Problem: Thomas is considering retiring and migrating to a rental property in the Virgin Islands. Thomas presently owns a home appraised at $595,000 with $300,000 remaining on the home loan. He has about $350,000 in savings right now. The Virgin Island rent will be $1,000 a month and he estimates that he and his wife can live on $3,000 a month in the Virgin islands. He figures that he will live for 25 additional years and can earn 5% in his funds.
Q1. Does he have sufficient resources to retire in the Virgin Islands?
Q2. A friend noted that he also will get social security benefits but also will have top pay taxes on funds coming from his tax-deferred retirement fund and the social security. If he expects $1,500 in social security income and 18% of the income coming from the retirement funds are deducted for taxes, can he afford the retirement plan at this time?