How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire? (Part 1)

Parents Forum Parent Cafe
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<p>I agree mcat2 about moving often - people just do not realize how many costs they are absorbing with purchase and sale. We always expected to stay where we bought, but job opportunities had us move to three different cities. The last house was in a lousy school district and crime was getting bad, so we knew we would never get $$ out of house by adding a bedroom and bath. We finally sold the house over 3 years after we wanted to. Now have been in our home (that we built) 22 years. It would have been paid off, but we refinanced - now our interest is only 2.5%, so not bad for next 9 years.</p>

<p>I agree with thumper1 about sharing the wealth a bit with the next generation as they are going through their lean years. I remember my parents pressuring H and I to purchase a new 4 door when we were expecting our first DD. We ended up caving and borrowed against 401 k at 8.5% interest. A few years later, dad had terminal cancer, and he realized he can’t take it with him, so they gifted out $10K to each of the 5 of us. Part of it was he had built up so much wealth, that he knew my mom would not need it all. In future years, mom gifted out frequently. They did very well with an inheritance for us.</p>

<p>We all have three things in various levels - time, energy, and money. Balance in these is nice, but we cannot control some health issues and external events that affect things. We can always adjust our attitude to one of gratitude.</p>

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<p>I think it takes a lifetime of living below your means to really be able to afford to retire. Lenders will allow you to buy houses way outside the suggested range of 25 - 30% of take home pay. Once you pop above that there is no extra money for other things. Then when people lease new cars all the time, they’re driving cars they really can’t afford and forever have car payments. </p>

<p>We could technically stay in this house as we have a first floor master, but Maryland is so retiree unfriendly we’ve got to get out of here eventually. And I feel like we need to make sure we connect with the new community wherever we choose to live. </p>

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<p>I agree that moving is a huge money sink. Of course, not moving can be too, which is my situation. When we moved to this community before we had kids we were told “you have to be in the X school district” and, being young and naive, we took that as gospel. After my divorce my ex (wisely, it turns out) moved to a cheaper neighborhood while I stayed in the district so the kids wouldn’t have to switch schools. Looking back, not moving to a more affordable place is what has put me so far behind on my retirement savings. Now I am in the home stretch and I plan to move next year. I will be looking for a place where I can have a decent career for the next 15 years, but also that’s affordable and where I can stay into retirement if I want to. The only problem is I have no idea where that place might be!</p>

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<p>A year and a half ago DH and I downsized and got rid of our mortgage. We had been in our old home in an expensive town with outstanding schools for 25 years. Once the kids were gone (well, actually five years after the kids were gone; these things take time) we sold that house and moved to the next town over. The schools here are not great, but we don’t care. I’m actually finding it very interesting living in this town, as it is much more diverse and needs people like me to volunteer for various things. But we see our old friends in our old town just as often, and we use just about all of the old merchants that we used before.</p>

<p>But I am concerned about staying in CT, since it’s supposedly a not-retirement-friendly state. I need to do more research.</p>

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<p>" I think it takes a lifetime of living below your means to really be able to afford to retire. "</p>

<p>This. </p>

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Maryland’s inheritance tax does not apply to bequests to immediate family members (and some not-so-immediate family members). It mainly applies to bequests to non-related persons. So it really doesn’t affect many people at all. Maryland has both an estate tax and an inheritance tax, and they apply differently. <a href=“http://registers.maryland.gov/main/packets/infoguide.html”>http://registers.maryland.gov/main/packets/infoguide.html&lt;/a&gt;&lt;/p&gt;

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<p>It seems like they found a solution that fits pretty much nobody. I’m just not seeing how this is going to work. If you’re retired you’re gonna spend less on housing and transportation, if that savings is 10% (sounds reasonable - someone tell me if I’m wrong), it means you’re currently spending 95% of what you make. If you’re only saving 5% a year you’re gonna retire when you find out you got cancer and are gonna die in 6 months. </p>

<p>I don’t know why it would cost so much to occupy your time, unless all you’re doing is traveling the world or spending all day every day at the casino (which does appear to be a popular choice). </p>

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<p>If there are middle class jobs there, the schools should probably be okay, right? </p>

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<p>Reading this thread reminds me that we probably do the opposite of what everybody else is thinking here.
1-LBYM, yawn, we only do that when we are unemployed, otherwise it’s a hard ship to frugalize. When you have two incomes and that means two careers, and two young kids to take care, you would be lucky to get the marketing done on Sunday to feed them properly, let alone LBYM. And the stress will kill you sooner. </p>

<p>2-Buying house in the non-best school district so you can save money. Well, we’ve always buy house in the best school district for academic and safety reasons. Also it’s if the house is expensive, when you’re ready to retire, you can sell it and move anywhere, and with lots of equity. It’s not always the case if you buying a house in the cheapest cost area. Where would you move?</p>

<p>3-Paying off the mortgage. Well it’s a common wisdom for the Suzie Orman crowd, but for me why should we pay off a mortgage rate that is so low. Even for car loan, when the credit union offers less than 1%, IIRC .74%, why would one want to pay it off even if one can. I remember the days of borrowing 15% to pay for my car. However, what I make sure is that there is enough income set aside to pay off the debt. Same with rentals, if the mortgage is paid off, there is less deduction, one has to pay more tax. As long there is positive cash flow to cover after the mortgage then why pay off such a historical low interest rate. </p>

<p>4-Move to another city when you retire. I had plan to move a little bit farther(maybe 20 minutes farther)when my last one is out of high school but was outvoted by other family members. In hindsight, staying in the same area maybe a good idea, kids will come back to visit you and their high school friends. House in this area and it’s value has staying power, if not going higher. When the housing bubble busted, it only came down 20% vs the peak.</p>

<p>5-We don’t plan our retirement so we can live till 100, nobody in our family has reached a 100. FIL was 91, MIL was 87, my own father was 87, my own mother was 63. However, I might have longevity gene, because there are several family members live in the 90s without lots of medication.</p>

<p>6- Our philosophy in life has always been for spend money to enjoy our experience while we are on this earth, travelling is one of them, and we’ve done quite a bit of travelling, we are not the type of people to wait until retirement to travel.
With that philosophy, my husband and I will focus on the quality of our life in the next 20-25 years, ie travelling and doing more things, not just sitting at home and rot. After that it’s great if we have money to travel, if not it’s not a big deal, we probably too sick to travel anyway. But honestly, the quality of life significantly decrease after a certain age. I met somebody at a restaurant recently and he kept saying he wanted to die, because he is alone at home, taking lots of medication and not enjoying life, he is 89. His wife is still working. So this is why husband and I will retire together.</p>

<p>7-In retrospect, I wish my husband and I would have the guts to retire when I was 45, it was the optimum age balancing energy, life, heath, etc
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<p>“If there are middle class jobs there,the schools should probably be okay, right?”</p>

<p>Not where I live. (Pasadena , Ca)</p>

<p>When D came along we had every intention of sending her to public school. But we ended up paying a large chunk of change to send her to private from 1st thru 12th. </p>

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<p>“Also it’s if the house is expensive, when you’re ready to retire, you can sell it and move anywhere, and with lots of equity”</p>

<p>A house is just that - a house, a place to live. It is not an investment. When you consider all the utilities and maintenance and taxes and etc. you paid over the 15-20 years you lived in the place, that equity is probably a negative number (of course, opportunity costs needed to be considered, too, as well as the avarage returns if the difference would have been invested in an average MM or index fund, but even with that the equity is still negative). When people start treating their primary dwelling as “investment”, RE bubbles happen. And that is not a good thing. </p>

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<p>^In general terms, the answer is probably yes. But if you owe one of those houses in Palo Alto next to Mark Zukerberg, then the answer is no.
In fact, why of the wisest comment I read when I was younger is from a couple who bought a house in downtown SF and they were able to retire in the suburbs after selling the urban house.</p>

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<p>In California, with Prop. 13, it makes sense to stay put and keep your lower property tax rate. Unless you are moving to a house that costs less than you paid for your current house.</p>

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<p>Some counties allow you to transfer your base to another county in CA, you need to check. I think after 55.</p>

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<p>Proposition 60
<a href=“http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#12”>http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#12&lt;/a&gt;

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<p>Gospel. Truer words were never written. That statement also flushes out the issue of what living within or above or below your means actually means. Its the way that savings are created.</p>

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<p>I’m the world’s worst saver. I count my blessings that I am 15 years into an employer with a forced pension plan. My contribution is 11% each pay period. I’ll get a pension in the range of $2300 (if retire in a highly unlikely eight years at 56) or $3400 (65) assuming no position change plus group health coverage. Plus estimated SS of something like $1900-2400 based on my own contributions. Probably I will retire at 62 which will give us about five years after the last kid is done with college. My SO has his own (not big enough) 401k, and good investments but no pension. </p>

<p>Either way I have a rental with a very low mortgage that we could live in (and I have) for under $1300/mo including HOA, taxes and utilities if push came to shove. Cost of living is low here and I think seniors get some serious tax breaks. </p>

<p>I worry about when I retire that I will want to DO stuff that costs money. Take up more hobbies, buy more books, buy buy buy
and spend more than I do now. </p>

<p>I have often joked with my best girlfriends that we need to buy an old girl scout camp and each family gets their own cabin and we have communal meals/living room and that we will hire a woman/couple to drive us to appointments and help with maintenance. They can have a cabin rent free, we get some privacy and some socialization and there will be enough of us that someone will still be spry and handy and compus mentus. </p>

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<p>We got LTC as soon as DH’s employer offered it. No health questions for the level of coverage I got, since I had just been diagnosed with leukemia. Didn’t need it after the heart attack, but glad to have it in place. </p>

<p>DH has a large term policy, which I suspect we’ll keep til we are on medicare, since my medical expenses run into the six figures annually. If I do n’t have his coverage, it would be expensive to replicate on my own. </p>

<p>How much do we need to retire? I figure 60% of current income. We live on less than that now after tuition bills. </p>

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<p>We are in MD but are within a couple years of paying off the mortgage on our house – only one we have owned, has more than doubled over that time. OTOH, would be nice to have a place that is more conducive to aging in place vs. our four level split. Have been in KC this week for a family reunion. A cousin has the perfect house, IMO, and it was 1/3 the value of ours (and 3x nicer). </p>

<p>OTOH, I have all my doctors here. DH is not interested in retiring. He plans to drop dead st work. This is not how I want to spend the time I have remaining! I’ve already dodged two major health bullets.</p>

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<p>How have you weighed money vs. quality of life when making decisions about retirement? Do you always choose one over the other? Do you and your spouse agree about those choices? Dh and I are going back and forth on those issues and can’t arrive at a satisfactory solution for either of us. We can each see the other’s points of view, and have conflicted feelings about some decisions. How did you decide when to retire and where to live, and have you ever regretted your choices?</p>

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<p>“How have you weighed money vs. quality of life when making decisions about retirement? Do you always choose one over the other? Do you and your spouse agree about those choices? Dh and I are going back and forth on those issues and can’t arrive at a satisfactory solution for either of us. We can each see the other’s points of view, and have conflicted feelings about some decisions.”</p>

<p>That would be tough if you have completely different ideas, @Silpat. Some decisions are so permanent. I guess if you can’t agree, you find a way to compromise. Maybe the person who really wants to retire does it first. But what if there’s a disagreement about where to live? That would be so hard if you’re not on the same page, and people can really make a big mistake by moving to the wrong place.</p>

<p>I have muttered a bit about retiring early, to which my husband seems rather horrified by. I think he still really enjoys his job, while me
not so much. I’m tired. But I don’t really have anything pressing that I’d like to do, and we are in our peak earning years, so it would be tough to rationalize retiring too early. And it’s a one way ticket, you’re not going back.</p>