and have said they will take care of us in our old age, but we no not want to ask for help unless we are destitute.  \nOur new home is in a nice active retirement community on a large quiet lake in rural South Carolina.  There is plenty to do here that is not expensive and does not require much travel (fishing, clubs, rec center with pools and fitness, golf, etc).  Cost of living here is pretty low, so our monthly expenses are very affordable with just Social Security.  \nQuestons:  \n-Where would you suggest we put the $175,000 to minimize risk, but still have some growth as we could really use the extra?  We are concerned about the possibility of another stock crash like the last one, which would be a serious problem for us.  \n-Should we consider a reverse mortgage to pay off the equity line?  We are currently paying just interest only (about $160/mo).  \n-What other suggestions might you have to make our retirement more comfortable?  \nThanks for any help!  \n"
  Self: "Totally off topic, but:\n\n- own 1 car (2006 Honda Accord 120,000 miles) no payments\n- own 1 truck (2006 Honda Ridgeline 140,000 miles) no payments\n\nWhat a weird coincidence.  I was just reading that other thread with the woman making $140k and way way way overspending, and she had a 2012 Accord and a 2012 Ridgeline as her two cars.\n\nSorry.  As for your question:\n\nThe first few years of retirement are most influenced by sequence of withdrawl risk.   You already have a Vanguard IRA, so I'd roll your 401k over there to get it all in one place and make things easier.  I'd suggest a simple 2- or 3-fund portfolio.   VTSAX is a total market index fund and VBTLX is a bond fund.  Do a 60-40 split between VTSAX and VBTLX.  If you need money and are going to sell some investment, check to see if the market is up or down.  If the market is down (VTSAX is down), then sell off some of our bond fund.  If the market is up, sell some of the VTSAX and rebalance.\n\nYou have a $40k line and have $30k available, so you only owe $10k on your HELOC?   Just pay it off, start throwing $500 a month at it, or more.   (Edit: Second math, it looks like you have a $70k HELOC open, have borrowed $40k and have $30k available credit.  Regardless, I don't think any "reverse mortgage" is necessary, just start paying down the principle.)"
  dwinps (dwinps): "That part is a bit confusing whether he owes $30k and has $40k in available credit on it or he only owes $10k.  Either way he needs to get that paid off."
  Self: "He says the interest only is $160 per month.  4.74% APR is 0.4% per month.  $160 / 0.004 = $40,000\n\nSo I think he actually has a $70,000 HELOC, has borrowed $40,000, and has $30,000 available left on the line.\n\nFor having everything else so well put together, he's treating his HELOC oddly.  It's not free money, you shouldn't just be paying the interest only part of the loan.  Yes that's all that's "required" but it's just as silly has spending money on your credit card and just paying off the interest every month.   Treat that HELOC like any other mortgage, you need to put extra principle payments into that loan."
  User (CuriousCatte): "That was the original plan, however the expenses of living living 200 miles apart (renting a room, eating out more, traveling 2-3 times per month) ate up the extra.  I did not want to tap the savings since the market was going up and I did not want to pay income tax on it, but someone mentioned using the IRA next year while taxes would be zero and paying off the HELOC which has a higher rate than I am getting on the IRA.  That sounds like a good plan.  "
  