| | | Working longer isn't always an option. My business income is at the mercy of my clients. My wife's primary income depends on the continued operation of her employer. Sometimes you find yourself fully retired with no recourse.
Agreed that downsizing to an area with a lower cost of living can have a huge impact. Not only can that shave $20k or more off the cost of living, but (assuming the house is fully paid off) it can release several hundred thousand dollars of principal to invest. That improves things on both ends!
I'm a strong advocate of meeting the income needs, whatever they may be. But a temporary income need can be more easily met with asset sales than through higher yield. I've tried to avoid looking at the numbers, because they are scary if you think about them, but our outflow this year is going to end up north of $300k, somewhere in the $300k to $350k range. Our income isn't anywhere close to that, even if you include income from investment accounts that we don't have access to yet. Happily we don't NEED to generate $300k of income, we can get by with $150k of income with $250k of principal available to be spent as needed, and have a wide margin of safety to boot.
It's a one-time need, obviously, but that's kind of the point. Short term needs are best met with saved principal, because $1 of principal funds $1 of need. It doesn't make sense to fund a need with income unless the need continues for 10++ years. (We could argue about the 10 to 15 year time frame.) I'm willing to spend money, but I would rather fund the need more cheaply where that makes sense. |
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