Jlyn and her husband are two decades away from retirement, but they’re considering purchasing a second home that they will reside in at that time. Should they proceed with the purchase now, or continue saving instead?
Reese has been laid off recently and is facing a tough decision between two financially sound options. Should she maintain her long-term disability insurance? Or would it be more prudent to conserve her finances?
Kip’s youngest child has just graduated from college, and he is anticipating an early retirement. However, with the steep expenses associated with long-term healthcare, is this still a feasible option?
In today’s episode, former financial planner Joe Saul-Sehy and I delve into these three inquiries.
Enjoy!
P.S. If you have a question, feel free to leave it here.
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Jlyn asks (at 02:31 minutes): How do you balance conflicting financial objectives when you’re doing well but aspire to do even better?
My husband and I are both 41, with three children aged 8, 11, and 13. I am a physician, and he is employed as a commercial project manager. Together, we earn $350,000 annually. We tithe 10 percent, invest 18 percent, and still have a monthly surplus of $3,000 after covering all our expenses.
Our primary residence is valued at over $1 million, with a $550,000 mortgage that we intend to pay off by the time we retire. We have also eliminated $300,000 in medical school debt, so aside from the mortgage, we do not have any debt.
Currently, we have saved $500,000 for retirement, and our children’s 529 plans are funded by a $980/month rental from a portion of our home. We expect to retire around ages 60 to 62, and we’re now contemplating whether to purchase a second property.
We would like to use it frequently during our retirement, and it could also function as a short-term rental in the meantime. However, we are also managing other financial goals—saving for college, vehicles, weddings, and further contributing to our retirement accounts.
How should we navigate our surplus investments in relation to acquiring a second home? And what significant financial risks should we be mindful of when considering a lifestyle-oriented second property which we hope to utilize for part of our retirement?
Reese asks (at 28:51 minutes): I was recently laid off and have signed up for COBRA, which is extremely costly—but I’ve already reached my $7,000 out-of-pocket maximum for the year due to an ACL tear. Thus, maintaining that healthcare coverage is logical while I recover and search for a new job.
Should I also persist in paying for the long-term disability insurance provided by my previous employer?
Realistically, it may take me six months to a year to secure a new position. While the likelihood of needing healthcare during this period seems substantial, the chance of facing long-term disability appears much lower.
So my question is: Should I forgo the long-term disability coverage for now and, if my next employer doesn’t offer it, consider purchasing it on the private market? Or is there a benefit to remaining with the same plan for continuity?
With health insurance, switching would mean starting over on my deductible, but I doubt that applies to disability insurance. What should I be aware of regarding changing disability policies, and how should I assess the cost against the risk?
Kip asks (at 40:55 minutes): What’s the smartest strategy to prepare for the significant expenses associated with long-term care, especially if you prefer to retire now?
I’m 47, my wife is 48, and we reside in a western suburb of Atlanta. Our youngest just completed college, and I’m eager to retire, mainly due to my dissatisfaction with my job. However, it pays well, so I’ve stuck with it. We maintain a very frugal lifestyle, and I could manage our current expenses if I quit now.
The challenge is long-term care. Skilled nursing facilities in our region charge about $10,000 a month per person, which would total $20,000 a month if my wife and I both needed care. According to the four percent rule, I know that’s not sustainable for me.
I’ve considered long-term care insurance, but the expense, ambiguous terms, and potential for premium increases make me dubious. It seems I should keep working to self-fund those future costs.
If we never need it, that money could then be passed down as an inheritance to our children. Is that the right decision, or is there a more effective approach to handling this?
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Jlyn and her husband are two decades away from retirement, yet they're considering buying a second home for their future use. Should they proceed with the purchase now, or continue to save?