We still are in prime buying period for housing - and when there is a lot of competition for housing driving the prices up further; the interest rates going up is also having many first time buyers feeling the pressure. All they can do is ‘stay in the game’ until something works out. DD’s married friends had several offers not go through due to competing offers, but then they had one at the end of last year get accepted, and they closed last January (houses/townhouses/condos for sale over Oct - Dec and early Jan/Feb often have less buyers looking and seriously selling owners).
Fortunately both DDs are in affordable rentals, and one will be moving in Nov so we will see what happens with that move.
DD2 needs to be saving, and she has to budget herself; she had legitimate expenses - being in weddings away (with away bridesmaid event) - and taking a ski vacation. Buying herself will need her to be disciplined in saving, and hopefully earning more.
Interesting article. But… there can be incredible variation on COL (especially housing costs) within each state. That’s true in NY, which in general is expensive… but our starter home near Binghamton is now showing $117k (admittedly property taxes are high percentagewise- $3700, state taxes high too). Also true in CO where we live now…. Boulder super pricey, other areas high, much cheaper in rural areas on the plains.
Agree with you on the variations with housing costs, what communities offer, problems you may not be aware of, and variations with states – huge variations. That is how generalizations work - but may get people thinking/looking/analyzing if where they want to live in retirement is indeed affordable and a good choice for them.
I just saw this and it is true about some of these communities close to cities (Orlando area where DD lives and she lives very close to Maitland/works in Maitland), and Madison WI. Niece and her fiancé built a house just outside of Madison WI and know the area well.
I know these are generalizations, but they listed “average age of retirement” and those included 62, 63, 64. For anything under 65 (Medicare qualifying) isn’t the health care piece a huge factor? I could pick one of the cheaper places to live, but if I retired at 62, based on my current projections I’d still have 3 years of $30k a year in a state healthcare marketplace for me and my partner. I wonder if that is factored into the state rankings?
If someone works long enough for the government, they can have their insurance plan at a reasonable level. Some work for a company that has this benefit to have reasonable cost health care until 65. DH and I did not - I worked through us both being 65 (his birthday is a few months before mine). I saved $1K/month from his COBRA costs (mine would have been similar COBRA cost). Some may live in a state where they have a reasonably priced health insurance option. Our uncle was union electrician and could save up money in his plan and retire a few years before Medicare. So some people have options on this.
We paid COBRA dental plan, and found out that after our 18 months, the plan you purchase with that company name does not have the same benefits even though on paper it looks like it does. We are going to buy a dentist specific plan which will cover the cleaning and some basics, and discount on any dental work.
I don’t think any of that factored it - it was general retirement and the average age.
I’m already taking distributions on some of my accounts. I also have a RMD I was required to take on an inherited account. According to my financial planner…I’m good to go when I’m 72. Which is good.
Based on input from our financial guy, we have some money getting converted into Roth IRA on a schedule between now (age 65) and then based on taxing and withdrawals at 72 and beyond. It does help on our tax picture and increased estate a decent amount too (for our inheritors - DDs).
If you opt to convert, you’ll need to sort through some Tax decisions.
Should I withhold taxes if I convert?
The amount you convert to a Roth IRA is taxable, but you don’t have to withhold taxes during the conversion. You can opt to pay when you file your tax return; however, if the tax bill is large enough, you could be subject to late payment penalties. Review your overall tax situation with a tax advisor and make estimated tax payments as necessary, ideally from non-IRA assets.
Paying taxes from nonretirement sources allows you to maximize the benefit of the conversion by having more dollars grow in the Roth rather than being used to cover the tax bill.
The rule of thumb is that if you do NOT have teh ability to pay taxes from non-retirement sources, you should not do a Roth conversion. In other words, if you have to have the taxes withheld at the time of the conversion, its probably not worth doing.
We have been with our financial guy quite a while, and he did an analysis - and we can see how we will benefit on these years (age 65 - 72) and the amounts of conversions each year. We have a steady financial situation - both being retired. So we are implementing with his guidance. Our taxes are very straight forward/uncomplicated.
