Yes, all other things considered, even with the crazy McCleary bump the property tax rates in WA are still better than in many other places. Of course, the valuations are a whole different ball of wax… so for folks on fixed income increase in property values could be a big problem. Fingers crossed that craziness is over.
And having grown up in CA, prop 13 was helpful whilst also having bizarre effects. Old guy lived in his house 40+ years, paying $1500 a year, neighbors paying $15k a year etc. For non-Californians, because of the dramatic property value increases in the '70s and old people being taxed out of their homes, the prop 13 rule said the valuation of your home was what you paid for it with a maximum increase of 1% a year. The very interesting feature I recently read about is that you can pass your prop 13 protection to your kids. Now that first generation movie stars in Malibu are dying off, next generation kid owners are paying taxes on extremely low valuations, 40 years later there are some weird unintended effects surfacing.
Property taxes in California also include payments for bonded indebtedness. So it’s the base rate plus what is tacked on for bonds. And California voters almost always vote yes on bond measures. In 30 years our property taxes have doubled.
If you have been living in the same house for 30 years, your Proposition 13 capped property tax is 1.02^30 = 1.81 times what it was when you bought it (since the cap has a 2% per year increase). I.e. close to double within the Proposition 13 cap.
Of course, it is likely that your house price has much more than doubled – probably helped by Proposition 13 discouraging people from moving and putting their houses on the market.
I don’t think there is any cap on the amount tacked on for the bond issues passed. I know for a fact what we paid when we bought the house and what we pay now. And it is double.
Not to mention the high water and electricity rates, high homeowner’s and auto insurance, high sales taxes and high gas taxes.
In the last 30 years, inflation has slightly more than doubled prices overall, according to the BLS. So if your taxes have only doubled in 30 years, that’s pretty good IMO.
The comment of mine related to Prop 13, the purpose of which was to allow people to stay in their homes and to keep taxes from going up exponentially. All these decades after it passed, it is still very popular and a ‘third rail’ that dare not be touched. But, bond issues which fall on property owners keep pushing the property taxes up despite Prop 13.
Prop 13 capped the increase in property taxes to 2% per year. Special taxes, assessments, bonds, etc. are not capped, but must be voter approved and approved a minimum of 2/3rds of the voters.
Popular here in SIlicon Valley, many local school districts often pass special parcel taxes of hundreds, if not, a thousand+ dollars.
Prop 13 is great if you bought your house 20+ years ago. To me it doesn’t seem fair that for the same house value residents are paying wildly different taxes depending only on when they purchased it. And not just for one year but potentially for decades. On the bright side, you don’t have as many retirees finding that they can’t afford to stay in their homes due to rising taxes. On the other hand, it makes it tough for young families to afford a house, or move to a bigger house if their family grows. It reminds me that taxes never really feel fair.
I.e. the bond issues or whatever made your property tax about 10% more than what it would have been just with Proposition 13 cap increases (i.e. 2 times instead of 1.81 times what it was 30 years ago).
Not too many add on bonds, so our taxes have only increased ~75% in 33 years. Of course, the house value has quadrupled over that time. Pretty good deal to me.
Am sure I’m missing a lot as I didn’t read all the pages of comments - clearly this is a hot topic! I’m loving @TiggerDad and @ChoatieMom and their details, plus others and the great conversation about how different people view spending. Our retirement plan involves selling the house and moving onto the sailboat (which we’ve owned since 1992), with close to that semi-mythical $30000 a year budget. We’re actually budgeting a bit more to be able to fly kids to wherever we are for their school vacations and to fly home ourselves occasionally, putting the boat on the hard somewhere. We’ve got about $2000/month in passive income and with the money from the sale of the house earning interest (plus a lot of other savings before we hit official retirement age and can tap into the IRA/401K money), we feel like we should be okay. Retiring at 51.
^ What are you doing for health insurance?
^How long will you live on the boat? What will you do afterward?
Repeating @notrichenough , my family members set out on their sailboat on the round the world cruise. Contracted an infection after leaving Mexico and barely made it to Hawaii, had to pay to have the vessel moved back home whole he recovered . There’s a whole lot of ocean out there…
One more very happy Californian here…while our state does have its issues (don’t they all?), we somehow made the wise decision 28 years ago to buy a home that is one we can grow old in. Our taxes are, honestly, unreasonably low (prop 13) and we’ve paid off the house which has gone up over 5x what we paid. We have made significant upgrades but it’s really the house dh and I are happy with and can grow old(er) in. And has room for those imaginary grandbabies that we may have some day on a lower level that currently goes unused.
Good question. Retiring at 51 sounds awesome, but if you have to pay for your own health insurance for 14 years, that and medical expenses could suck up every bit of that 30K, sadly.
We are (hopefully) retiring at 60, and that is definitely a concern. While we can keep our company provided insurance, we have to pay for it. A better deal than going out on the open market for private insurance, but still expensive.
So just to ask, you guys are retiring at 51 to live on 30K a year on on a boat? And you will have zero real estate and your 401ks will have no added money before you can draw? What happens if there is no SS in 15 yrs? I fully imagine a 51 yr old can see that SS and medicare will face attack. And as above, health insurance? That isn't included in your numbers above? That has to be $$, right, a $$ flexible plan if you have no fixed abode per se? This plan also assumes no market doldrums also for the house $$ and retirement funds to grow. After 50 is when the bigger catch up dollars are so useful in 401ks.
It sounds wonderful. but it would have to include a trust fund somewhere. No way is there no back up plan. This is America, you are supposed to have at least a million plus to be able to retire decently at 65. The numbers for the cost of post retirement health coasts over and above medicare sound terrifying.
Things I assume we cannot solidly rely on, SS (as is), medicare (as is), defined benefits pensions from companies that could go kaput.
For medical insurance, we’ve been ballparking $2000/month (for couple) for years prior to 65. I recently learned that there maybe(?) is a Cobra break for the 1st 18 months, but it would still be pricey.
Wow, @SailingMomof2 — sounds exciting! Do you have a plan B, in case one of you develops a chronic condition that requires somewhat frequent medical attention, for example? Out on the water is great for some things and not others.
Do you have a plan of where/how to live when one or both of you decided sailing is just too tough?
$30,000/year doesn’t leave much margin for error or medical expenses or anything unexpected.