Q: Is there any way to make 3% annual income on $200,000 and still protect the principle? Or is this just impossible? I am retired and would like a bit more income each year.
There is a way to make close to 3% by buying the 10-year treasuries now that are trading around 2.85%. They are a risk-free debt instrument of the Federal Government and generally are state tax-free. In theory, as long as you hold them to maturity there is no risk to principal. Hopefully, this helps explain one of your options. There are some other options we can talk through if you would like, feel free to schedule a consultation to talk.
Q: I am a 64-year-old male and will retire this May. Presently my only bill is my $2000/month house payment which still has 14 years to go. My company is offering me a lump sum package of my pension account of $500,000 or I can take a monthly pension of $2700 with my spouse getting $1300 per month if I decease before she does.
Is it better to take the lump sum and turn it over to my investment planner or take the monthly pension?I also have about $500,000 divided up between my 401k and a IRA. Since my wife and I plan on traveling once we retire I would like to bring home $6000/month to cover our house, necessities and travel. My social security benefit will be around $2400/month.
A: I think your question gets into a very significant topic of what you need versus you want and where those sources of income are coming from. Looking at your pension, it’s about a 6% cashflow to you and a 3% cashflow to your wife if you were to decease. The latter is fairly unimpressive but 6% is a good cash flow from a pension. To take this question into further consideration, some things I would have to find out from you to give you our opinion are:
- Family longevity
- Is the pension inflation adjusted or stagnant over the life
- Risk tolerance as an investor
- Long-Term Care planning
- When do you plan to draw SSI and how old your wife is
- Flexibility of assets vs fixed income
Once we know these things, this will help further determine whether a lump sum or pension makes sense for you.
Q: I have a looming medical expense of $5500. Are medical expense deductions being eliminated under the new tax plan for 2018? Should I incur the expense this year?
A: Thanks for reaching out to us. For 2017 and 2018, the new tax law will allow you to deduct qualified medical expenses that exceed 7.5% of your Adjusted Gross Income. This was scheduled to rise to 10% of AGI under the current law so it will work to the advantage of taxpayers.
Q: I have two questions regarding the new tax plan. Is there an additional standard deduction amount for over 65 age? Is the qualified charitable donation (QCD) from IRA's still available?
A: The new tax plan leaves intact the additional $1,300 deduction for each filer 65 and over. It is also our understanding that the new tax plan will not make any changes to QCDs from IRAs.
Your Wealth Questions are common questions we receive from our “Ask an Advisor” tool. The Q&A’s are provided for informational purposes only and should not be viewed as investment advice or recommendations. This information is not intended to, and should not, form a primary basis for any investment decision that you make. As always, please contact us to discuss your specific situation.