Recently divorced woman looking to buy a home.

**jeffrey** · 12-16-2008, 05:33 AM

How long were your parents married? I believe if they were married for more than 10 years, she would qualify for your dad's social security benefits which would be much higher than $600.

**RenoSteven** · 12-16-2008, 05:36 AM

They were married for 30 years, but she has been working for the past 8 years. Is she still entitled to some of his social security benifits?

**minnie1928** · 12-16-2008, 08:48 AM

I believe she would be entitled to some of his benefits. It is my understanding that she would be entitled unless she gets married again.

**KatieNK** · 12-16-2008, 09:47 AM

I think it would be wise to buy the cheapest house possible while still being happy in it.

**kork13** · 12-16-2008, 10:15 AM

Originally posted by KatieNK View Post

I think it would be wise to buy the cheapest house possible while still being happy in it.

I agree... I'm not sure what the housing market there in Richmond is like, but especially if she'll be living in the home mostly on her own and in her older years, smaller is better. Not alot of room is needed, and it's less house to look after. She should be able to get a good, small home for under $150k, possibly even under $100k. As I said, it depends largely on the local market. Just be careful that quality doesn't follow size--I've seen many small homes that aren't built well, with good materials, or just without much care, just because they're smaller, less expensive homes. I wish the best for your mother...

**simpletron** · 12-16-2008, 12:09 PM

she can get 50% hushand's benefit at full retirement age while he is alive and can get the 100% hushand's benefit when he dies assuming she doesn't remarry. if he has max out the SS benefit then she would be looking at ~1200/month from SS until he dies.

she could buy a house for 150K to 200K house in cash now, leaving 350-400K cash. which at a 4% withdraw rate would generate 14-16K/year or 1166-1333/month. so before taxes an income of 2.3-2.5K/month in retirement without a mortgage. so if she works until full retirement (i think it is 66 for her) for 35K then she can shift in reitrement with no real change in her standard of living by taking SS and withdrawing from savings.

if she can get a permanent alimony of ~1200/month, then social security would pick up the slack when he died. so add 1200 to 2.3-2.5K and you're looking at 2.5-3K after taxes and no mortgage.

so I would say she can afford 200K and possibly a little more, but she is going to be on a fixed income and the more she spends on a house, the less will get to spend on everything else.

**jIM_Ohio** · 12-16-2008, 12:33 PM

I think working on a whole plan is step 1.

Generally speaking, 550k NOW is worth an income of 22k per year. SS of $600/mo=$7200, so generally speaking her retirement income (if she retired NOW) would be 30k.

She is age 60... if she waits 10 years to retire (age 70) here is what I would look at:

550k would be $1.1 M (with no new contributions- just growth over 10 years, earning 7% per year). I am guessing SS would increase to $1000/mo (more credits, paid in more from wages).
1.1 M is a yearly withdraw of 55k, plus 12k more from SS for a yearly income of $67k.

For age 60 retirement, I advise starting at a 4% withdraw rate.
For age 70 retirement, I might consider a 5% withdraw rate.

If she can earn 35k and rent, that is best solution for a better retirement. I might consider looking for a condo at 60k-100k and financing it (do not take money out of market right now). If 60k- the 1k/mo alimoney would pay off the mortgage in 5 years... and the retirement monies would stay intact.

For the 7% growth I would look at an allocation of 40-60 (40% stocks/60% bonds). I might suggest Vanguard Wellesley for most of it (it is a 40-60 balanced fund) or T Rowe Spectrum income (15-85 fund) with some T Rowe Global Real estate and blue chip growth and or equity income mixed in to bring mix back up to 40-60.

**nodebt99** · 12-16-2008, 02:38 PM

Originally posted by jIM_Ohio View Post

I think working on a whole plan is step 1.

Generally speaking, 550k NOW is worth an income of 22k per year. SS of $600/mo=$7200, so generally speaking her retirement income (if she retired NOW) would be 30k.

She is age 60... if she waits 10 years to retire (age 70) here is what I would look at:

550k would be $1.1 M (with no new contributions- just growth over 10 years, earning 7% per year). I am guessing SS would increase to $1000/mo (more credits, paid in more from wages).
1.1 M is a yearly withdraw of 55k, plus 12k more from SS for a yearly income of $67k.

For age 60 retirement, I advise starting at a 4% withdraw rate.
For age 70 retirement, I might consider a 5% withdraw rate.

If she can earn 35k and rent, that is best solution for a better retirement. I might consider looking for a condo at 60k-100k and financing it (do not take money out of market right now). If 60k- the 1k/mo alimoney would pay off the mortgage in 5 years... and the retirement monies would stay intact.

For the 7% growth I would look at an allocation of 40-60 (40% stocks/60% bonds). I might suggest Vanguard Wellesley for most of it (it is a 40-60 balanced fund) or T Rowe Spectrum income (15-85 fund) with some T Rowe Global Real estate and blue chip growth and or equity income mixed in to bring mix back up to 40-60.

Don't expect 7% consistently anytime soon!

**jIM_Ohio** · 12-16-2008, 02:44 PM

Originally posted by nodebt99 View Post

Don't expect 7% consistently anytime soon!

REALLY?

I bet market is returning double digits in 2009 or 2010. Invest now and get a double digit return.

Plus I mentioned using 40-60, which is only down 13% ytd and more than likely reinvested dividends put this close to -10% by years end.

I am not suggesting a person with a 10 year time horizon go "all in", but I do suggest getting in now while the chance for appreciation is at it's best.

I lost 40% earlier in year and have already gotten about 10% of it back. Have you?

**RenoSteven** · 12-16-2008, 07:11 PM

Thanks for all your info guys and galls!

I agree that working on a plan is number one priority. I'm going to get her an appointment with a financial adviser.

Jim Ohio brings up a great point that I have been struggling with, is it better to buy a house cash and let the value of the house grow, or buy the home over time and let your money grow? (I dont think my mother would be ok with the idea of a condo)

My mother was set on pulling everything out of the stock market and putting into a regular savings account with BoA (stock market collapses scare her big time). I'm very against pulling out 100% because selling low seems like a bad idea, also there is the risk of inflation. Perhaps the 40/60 vanguard fund that Jim mentioned would be a good option for her.

**jIM_Ohio** · 12-16-2008, 07:58 PM

If she is risk averse, I would follow her risk profile- she needs equity exposure for a 30 year retirement, but 40 might be too high.

for example put 70 percent in a 40-60 wellesley fund
put 10 percent into a REIT fund and 20 percent into a bond fund. You are looking for 7 percent annual gains and income producing securities are a GREAT way to deal with volatility.

At T Rowe I would look at 60 percent spectrum income (about 15-85), 20 percent equity income or similar and 20 percent global real estate for a similar profile looking for the 7 percent annual gains. High on income, low on stocks.

A house will not appreciate as fast as stocks, and a house cannot generate the income of an equity or bond portfolio even if it did appreciate.

**RenoSteven** · 12-16-2008, 08:37 PM

thanks again jim, I hooked you up with 5 of my 30 rep points lol

Recently divorced woman looking to buy a home.