Retirement - where you are and expectations

[JavaBrewer]

So I have been posting here about retirement and challenges I see coming down the road. I have lived in SoCal my entire life and thankfully own homes in San Diego and Santa Barbara but not free and clear. The wife and I plan to sell our SD home and pay off the SB home to be free and clear from mortgage and retire there.

That would net us left over money for investment. We also have under $1.5M in retirement accounts. My concern is that the state is going to make it increasingly expensive for retirees. Where even as I would own a home free and clear the daily (gas, groceries, etc..) monthly (insurance and medical) and yearly costs (property taxes should prop 13 go away) will suck us dry. I do not have a pension and we are planning the general 4% dividends of investments and not touch principle combined with SS for income. We want to hand down to our two kids a fully paid for home in CA when the time comes.

So my question to anyone who cares, how are you approaching retirement and life after you earn an income from a paying job? This forum is loaded with entrepreneurs who will likely continue earning money as if they were still there. That is not me. I would like to hear plans from the folks like me on what their outlook/plan is. I plan to work as a PT contractor until 70 or so, I am currently 63.

CA is constantly making it more difficult for retired folks to keep their homes and retire in place. I think many other states and locations are similar. Anyone want to share?

[jyl]

I’m interested in this topic too!

[id10t]

54, can do several things in 3 years that will end up mebeibg quasi retired from my current position

time limited phased retirement, just retirement plus continue on contractor gig, just retire and go private sector elsewhere

[wdfifteen]

9 years retired here. You are right to be concerned about essential expenses getting out of hand. You can’t plan for global catastrophes and economic upheaval, but they can happen, as the last 9 years have shown. I find I spend more on hiring work done than I did back before, “I physically can’t anymore,” and “I don’t want to do this crap anymore.” Medical expenses are way higher as you age, and health insurance increases every year.

[look 171]

One of my biggest concern is the reassessment of property tax once the house is passed onto your kids. The min you die, they start the process on today's market value and tax them accordingly. If they can't pay it, the county may lien and threaten to sell. I am so concern over this. JAVA, I have nothing else to add. I am next on retirement very soon at 59. But I may work for a few more years, who knows?

[Evans, Marv]

I'm 83 now and retired at 62. My only piece of advice is to stabilize and simplify your finances as much as you can. I entered retirement with zero bills, loans, or other financial anchors. My wife worked until a few years ago and will apply for retirement probably this year or next. I pretty much know where every penny comes from and goes to and plan ahead as well as I can, along with having savings for unforseen events. Having a clear picture is important. I know this is pretty simple, but it's worked out OK for me.

[LWJ]

You hit the nail on the head. It isn't how much you have, but how fast you spend what you have.

Me? 59. I technically have a job but really don't work. I hired a co-worker to do everything and after a certain time goes by, I will leave and she gets my business.

We have assets but what we really have is a frugal spending habit. My wife, daughter and I spent last night perusing a local thrift store. Yay, Value Village! I picked up a lovely Mountain Hardware jacket for $10. Considering I will use it to hike and get dirty, it's a score.

We have lots of equity in our home and a stupid low mortgage rate. I can't see very many situations where we outspend our money.

So yes, OP is asking the correct question. How to live within one's means when the income plummets. I expect everyone has a different answer.

[KFC911]

I'm 65 ... have always lived within my means, love where I live, and have no real expectations ... but alas ... I am "poor" .

Only the OP can answer this question... as it applies to his situation imo.

I left the corporate IT world 17 years ago .... my time is worth more than $$$.

Always has been imo.... NOW it really is

[rfuerst911sc]

Living within your means is very important , so is going into retirement with zero debt . Plan the best you can and pull the trigger when you want to . Keep in mind there are variables you can't control . Cost of living , a health event and when will you pass away . That's just the facts . I don't worry about any of them because I can do nothing about them . I retired 8 years ago and we are doing just fine .

[stevej37]

72 here and 12 years into retirement. I started tracking my net worth each month when I retired, just to make sure that there were no bad trends.
I still do, but not concerned as much now because it's gone up every year since. I stay away from large purchases and no money is ever borrowed. I have a good pension that helps a lot.

[KNS]

Santa Barbara is a beautiful place to retire but you have to ask yourself, as appealing as it is - does it make financial sense? A place like that could suck you dry. I was born and raised in SoCal so I get the draw but I couldn't imagine retiring there unless it was in a very economically friendly area. Or you were very flush with cash.

[vash]

Timely. My first appointment with a retirement specialist is in a few weeks.

My house is just about paid off. I need to get a lay of the land. I’m ready. I could move but I’d be bored.

[Seahawk]

By definition, "retirement planning" is a necessary oxymoron...the amount of variables involved in anticipating the vicissitudes wrapped in 15 to 20 years of life can make you crazy.

The big stuff, which you are already rightfully working through, is critical in terms of shaping the ability to establish a retirement "floor".

My only financial advice is to establish a "know when to fold'em" of monthly fixed costs exceed a certain comfort amount and anticipate, to the best of your ability, how to deal with it: move, sell and rent, involve the children earlier, etc.

After that, and I am sure you are tracking, make sure all the paperwork is in order to support the inevitable hard decisions.

[MBAtarga]

We are both 63, retired just last year. Only 1 residence, not paid off - but equity is around $500k and mortgage is at 2.25% so we are in no hurry to pay it off. We can draw 7% from IRA's (if needed) and still maintain the balance - and that with SS (wife's draw starts in March, mine will wait until 70yo). Short of any large medical costs (we have insurance for now then Medicare at 65) we should be good. Our financial advisor tells us we can spend more - just depends on how much we want to leave to the kids (2.) We've already been traveling more and have several domestic US and some international trips planned this year including an African safari and European river cruise.

[monoflo]

My take is you need less than the "experts" tell you when you retire.
I've been out 10 years and have a larger savings nut than I did when I left.
One big key is have minimal or no debt. At least for me it was/is. Where one lives is a big deal -Illinois where I am has horrendous Property Taxes that depress the value of your property in comparison to other States.
If one has a spouse make sure to do some figures as to what the death of one of you does to the budgets. That SS you lose can hurt and the single tax bracket does no favors.
Many guys i know have trouble paying themselves. Took me awhile to get that one.

[Noah930]

One thing that CA got right (imagine that!) was Prop 13. People in other states can't even fathom the concept. But it's one big-ticket item in retirement, IMO. Theoretically you're on a "fixed income" at that point, but what happens when your property value doubles during your retirement years? I left CA last summer and moved cross-country. We're trying to buy a home now, and about half of people look at me like I've got three heads when I mention property tax as a deciding factor of where I want to buy a house (towns here vary significantly in their taxation amounts).

I don't see Prop 13 going away. Of course I could be wrong. Politically CA does a lot of stupid things. But there are a lot of rich landowners who are politically connected enough to make it unlikely.

[wildthing]

I've got at least 12 years until retirement, though I would like to avoid paying through the nose for 3 years until Medicare eligibility... Here are things that are on my mind:

1. How to increase "healthspan" not just "lifespan"
2. How long will the money last / how long will I live
3. Die with zero vs. leaving something for the kids
4. Stay in the SF Bay Area where everything is expensive or move where the kids might not even visit

[Noah930]

Originally Posted by look 171

One of my biggest concern is the reassessment of property tax once the house is passed onto your kids. The min you die, they start the process on today's market value and tax them accordingly. If they can't pay it, the county may lien and threaten to sell. I am so concern over this. JAVA, I have nothing else to add. I am next on retirement very soon at 59. But I may work for a few more years, who knows?

Can you put your kids on the title now? One house across the street from mine in LA was occupied by an elderly woman and her daughter. The mother (in her 80s?) eventually passed away. The daughter (in her later 50s/60s?) continued living there for many more years. She continued at the same property taxation rate (per Property Shark?) despite her mother's passing. On paper, the house had last changed hands in the 1960s.

[Bugsinrugs]

I used to worry so much about money. Having employees and making payroll was always stressful. Having retired six years ago I have learned to never worry about money again. My wife started investing in real estate with me being the maintenance guy. So after many years of busting my butt the combined income from rents and social security more than take care of monthly expenses. We don’t need to touch our retirement funds leaving them to grow. Diversification is the key.

[masraum]

Originally Posted by KNS

Santa Barbara is a beautiful place to retire but you have to ask yourself, as appealing as it is - does it make financial sense? A place like that could suck you dry. I was born and raised in SoCal so I get the draw but I couldn't imagine retiring there unless it was in a very economically friendly area. Or you were very flush with cash.

I've never lived in Cali, but I've been there several times often spending a week or more in various locations. I can definitely understand the appeal, but trying to retire there would be terrifying unless I was a multi-multi-millionaire. The costs are so high, especially for RE and therefore any other costs associated with RE. I'd need to be someone with a BIG retirement, but living a middle-class lifestyle/home.

I guess there are some less expensive places. I think I've heard that the east side of the state on the other side of the mountains is cheaper. I assume it also lacks some of the appeal that the coastal side has. I've never been to anywhere on the east side of the state.