Author Topic: 58 yr old needs your sage advice  (Read 2124 times)

Body surfer

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58 yr old needs your sage advice
« on: December 26, 2018, 10:18:08 AM »
Hello. I am a first time poster who has learned a lot from MMM and you wonderful folks. I realize I could retire now in our current house or one close in the same value, however we wanted to move to a particular beach town where we vacation each year. The reality is, to move there I would need to work several more years.

DW & I both 58 yr old
$675,000 (50% S & P 500, 50% CD's and $ Market)
pension will be $30k/yr (wife)
house $275K (own it)

I am willing to go back into practice (physician) for several years to fund difference in housing/taxes for a home near beach. Houses cost $675k and up

Our yearly expenses are $45-50k not including heath ins

I greatly look forward to your sage advice...thank you

4alpacas

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Re: 58 yr old needs your sage advice
« Reply #1 on: December 26, 2018, 10:34:23 AM »
First, I have no idea how much health insurance would cost for you.  If we estimate $20k/year, you need $500k/year to support the cost. 

Second, you only provide the cost of the house--at least an extra $400k.  However, you don't include the increase tax basis or difference in utility costs.

Rough guess, you need about $1M more to retire ($500k for health costs, $500k for increased housing and tax basis).

Body surfer

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Re: 58 yr old needs your sage advice
« Reply #2 on: December 26, 2018, 10:48:30 AM »
Thanks for your response. Property taxes would be about $8-10K/yr. Not sure about how much health ins is via ACA.

A big issue is: is it worth it to have to work perhaps 5-7 years more to live where you truly want? vs. retire now or at least very soon and live as we do now. (I realize that is a very personal decision)

dougules

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Re: 58 yr old needs your sage advice
« Reply #3 on: December 26, 2018, 11:00:55 AM »
How much are you putting back every year?

Body surfer

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Re: 58 yr old needs your sage advice
« Reply #4 on: December 26, 2018, 01:30:53 PM »
I need to save about $200-250k to pull this off. I appreciate your insights thus far. I would not to practice there. If we delayed 4 years we would receive approx $60k/yr SS & pension. I would not want to drop below $500k after house purchase (at least to start). Thus- we would have $80k/yr of income

reeshau

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Re: 58 yr old needs your sage advice
« Reply #5 on: December 26, 2018, 01:43:29 PM »
I would not to practice there.

Just to poke at this some more:  how hard / how deeply thought out is this position?  You pose the question as a matter of working or moving.  But working in your new location would allow you to get settled / work on the new house / plant roots while you are at least enjoying some taste of the retired life.  I would also see this as a possibility for part-time work: surge / relief shifts during high tourist season, when the beach is too clogged to be much fun for a local, perhaps?

Your brief description leads me to think of a number of choices, not a clear black or white decision.

Body surfer

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Re: 58 yr old needs your sage advice
« Reply #6 on: December 26, 2018, 02:15:34 PM »
I would have to take the state exam to practice there- I am not interested in putting forth the effort I must admit. It would be quite an undertaking.  Therefore, I either practice here for several years and move there, or just retire now and stay here.

We would be happier there- but yes, a lot of hard work ahead to pull it off.

Body surfer

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Re: 58 yr old needs your sage advice
« Reply #7 on: December 26, 2018, 04:26:10 PM »
clarification: $675k liquid + $275 house= $950k
will have $60k from SS and pension
need to cover difference if want to move there (would need to have $225k extra)

My decision will be based on if I think it is worth it to work a few more years to make up the difference or just retire now and stay here

Mikila

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Re: 58 yr old needs your sage advice
« Reply #8 on: December 26, 2018, 05:45:44 PM »
Is there another way to live there, cheaper?  Would you consider a condo or renting instead?

Cassie

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Re: 58 yr old needs your sage advice
« Reply #9 on: December 26, 2018, 07:04:33 PM »
Having lost 3 friends between the ages of 59-67 I wouldn’t work that many more years at your age to live somewhere else. I am 64 and the reality is at this age who knows how much time you have left. People with high deductible plans at your age are paying up to 20k/year.

Body surfer

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Re: 58 yr old needs your sage advice
« Reply #10 on: December 26, 2018, 07:55:16 PM »
Mikila- we are concerned about neighbor noise if living in a Condo or apt.

Cassie- sorry to hear about losing your friends. You made a great point.

draco44

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Re: 58 yr old needs your sage advice
« Reply #11 on: December 28, 2018, 12:13:03 AM »
I noticed that your commented that in your ideal situation of moving to your favorite vacation town, you say you'd want a home "near" the beach rather than "on" the beach.  If you are willing to be in your dream vacation area but not have beachfront property, maybe you can buy a dream home for less if you push the limits of what you consider to be "near" the beach. I know in the case of Florida real estate at least, there are huge price differentials between the coastal towns and the towns one jurisdiction away from the beach, even though both get the same weather and similar amenities.  Or maybe you could find a house that's smaller than what you have now in your dream town? Or find a beach town next to your ideal location that would offer a similar retirement experience for less? There may be a slightly downsized version of your retirement dream that's possible with your current finances.

Unique User

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Re: 58 yr old needs your sage advice
« Reply #12 on: December 28, 2018, 07:38:15 AM »
I noticed that your commented that in your ideal situation of moving to your favorite vacation town, you say you'd want a home "near" the beach rather than "on" the beach.  If you are willing to be in your dream vacation area but not have beachfront property, maybe you can buy a dream home for less if you push the limits of what you consider to be "near" the beach. I know in the case of Florida real estate at least, there are huge price differentials between the coastal towns and the towns one jurisdiction away from the beach, even though both get the same weather and similar amenities.  Or maybe you could find a house that's smaller than what you have now in your dream town? Or find a beach town next to your ideal location that would offer a similar retirement experience for less? There may be a slightly downsized version of your retirement dream that's possible with your current finances.

This is what I would suggest.  In NC and SC beach towns there is a lot of price differentials depending on the town.  Can you find a cheaper town or alternatively, rent for a year to determine  your exact plan? 

John Galt incarnate!

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Re: 58 yr old needs your sage advice
« Reply #13 on: December 28, 2018, 05:09:38 PM »
Thanks for your response. Property taxes would be about $8-10K/yr. Not sure about how much health ins is via ACA.

A big issue is: is it worth it to have to work perhaps 5-7 years more to live where you truly want? vs. retire now or at least very soon and live as we do now. (I realize that is a very personal decision)

As you posted,  the decision is "very personal."

If I were 58 I would not work 5-7 years more to live where I truly wanted to unless where I was living was unsafe/unpleasant/unhealthful.


John Galt incarnate!

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Re: 58 yr old needs your sage advice
« Reply #14 on: December 28, 2018, 05:13:16 PM »
Having lost 3 friends between the ages of 59-67 I wouldn’t work that many more years at your age to live somewhere else. I am 64 and the reality is at this age who knows how much time you have left.

Hear, hear!

JGS1980

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Re: 58 yr old needs your sage advice
« Reply #15 on: December 28, 2018, 05:18:11 PM »
Ptf

bugbaby

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Re: 58 yr old needs your sage advice
« Reply #16 on: December 29, 2018, 09:16:50 PM »
If I truly wanted to retire in a high COL area but can't afford it now, I'd look to move and work there.

Alternatively depending on specialty, you can move there but do Locum 1 week per month to fund it till it's paid iff. A physician colleague of mine who's 70 does this.

Sent from my KIW-L24 using Tapatalk


freya

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Re: 58 yr old needs your sage advice
« Reply #17 on: January 01, 2019, 10:05:29 AM »
Is $275K what you paid for your house, or is it what you could sell it for now?

When does your wife's $30K pension kick in?

Also, your expenses of $50K/year for a couple with an owned house in a (presumably) LCOL area seems high.  Does that include medical insurance?   Can you reduce discretionary expenses enough to make room for the $3,000/month you'd be paying in mortgage/property taxes for the new home?  Have you inquired about whether your income & assets would be enough for you to even get a mortgage for this new home?

Definitely second the option to rent or sublet there without selling your current home, to test the waters and do some more research before jumping in.  And, I think you'll find that your concerns about apartment living may be over-blown.  If need be, it's not that expensive to add a layer of soundproofing to inside walls & ceilings.

Laura33

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Re: 58 yr old needs your sage advice
« Reply #18 on: January 01, 2019, 12:22:59 PM »
The actual question you posed is a highly personal one; only you can evaluate the importance of being in the vacation destination, your health (and your wife's), your desire to escape the working world, etc.  But let me note a few things and pose a few questions for your consideration:

First, a note:  the 4% rule is based on a stock/bond portfolio.  The amount you have in cash or your house should not be considered in evaluating how much you can withdraw without depleting your portfolio.  So really, you are talking about a little over $300K invested, which should generate maybe $13K/yr reliably. 

But the reality is that you don't need to worry about a 40-50-year glide path, because you are only 4 years away from SS.  It sounds like in 4 years, you guys will have around $60K in guaranteed income (maybe a little less if you stop work now instead of working 4 more years, maybe not).  So really, all you need to do is come up with enough cash to get you through the next 4 years, plus some extra costs to cover your health insurance until you are eligible for medicare.  You clearly have the cash to cover 4 years of expenses -- if you take the @$13K from your investments, that would leave you needing maybe another $30K/yr from your cash, or $120K total; given that you have over $300K in cash, you could do that and still have almost $200K cash left over (plus, likely, the same $300K+ in your investments, or most likely even more).

But the big question mark is that you don't yet know how much the medical insurance would be.  So your next step is to price that out, both where you are now, and in your dream location.  This is important, because based on the math above, you are close to being able to cover your expenses until 62 from your existing 'stache and still have money left over for a more expensive house in your dream location.  So it is likely the cost of health insurance that will determine whether you can do what you want now or need to work longer to afford the move.

But as to the move, questions for you:  have you ever lived in that location longer-term?  Do you have a sense of what it is like in the off-season, whether there are permanent residents there vs. just transitory vacationers, whether you have the necessary mix of grocery stores/doctors/hardware stores/entertainment/you name it for regular life?  Many people find that the place where they have had years of glorious vacations is not so glorious as a full-time residence.  And have you looked into differences in the cost of living?  Places with more expensive housing also tend to have more expensive food, utilities, gasoline, shops, insurance (especially flood insurance!), and everything else.  Your path to quitting is very different depending on whether you will need $45K/yr or $65K/yr. 

In short, you need research.  Your numbers are tight unless you work many more years, and yet at your age those extra 5-7 years could take up a noticeable chunk of your remaining life.*  It is never a good idea to make such a significant decision based on assumptions.  Research your "real" costs, both where you are now and in your preferred location, and make your decision based on hard numbers.

One other thought:  when you are doing your planning, have you figured out what will happen if you or your wife dies first?  I know with SS, you only get one benefit; after your spouse dies, you can choose the higher of the two, but if your projections assume two SS benefits forever, you can be in a world of hurt.  It sounds like your DW has a pension, not SS, which suggests that she may have been exempt from paying SS taxes.  That pension may be exempt from these rules, but it may not -- I don't know; and the pension could have full survivor benefits, 50% survivor benefits, or no survivor benefits.  That is another thing to investigate to ensure that you or your wife isn't left hanging when one of you dies.

Finally, I second (third) the notion of getting licensed in your new location, period.  I am a huge fan of having a fallback for when the shit hits the fan, because IME it always does at some point.  Your biggest asset is the massive knowledge and skill set you have built from all of your years of practice.  Getting your license would enable you to deploy that asset in your new location if the need arises.  Yes, it's a pain in the ass (I'm a lawyer, I've had to take the Bar several times when we moved states, and all I can say is UGH).  But think of it as the world's cheapest insurance policy:  for the price of some temporary inconvenience, you can ensure your family's financial future no matter what happens.


*Not trying to be mean!  I am 52 myself and so struggling with the same issue.

Body surfer

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Re: 58 yr old needs your sage advice
« Reply #19 on: January 01, 2019, 03:16:30 PM »
Laura- awesome considerations.... thanks

Pension is 'joint survivorship'- DW gets all if DW passes first.

Pension and SS (age 62) would be $64k thanks to SS COL increase.

I thought of attempting to get license there- I have a few licenses- dreadful prospect of having to prep for that exam after all these years.

After plenty of research it appears I would need between $1.3-1.75M- for house and stash- to feel secure financially (depending on which of the areas we pick. If we both delay SS to age 67: Pension and SS would be $82,500/yr.