IF you are not relatively sophisticated in the realm of income property, investment management and tax planning then you really need to spend some time with a financial planner.
Here are two examples of how you might do things - my long time business partner and I both quit working in 1998 - 1999 and we both went cruising.
My wife and I sold our large house in 2000 and went sailing. We had to return in 2001 to deal with unpleasant consequences of the house sale
that failed many months after we thought it was completed. We invested all the proceeds from the house sale
in mutual funds. We also left our IRAs in the care of a financial manager who had taken care of our money since 1984.
The stock market declines of 2002 and 2008 hit us very hard and made my wife so nervous she returned to work for a few years. We put our cruising plans on hold for that period of time.
However, out financial managers have given us an annual
9.3% (net of all expenses and taxes) return for the last 14 years.
Our house, which we owned 1982 - 2001, provided us an annual 2.5% return net of all expenses (including taxes
, appreciation, selling expenses, improvements).
My business partner took the opposite tack. He and his wife kept their home which they owned outright. The house is in a very nice Seattle
suburb with great rental potential. They lease
the house (two-year minimum) through a large real estate management company. The house provides their entire cruising income and guarantees his wife a known entity to which they can return when they quit cruising.
That couple has sailed from Seattle
and has been in the Med for nine-years. They return to Puget Sound
once a year or every 18-months and take care of house business in between leases. They have had very good renters and almost no rental problems.
income from their home provides all the money they need to cruise
(they are quite frugal) and have not had to touch their IRAs which have grown significantly in the last 14 years.
The stock market declines of 2002 and 2008 had no impact on my friends cruising plans. They were in the Mediterrean at that time and their home stayed leased full time. Their IRAs did decline, but since they were not withdrawing from them, those declines had no impact on their day-to-day life.
When they return from cruising they will already own a home in their favorite neighborhood.
When we quit cruising and living aboard
we will have to sell our boat, take the proceeds of that sale, and purchase
a home. Our problem is that we have visited so many nice places to live that we can not decide where to settle or how much to spend on a house.
My friends already know their future - at their old home and near their kids
. We have no kids
, no living relatives, and have no idea where we want to settle.
Either way can work.