Retirement in sight!

[CessnaDriver]

I'm 64 and wife is 62.5.  Wife is a retired teacher, pension taken in lump sum and she only gets $200 or so in SSA.  I will qualify for about $36K in SSA at 66.5.  I have the following investments:

After tax accounts = $500K
Tax deferred = $2,100K
Roth IRA = $170K
HSA = $40K

We downsized our main home, I financed 80% and put the proceeds from the old house in the market.  Mortgage rate is 2.375%  I owe $285K, making $1,885 payments.  Over the past 18 months the account funded by the home proceeds has grown 45%.

We bought a 2nd home, I financed 80%.  Mortgage rate is 2.375%.  I owe $294K, making $1,943 payments.

The only other debt I carry is my wife's new car which is a promotional interest rate.

My concern isn't so much do we have enough money.  Instead I'm concerned that carrying the mortgages, while creating a nice arbitrage, will require me to tap into my tax deferred accounts and increase my taxes higher than they otherwise would be.  The payments need to be funded at $3,828 each month.  It just seems like I've created a monster that requires to be fed and higher taxes are the result.  My RMD's are going to be a problem in the same regard once they kick in.

I had a grand plan to squeeze my taxes down as low as possible and I'm beginning to think that my assumptions were wrong.

Thanks in advance!

[EngineerOurFI]

What are your total annual expenses?  How you’re doing completely depends on what your total annual expenses are.  If your annual expenses are $80-100k, then you’re in pretty good shape considering Social Security income is coming your way soon and you can withdraw $100-110k from your nest egg.  If your annual expenses are $130k (which means you would need to add taxes on top of that $130k expenses to arrive at a gross income that exceeds 4% SWR)....then I would slap myself and sell that second home today.

First mortgage was a reasonable decision that paid off.....Why did you buy the second home...?  Can you sell second home?  Homes have appreciated a ton in many areas, so you might literally be able to sell second home at a profit even inclusive of transactional costs.

[reeshau]

What are your total annual expenses?  How you’re doing completely depends on what your total annual expenses are.  If your annual expenses are $80-100k, then you’re in pretty good shape considering Social Security income is coming your way soon and you can withdraw $100-110k from your nest egg.  If your annual expenses are $130k (which means you would need to add taxes on top of that $130k expenses to arrive at a gross income that exceeds 4% SWR)....then I would slap myself and sell that second home today.

First mortgage was a reasonable decision that paid off.....Why did you buy the second home...?  Can you sell second home?  Homes have appreciated a ton in many areas, so you might literally be able to sell second home at a profit even inclusive of transactional costs.

+1

@CessnaDriver , you don't actually have any questions in your post.  Is there something specific you are looking for feedback on?  Expenses are an important part of a case study.  Have you reviewed the "how to write a case study" topic to see the template?

Since you posted here, we are all going to tell you to pick one house to retire to, and stick with it.  You will definitely not optimize your taxes with two houses, at least if one is not a rental.  Maybe that is worth it to you, and so be it--but then you are barking up the wrong tree.  As you consider RMD's you might want to also consider further deferring taking your SS.  No way to know how that calculates out, though, unless you know your total expenses, and therefore your withdrawals.