From my googling it’s the same as 401k account. You have pension and then deferred contribution.
I think Deferred Comp is similar but different. I only knew of deferred comp plans in the private sector, but these are funds that you put away that are held by the company and then paid out to you after you retire, I believe. (I didn’t realize that they had deferred comp for police department employees.) Highly compensated folks are not limited in their contributions in the way that they are in a 401k. I have been told that one of the big consulting firm conditions payment of the deferred comp to the departing employee not competing with them by joining one of their competitors (not sure if this would also rule out individual or small firm consulting).
This one is for police, it sounds like something similar to 401k.
I thought the WSJ article was fascinating.
The last two retirees reported that their savings have gone back to what their original number was because of gains in the stock market even though it’s down this year. Even though both had healthy withdrawals from their savings
The woman was interesting. She saved a million and converted her pension into a lump sum for a million. Retired in 2008 which as we all know was a bad year to retire!
Was spending $200,000 a year before she sold her NYC condo for one in Florida 5 years ago. If she makes $25,000 a year in social security, I would doubt that she made $200,000+ before she retired. And she retired before she could draw social security at 58 so she was drawing on her initial investments.
4% of 2 million is $80,000 so she was drawing more than double that amount. Yet she still has $1.8 million 14 years later.
She can probably spend $110,000 a year now but was really spending up until 5 years ago yet her initial investments have not gone down much. Despite a very bad few years at the beginning of her retirement.
This does not surprise me as I thought that some of the people who resigned/retired during the Pandemic would need to get jobs again.
In January, after our 10 year 2.5% payments were almost done, we locked into 2.5% interest for 10 years on a portion of what our home is worth. The money we put into a separate investment account that we can easily draw money from if we want to - money to help our DDs get into their first homes for example. Our payments are very manageable, $1400/mo, no escrow.
Some people like to has SWAN paid off home. We SWAN under this situation. In the next 1 -2 years DD2 will probably be ready to purchase a home, and we can assist with down payment so she can avoid mortgage insurance.
This was our easiest way to have funds available.
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What is, “SWAN”?
Sleep Well At Night, I think.
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Well, if the market returns 8% and your mortgage rate is 3%, why would you rush to pay off that mortgage? For most people, housing is a cash neutral investment at best. So, emotional appeal aside, for many it makes no sense.
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TY for posting that link. I may have visited it before and thought I could not continue reading.
These four cases all handled retirement differently.
Ms Hall with her HR Executive experience with Berkshire Hathaway gave her the confidence to cash out her pension. It also allows her estate to be larger when she does pass. It sounds like she continued to do fulfilling things and has the life she is happy with.
Mr Compton can decide in a year if he pays off his mortgage or sells his townhome. Now that his cash flow is downsizing as he is aging off the various boards - it depends on how he wants to move forward. Property taxes in the Chicago area have risen very dramatically (probably with housing values going up). Whatever he decides, he won’t outlive his cash unless he has dramatic health issue and needs long term care (and that would be the case for most of us getting to age 84).
Mr. and Mrs. Bradley are doing fine. It doesn’t say how any of the couples handled the health insurance before turning 65 - some may have gotten it as part of their company benefit for retirees which was common before mid-1985 (after that time it was carved out for newer hires), so these folks could have had those benefits. Mrs. Bradley working in the wine industry may have carried this benefit. They seem comfortable with their mortgage.
Mr. and Mrs. Fitzgerald - many law enforcement positions require retirement at age 55. They also often have ‘vesting’ after 20 years. With his rank and well funded police force/police union, he was in good shape financially. Wife at age 58 is working as a writer and an editor. They may have the car loans because of low or no interest financing. Once his wife wants to stop working (if she can’t work remotely) - it may be she wants to work until age 60. I like how they watch the cost of groceries and pick and choose what they are willing to give up – I do the same - and am watching the 3 main grocery places plus Dollar Market weekly fliers, which influences what I purchase and where I purchase. I write little lists, and if I am going for errands towards one of them I will make purchases. Sometimes I feel like making a more major shopping trip and make a circle to usually two of the stores. I regularly go to swim, so sometimes I will stop on the way back if I need something.
Many people only stay in high tax areas if there is family there or specific activities and they choose to stay. They see the effect on their retirement nest egg. I know several retirees that moved to our area after ‘researching’ where to retire. One has a younger husband who sells luxury cars locally – they moved from Seattle area.
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Be careful about assumptions about “high tax areas”. Your income level matter in terms of what is a “high tax area”. For the typical (high income) forum demographic, Washington is actually on the lower side of state taxes, because it has no state income tax. However, taxation is heavy for lower income people, because sales tax is heavy.
Who Pays? 6th Edition – State-by-State Data – ITEP can give you an idea of how heavy state taxes are by income level. Yes, the page is mostly about how state tax policies affect income inequality, but the information listed is useful for individuals to know what kind of state taxes they may encounter in different places.
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I am talking overall taxes. Many look at their high property taxes and go where they know their overall taxes will be lower - also similar with state taxes/local taxes. Some states don’t tax military pensions for example, which is a big influence for some.
Yes people need to research it all, so no surprises.
Taxes and living more economically are just one aspect. Some people want to live on or near a beach - and do that, with having various coastal areas and states to decide. Some want to maintain a lake property or smaller second home. Some choose to live near some of children/grandchildren - but also keep very much in mind all their other factors.
I spoke with a NYC retired teacher who knew what kind of house she wanted and annual total expenses - and she bought it in the area where I live. She has an easy flight to NYC to visit friends but has the lifestyle she enjoys - including less cold/little or no snow. She had lived in our area over 3 years when I talked to her, and she was very happy.
Agree. What matters is total taxation in retirement.
Looking at income taxes only is one data point, and it’s not even correct for retirees. Some states do not tax retirement income. For example, on the article that UCB posted above, PA, #7 most inequitable, and IL, #8 inequitable, do not tax retirement income. In contrast, CA #51, i.e., most equitable, taxes all income but SS in retirement; OTOH, long-time homeowners will have low property taxes.
And don’t forget estate taxes in ~17 states. Massachusett’s estate tax kicks in at $1m, but they are looking to change that.
Interestingly, this article shows CA on the more tax unfriendly side for new residents.
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I could not relate to any of the people in the article either regarding their spending or lifestyle in retirement. I always think those who get bored in retirement lack imagination and don’t have varied interests.
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I just called our property tax assessor office, and found out that when one of us on the property is 65 and older (used as primary residence, and we both are listed as the property owners) we pay 1/2 plus $48. Missed it for this year (had to ‘register’ before Dec 31) but will have it for 2023. I had prior been misinformed - so it is definitely worth checking!
No crying over spilt milk…
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I think some people really like and need some ‘structure’ to their day.
My DH has a hobby that he enjoys so much - kind of like the guy that is involved with the youth sport. Plus DH is handy and has a work shop. He recently was talking to me about his project high and low from work (electrical engineering/contract manufacturing in many aspects, design/test/QC/program management/technology transfer) - when the high wore off and before he had another great work project to problem solve. He has taken on hobby projects which included board design and wireless systems, and had the high wear off. After the hobby being such a big part of his day, he actually is now cutting back on it so he can do other things.
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It’s easier said then done. I have more time, I’m not bored, but I hang out with people much older than me. This is why I take an art class, I get to hang out with people a lot younger than me.
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I have swum on and off at the same place for about 20 years (had several breaks including fighting stage III aggressive cancer and some other health issues with 2 major surgeries in 1 year; then a job that I needed to wait for retirement to pick up swimming again). Now I go at least 5X a week. I use to have to go during the day when DDs were in elementary school - there were very old men that would either just sit around on nearby benches, or be in a lap lane with most of the time at the end of the lane just hanging out (one lane is near the hot tub, so it was convenient to go from one to the other). In the evening, I avoid these people.
Since I swim a mile breast stroke each time I go, I am focused on my laps - if I have to share a lane that is OK – but do not want to share a lane when there is someone using a lane just to hang out in. One guy was ‘walking the lap’ - no it is lap swimming (management came out and told him he either needs to swim laps or go to the pool exercise area) . I usually go after a class that ends most days at 6 pm (the class takes the whole pool) so I can avoid the few people who have gone there forever and think the rules don’t apply to them. I had the one man (who has hung around in that one lane through the years) recently who either was to give up the lap lane as others of us would need to share. You can have up to 3 share a lane (have to go on left side of the rope across and stay on the left side of the rope as you come back and time out the swimmers or can pass but respecting other people’s space). At least one lane (of the 4) is used for exercise/non-lap swimming. I just have to call the desk and they come out to deal with these disagreeable/non-rule following folks. So this old guy yelled at me and told me to shut up when I politely told him it was unfair for 2 of us to share a lane when he really wasn’t using his lane - now there is no way I will EVER share a lane with him - do not want to get anywhere near someone who is that explosive. Another gal plays little games and wants to hog a whole lane when she should share - saying “I’ll be done after 4 more laps” (I asked the few exercise area people with 2 lane space if it was OK if I could swim next to the rope and they said OK - so avoided having to deal with her). I finished 1/2 mile before she ‘completed her 4 laps’. Last week this same gal told a guy in the exercise area to ‘save her lap lane’ (I was sharing a lane and went to the empty lane when she vacated it). As I said, she plays these little games. Well she complained (I had words with her and returned to share the other lane and told her she did not share well) and so the pool guy talked to her and me. Later the management told me she has been problematic for a long time (which based on her other behaviors, I could surmise). I want a pleasant fulfilling swim. My Medicare supplement pays for Silver Sneakers which pays the pool fee. Never see the problematic woman on Sat/Sun. The old guy who takes the lane opposite of the hot tub, usually there are enough vacant lanes so I leave him alone.
I dislike these old guys sitting on the bench watching me swim, but usually in the evening they aren’t there, or they are in the steam room or sauna (which I never go into either). I only use the hot tub for about 5 minutes with the jet against my arthritic areas and muscles. The hot tub can hold 5 comfortably, and some of the heavy guys spread themselves out - and I just politely ask to use a little corner and it works out fine. One old guy suggested I move, and suggested I move a second time, then he got out and angrily said “I ASKED you to move”. I told him I was in a proper space in the hot tub and I didn’t need to move. He sat on the bench and waited for me to get out - and I said “have a great night”. I think he is use to ordering women around. Usually I go to the furthest away from any guy in there, but I wanted a forceful jet and I was in a spot that must have been too close for his comfort zone.
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Good for you for doing that. Property tax senior discount criteria will vary by location, but it’s always worth investigation.
In our location, only my husband needs to be 65+ to qualify (helpful, since I am 7 years younger). It was a small amount of setup pain, with a year turnaround until our discount kicked in (about $500 off of a $3000 bill; there was some kind of formula and maximum discount). But now we have the lower rate going forward.
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The tax office on the phone told me that our tax in 2023 will be 1/2 plus $48 - so it is more than your discount. Homestead Allowance. We also are where only one of the property owners (and as primary dwelling) need to be 65. Kicking myself for missing the tax discount for this year, 2022 (had to show them driver’s license before Dec 31, 2021).
We get water from one city, and they also discount 10% on billing for 65 and older. That info was easily available. Electrical, gas is another city and no discount.
Annoying, but glad we have now triggered the discount.