By Alessandra Malito
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My wife and I are 64 and 65 years old, respectively. I plan on retiring in two years when I’ll be fully vested with my current employer, avoiding early stock withdrawal penalties, and be closer to tapping into Social Security benefits. Currently we have $1.5 million in 401(k) investments, in moderate to aggressive funds, and a few small IRAs. We also have about $600,000 in various dividend earning stocks, including the mentioned company stock, as well as annuities. We have no debts of any kind and are currently living in a two-family property that we own, mortgage free. Our net income from the rented unit is approximately $1,500/month.
Our “perfect world” goals for retirement is to be closer to family and own a modest home in California, with an ADU (Affordable Dwelling Unit) or home with some small additional rental income, and spend months at a time traveling abroad. We are not “luxury” travelers, enjoy modest traveling and prefer the B&B stays. We were very fortunate to be able to tap into the frenetic real-estate market last year and sell our main residence and have $1.1 million to invest in our next home. We’re now on the other side of that market and will most likely be forced to buy a property at an inflated price. Our concern is not getting much for our money, but moreover putting all our cash into an expensive home may not make sense, given the traveling we want to do.We plan to keep and rent both units of our current two-family. Should we invest that large amount of cash and rent a small apartment near our family, or bite the bullet and move forward with purchasing an expensive home?
See:We have $1.5 million we don’t intend to ever use in retirement — how do we invest it if we plan on giving it to our kids one day?
Homes are definitely pricey these days, but the tide in the real-estate market is turning back to the buyer, so you may be in better shape than you think. Of course, there are still plenty of variables to consider, as you know.