Perhaps that may be true in many cases, if people made projections based on best case scenarios, rather than average or worst case scenarios. For example, medical bills beyond what insurance covers may be higher than anticipated when making your spending estimate for your projections.
Am I correct that there is no lifetime exemption on capital gains with second homes?
Due to divorce, my siblings in law had to sell their vacation home. Due to the hot market, they made a good profit on it. But considering the cost of the home, the costs of maintaining and now paying taxes on the capital gains, I think that the stock market would have been a much better investment.
I do understand that a vacation home is much more than an investment. And especially an inherited property. Iām not convinced that itās a great money making opportunity.
Also since I live in a concentration of the US where homes arenāt gaining the value of other parts of the country. I think that we are basically blocked from retiring to another part of the country because our house just isnāt gaining enough value to be able to afford to move.
I sometimes feel that we got the short end of the housing stick.
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correct. The cap gain exclusion is only for a primary home.
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We have friend with a ski condo, which in theory sounds like it could be a good money-maker rental. They say, ādo it to make family memoriesā¦ donāt expect to make moneyā.
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I feel your pain. We purchased our home in 2006, right before real estate collapse. Our house wasnāt worth as much as we paid for in until the last year or so. Meanwhile, in the āless then desirable areasā (back in 2006) houses have gone up 100s of thousands of dollars (I am not exaggerating that number). I have to remind myself we are lucky to have a very nice home, we moved here and didnāt pay private school costs, and we are still much for fortunate than many.
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Either the Washington Post reads here, my newsfeed knows we talked about this or itās a pure coincidence 
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To each their own has become my saying.
That being said your BFF is just using saved equity in the house to fund other purchases. I wouldnāt necessarily want to fund things that way but some do. Eventually you have to pay.
I have watched my folks pay off their house in 1997 which they bought it in 1971. My Dad has passed, but they lived rent free since 1997. Just have to pay Property Taxes and maintenance. What they got from that is peace of mind.
I personally plan on moving when I retire. My house will be about 98% paid off worst case. I will buy something cheaper/smaller and have extra funds from the sale for either retirement or to pass a long to my kids. Or I might move into something smaller but in a area that costs more. I will be able to afford that if I want.
I live by the mantra that having no debt gives you freedom. I am not there yet, but plan on being there by retirement.
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Thatās why they call it āthe evil twinā over on Bogleheads!
Back to a topic adjacent to the state pension WEP/GPO discussion up thread. I struggle considerably with trying to figure out how much non-pension savings I should accumulate give my pension. I have not found a good modeling tool that addresses this.
Many state employees donāt give this too much thought as they will plan to RIP (retire in place!) to get to 80%. This is not my plan and have focused some savings on 403b/457 but Iām not certain if and when I can take the pedal off the gas. I have three kids in college this coming year so that may force my hand at least for a bit.
If the pension is properly funded, then you need only the save enough to provide the retirement income/money not covered by the pension.
If the pension is underfunded, then you may have to estimate a reduction in value based on the risk of it failing.
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Itās definitely well-funded and a state pension with cola and healthcare, but itās so hard to compare to a bottom line 401K funded retirement. Iāve run present value calculators but they seem so estimated for all the unknowns.
Your balances in these accounts donāt affect WEP and GPO. The offset relates to your pension and social security onlyā¦or at least that was my experience.
I contributed the maximum to my 403B every single year I worked at my last jobā¦so 30 years. This gave me an additional retirement bucket.
I was subject to WEP and GPO because those 30 full time years I did not contribute to SS (teachers in my state donāt). Soā¦my pension very much offset my (small) social security benefit when the time came.
My financial planner advised me to contribute as much as I could to my 403B so I did.
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Yes, I definitely know this, but not knowing how much is enough drives me crazy. Iām worried for RMDs as I, too, plowed money in their early and often.
@MAandMEmom maybe others will disagreeā¦but we were advised to put as much as possible into our 403B and 401K accountsā¦and we did.
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You may have āconcernsā - but worry is when you are unprepared and in trouble. You can look at your spending, savings, maybe if you can move the needle on income. Outside things one cannot control - but one can be aware and see if adjustments to āthe planā are needed.
After attending some weddings in May, I can see what progress DD1/SIL are making on SILās ācareerā - he quit a job w/o having the next secured and the new job fell through. āWe are OK with itā - DD is working OT and gaining bonuses. Not what we envisioned with their marriage 5 years ago; 3 children and āthe head of the householdā is not fulfilling the role he insists he is despite lack of career path or head of household income. IDK if DD could even discourage him from quitting the job he did ā IMHO he was prepared to move on but he definitely could not āwill itā to happen. Sept 2023 their oldest will be in kindergarten and they need to move into a better school district nearby. I suspect they are re-signing their current lease for another year to give SIL more opportunity on his career ventures. They are visiting his parents at Easter and I doubt much will be said about it. His mother says āIt is in Godās handsā. The horse so far is not drinking the water he is lead to. My view is he is acting āspoiledā; DH thinks ālack of ambitionā. Either way, trouble in river city.
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@SOSConcern there are plenty of families where the financial āhead of householdā is the momā¦and that is fine. If it works for themā¦that is what matters.
But this is off topic to retirement so Iāll stop here.
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If you are worried about RMDs then you probably have plenty of money to retire.
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It definitely affects our retirement and our retirement plans. SIL will never consider our DD as āhead of householdā. He has issues and we will put it to bed at that.
I can understand your concern and how it may affect your retirement planning.
H most definitely took our kids into consideration when deciding when he felt we had enough on which to retire.
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I feel for you but you need to get your DD to handle her H as much as possible. DD and her H can āeat beans and riceā as they say in the south, while you do what you need to do for the grandkids.
The break in SILās employment is not good at all. He absolutely would be terrible as SAH parent. He only has a plan A which is not a sure thing so I might talk to his parents ā but I actually donāt think they would say anything to him to snap him into taking career actions for plan B (readily could get a job). We will see them towards the end of the month and will try to talk 1 on 1 with DD ā she has to manage the decision making and work with her H as his decisions have not been good and then he says āshe agreed to itā. DD is making excellent money and is able to get a nice bonus for extra OT - coming up she will earn her 2nd bonus. She just got another pay increase from her boss. SIL is ātalkā about head of household but he is not so with his career nor his earnings. 5 years is long enough for him pursuing what he wants while earning low wage in āpauseā mode. DD has done super well with advancement and superior earnings. DH even says it is ācrazyā for her to leave a job like she has to count on his lowish earnings in another state and then have DD do all the work at home (AND be expected to home school just because he was home schooled) - his mom, although intelligent, did not have education beyond HS and due to moving and being where some public schools were not very good - and they could not afford private/Catholic. His mother never would have the earnings DD has.