One thing that's still not clear to me is why - with your assets - you would move to another state just (or primarily) to avoid taxes.
I’d wouldn’t say “primarily” but yes, (all things being equal) it was “on the list.”
Here’s what’s important to me (possibly clarifying I’m not hopelessly obsessed? Or maybe damning me!):
1. Moderate climate: cooler over hotter — think “San Francisco weather” — but (limited) snow would be nice. I like rain. New constraint: avoid wildfires.
2. Lots of hiking/camping and “enjoy nature” opportunities.
- My “go to” vacation is hiking/camping in the High Sierras, but it’d be nice if the 4+ hour drive was reduced.
- I’d like to pursue ocean/bay kayaking more.
- Some place where the water and mountains were closer together would be ideal.
- Having long, paved bike trails (not sharing the road with cars) like Iron Horse Trail is a big bonus.
3. …*Now* tax-friendliness!
- Growing up, I remember family trips to tax-free Delaware for stuff like “new clothes/supplies for school year.” Guess it stuck with me.
- Living on the border of WA (no income tax) and OR (no sales tax) resonates with me (despite “use tax reporting” ethical concerns).
- Not paying extra 10% on LTCG (especially if I minimally trigger whatever taxes the state creates to “make up” for not having income taxes) is good.
4. *Convenience* to urban center.
- I hate driving in big city traffic. Pre-COVID, I enjoyed being able to day-trip to San Francisco (for good Dim Sum) using CalTrain.
- Proximity to an international airport would be a plus (should travel become safe again).
That sounds like the outskirts of Vancouver to me (except for public transportation), and if you drop “urban center,” coastal Washington? Any other good matches?
strategies are good - obsessions typically are not.
Point well-taken!
Also -- and this is something I really don't understand, so I'm hoping you can help me here -- why do people focus so much on income tax rates in retirement
Thanks for your post, and I’ve been trying to think this through for you…
I’m totally with you on “after retirement, with no income and a well-diversified portfolio, I can be smart about generating taxable capital gains that 1) allows me to maintain a happy lifestyle and 2) keeps me in lower tax-brackets.”
I’m concerned about income taxes *before* retirement given my portfolio. My worries align with your
Now your job is basically to not fuck it up.
statement and the “never sell” approach that I did for a long time. It paid off (so far) but now when I look at my portfolio and see the “percentage of assets in FAANG-like stocks”, I wince, think to myself “that’s a painful drop waiting to happen,” and am squeezed by this deadlock:
- If I don’t want to leave my job (so still a bunch of W2 income),
- then I can’t leave California (because I think remote-work isn’t fulfilling),
- but if I do start selling winners *now*, those capital gains will be taxed (if LTCG rules change) at “near the top” federally *plus* by California.
But if I do force myself to sell (just incrementally), maybe the downside of extra taxes will be a small price to pay to be “less worried” about the portfolio being too risky. I really don’t want to fuck it up.
Similarly: if you do move, why rent the house instead of selling?
My thinking there aligns with your retire-to-NYC idea… Palo Alto would be great place to “return to” for the last-few-years of life when I might:
- Need to visit medical centers/hospitals regularly (there are a bunch of good ones here).
- Want a lot of choices for in-home care (a lot of retired nurses looking for side-gigs as home assistants).
- Walk to farmer’s markets, supermarkets, good library, and a “quaint” downtown.
- Want to be back in a “no snow/ice slip on” climate.
And, thanks to previous owner, the home itself is very senior-friendly (no stairs, door handles instead of knobs, grab-bars in showers, and a bunch of other accessibility junk): it is setup to die in!
Secondarily (more for the therapist): if I don't sell, I don't have to pay those realtor fees! :-)
And would converting to a rental lose a homestead exemption and thus increase your RE taxes?
It would, but not much (owner-occupancy takes $7K off assessed value in Santa Clara County).
If “property taxes + assessments” are “around 1%,” I guess that’s ~$70 off $10K+ tax bill? Wow, didn't realize it was so little. Maybe my math here is wrong.
Washington state capital gains tax is 7 per cent on anything over $250k per year.
That’s a bar I can stay under; thank you — I hadn’t seen the “actual numbers” before this thread.
Loosen the purse strings and let go of some of your concern. You have so much in front of you and you can have a rocking good time of it if you let yourself.
I like that sentiment. Thank you for that bright feeling.