Well, even though unemployment doesn’t seem to get any better, the economy is said to be recovering. And as a matter of fact, my savings are starting to come back. Last March, investments hit a low point of $420,565, having lost just under $160,000 in ten months. This month, the balance is at $480,753, a $60,188 gain in 8½ months. Not bad, considering that after we were told our office would be closed and our entire staff canned, I used $25,000 of my savings to pay off the second mortgage on my house and that I pay my $800 share of the mortgage on the downtown house with proceeds from those investments.
My financial advisers hope I can refrain from drawing down anything, including the mortgage payments, during 2010. I’m cashing in part of a whole life policy to cover that bill—it will pay the entire year’s worth. They think that if I can leave the money alone for a year, it will recover its former glory. With a $60,000 increase in less than a year, that almost sounds believable.
I’d be happy if it would come back up to $500,000—just another 20 grand—and stay there. A four percent drawdown from that, plus Social Security plus part-time teaching, would yield a net income just slightly less than GDU pays me. And that would cover the bills reasonably well, even though Medicare will drive my monthly costs significantly higher in retirement.
If I’d left the $25,000 in savings instead of using it to pay off the loan, of course, the total would be back at $500,000. But consider: the loan cost $169 a month. Four percent of $25,000 prorated monthly is less than half of that. And if anything happened so that I couldn’t make those payments, I could have lost my home. Now it’s very unlikely that anybody is going to take my house away from me. Not even if the market crashes so spectacularly that I lose every penny.
Let us watch and wait.
Image: ScooterSES, Tokens from the U.S. Deluxe Edition Monopoly.
Public Domain. Wikipedia Commons
I know you have gone over this many times. I can’t remember hearing if you will qualify for unemployment? Would it help you put off drawing your Social Security?
Take care of all health needs this next month before your insurance is gone. If you are healthy is it worth bypassing COBRA and waiting for Medicare to kick in? Isn’t it just a few months without coverage?
@ Brenda: You don’t qualify if you have ANY money of any kind coming in. I’ll get the tag end of a paycheck in mid-January, disqualifying me that week. And I will get a payout from a whole life policy, disqualifying me for the week that comes in. I’d really only be eligible for two or three weeks, and they make you jump through so many hoops for so little money, it’s hardly worth it. I think I’m not going to be bothered with that.
Besides, Social Security will penalize you for earning more than $14,160, which I already am exceeding with the part-time teaching. I can’t afford to bring in any more “earnings.”
At my age, it would be extremely risky for me to go bare. Five months is plenty of time to have a cancer pop up, to suffer a cardiac event, to get in a car wreck, or to fall and break a hip. Any of those would pauperize me in a matter of weeks. With the ARRAS discount, COBRA actually will cost less than buying full Medicare coverage!
I’m close enough to full retirement age that I’m only sacrificing about 5% of SS benefits by starting now. Also, if a miracle happens and I get a job, it’s possible to repay the amount I’ve drawn down and reset payments at the full amount at age 66.