John Doe is a 65-year-old retired widower. He lives where he was born — in Winona, Minnesota. John joined the military after high school, served for 20 years, managed a hardware store and retired last week — the day after his wife, Jane, suddenly passed.
John and Jane both grew up poor and saved like crazy. They were sure they’d never have enough. They also wanted to leave money to their three kids.
Frugality worked its financial charm. John is sitting on a $1.5 mil IRA, a $1.5 mil savings account, a $45K inflation-indexed annual military pension, and, if he takes Social Security immediately, a $3.5K monthly benefit. He also owns a $1 million house free and clear. Ok, free is too strong. Maintenance, insurance, and property taxes total $25K a year. John plans to leave the house to the kids and to withdraw his IRA in annual equal real amounts starting this year.
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John ran MaxiFi Planner, my company’s economics-based financial planning software, assuming the default maximum age of life of 100 and a 1.96 percent real yield on his investments.....