As you might recall my previous mention of this, in my “past life” I was an actuarial underwriter for the Prudential (US) specializing in employee benefits and retirement planning. In the US, much of the financial planning that was appropriate then, and still is today, centers around taxes...specifically, reducing income taxes.
Without prying into your personal tax situation, it’s almost impossible to suggest what would most likely make the most sense for you.
A general rule of thumb, one that has passed the test of time for decades, is to spread your assets over a range of investment vehicles.
Markit declares,
“if your assets are in bricks and mortar - sell now while the price is still showing some of the massive gains they have "earned" over the last 10 years. If you can find a buyer...”
I disagree with that entirely, most especially if that property (which is assumed to not be your primary residence) is not subject to a large mortgage, or a mortgage/overhead cost which is greater than 70% of the potential rental income that property could yield. That 70% assumes a 30% income tax, so for each percent less than 30% of tax liability, add an equal percent to the 70%. Only if that property has an annual carrying cost significantly in excess of its rental income potential would I consider dumping it.
Since you are “cash heavy” going into retirement, I would consider placing at least a third, if not half of that cash into an insured annuity with a major mutual life insurance company. This is what is called a reverse annuity. Most annuities are built up by regular small deposits over the working years of an individual, and then drawn on as income after retirement. With a reverse annuity, you pay in at retirement in the form of a lump sum, and then immediately draw on the earnings of that fund. These types of accounts are insured, risk free, and can be customized to suit your income needs, length of time of payments, and generally can also include some life insurance, which is nice to have should you find your “useful time on earth” to be expired prior to when you planned. The appeal and advantage of these types of accounts over CD’s or regular bank accounts are several:
1) Higher returns (interest) than typical of banks
2) Funds are insured
3) An attached benefit of some amount of life insurance
4) Easy assignment of a beneficiary of both the fund and any life insurance
Since your wife is Indonesian, and you are foreign, and since you will be living in Indonesia, a key concern for you in addition to pursuing the highest yield on your hard earned money should equally be what happens to that money when God determines that your “useful time on earth” is over. This is estate planning, and it is just as important as retirement planning for those of us going into retirement with a spouse and children.
In my own case, I’ve already transferred ownership of all my liquid assets to my wife and our three boys. With my private pension, which will pay out survivor benefits, Eri is already the beneficiary. With my Social Security, Eri will never be eligible for survivor benefits as she hasn’t, nor will, live in the states for the five year requirement. However, each of our three boys are eligible and each would receive a monthly Social Security survivor benefit if I died before their attainment of age 18.
Whether or not you transfer ownership or use the beneficiary approach to your liquid assets is your own private affair, but you should be aware that in Indonesia, there are some very strange regulations/laws in place regarding joint ownership of current assets, joint bank accounts (almost non existent) and of particular importance, estate property laws. For all of that, you need the advice of damn good Indonesian attorney, and based on what you learn, then make your decisions regarding what baskets in which to place your eggs. Just be certain to follow the old rule of thumb...never put all your eggs in one basket.
Cheers and happy retirement!
