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Old 03-05-2019, 03:34 AM
 
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in a way hcola areas force a bigger savings rate on you and that can be a good thing later on if relocating to cheapsville .

a life time of potentially higher wages leads to higher ss checks and the more expensive homes channel more money in to ownership .. so a home now worth 600k that had appreciated a mere 3% a year is a lot more than a home that is 200k and saw the same 3% appreciation . ..
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Old 03-05-2019, 06:57 AM
 
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Quote:
Originally Posted by mathjak107 View Post
in a way hcola areas force a bigger savings rate on you and that can be a good thing later on if relocating to cheapsville .

a life time of potentially higher wages leads to higher ss checks and the more expensive homes channel more money in to ownership .. so a home now worth 600k that had appreciated a mere 3% a year is a lot more than a home that is 200k and saw the same 3% appreciation . ..
Generally I agree with you. But you will lose with out with deductions for student loan interest, Roth advantage, possible financial aid for higher ed, mortgage interest deduction on 750+, medical bill thresholds, ira savings deduction and any other advantage given to lower earners. Iím not even counting entitlements that are federally based. Heck, if you can get in to that eic zone because of a super low col then even more power to you. I think if your on the low end of wage earners your better off in a low col area.
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Old 03-05-2019, 07:05 AM
 
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Originally Posted by foodyum View Post
Generally I agree with you. But you will lose with out with deductions for student loan interest, Roth advantage, possible financial aid for higher ed, mortgage interest deduction on 750+, medical bill thresholds, ira savings deduction and any other advantage given to lower earners. I’m not even counting entitlements that are federally based. Heck, if you can get in to that eic zone because of a super low col then even more power to you. I think if your on the low end of wage earners your better off in a low col area.
it's the bottom line that counts and as you see most transplants that worked in high cost of living areas and had homes and relocated to cheaper areas are usually wealthier then the locals in cheapsville.. in comparison to the hundreds of thousands in additional home gains and a lifetime of higher ss checks it over shadows all the other stuff in practice.

yeah you pay more in interest but the higher home costs force more money in equity because the homes represent a bigger multiple of earnings . .

many long islanders are planning on doing just that , because their homes are now 600-800k at the least and their ss checks reflect the incomes they needed to survive up here .

Last edited by mathjak107; 03-05-2019 at 07:19 AM..
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Old 03-05-2019, 07:09 AM
 
Location: Philadelphia/South Jersey area
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Nope, first I've always lived in a HCOL (NYC and Philly) area so I've budgeted and saved for that area. Next I've never been a big fan of moving some where to save money unless no other option was available. My kids, my friends and my life are here, what would I do in a LCOL area that I'd probably end up hating. I'd rather work a few more years.

I'm in my last year of working and have no plans on moving from Philly. I will downsize because my kids are leaving and I really don't need a 4 level, 3500 sq ft townhome.. right now I have about 600K equity in the house so I'll sell in a year or two and pay cash for the next spot. again, the major factor isn't to cut cost but mainly because it's not a house I can age into (lol bad knees and 4 flights of stairs are not a good mix)

As others have mentioned one reason I stayed is that the salaries were better. When I turn on ss at my retirement age, it will be close to the max monthly benefit. There is a big difference between a 1500 month ss and 2800 month.
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Old 03-05-2019, 07:35 AM
 
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Quote:
Originally Posted by foodyum View Post
Generally I agree with you. But you will lose with out with deductions for student loan interest, Roth advantage, possible financial aid for higher ed, mortgage interest deduction on 750+, medical bill thresholds, ira savings deduction and any other advantage given to lower earners. Iím not even counting entitlements that are federally based. Heck, if you can get in to that eic zone because of a super low col then even more power to you. I think if your on the low end of wage earners your better off in a low col area.

In 2019, the notion of tax deductions is kind of nonsense. Single, the 24% bracket extends up to $160,725. Add in the $12K standard deduction, a maxed 401(k) with employer match, health savings account, pre-tax employee contributions to medical/dental/vision etc and a $200K gross income is still likely within the 24% bracket. Married with a joint return, the 24% bracket with two maxed 401(k) extends up to almost $400K.



Personally, I'm not going to adopt any tax avoidance behavior if I'm in the 24% bracket. If I'm in the 32% bracket or higher, it becomes more advantageous. Married, that's the top end of upper middle class.
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Old 03-05-2019, 10:15 AM
 
Location: Olympus Mons, Mars
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My point is that housing even in cheap areas is inflating at a 6-7% per year rate which is far more than inflation or even the forecast for the stock market. You need to get a real return in stocks of 7% to keep up with current Real estate inflation which means a pre tax + inflation return of something like 12% which is impossible. So the strategy of accumulating wealth in a HCOL and then buying something in retirement in a LCOL may not work out.

Example - Tampa, FL: 2012 median home price was $85,000, currently it is $220,000. Granted 2012 was the bottom of the Real estate crash but the forecast for Jan 2020 is $233,000 which is a 6% appreciation from today.

Extrapolating that to 2030 @ 6%/year the median in Tampa, FL would be $425,000. This would result in taking an expensive mortgage in retirement which would not be feasible. If one has a $1M portfolio generating 4% it would be unsustainable to service a payment on that.

https://www.zillow.com/tampa-fl/home-values/
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Old 03-05-2019, 10:24 AM
 
68,552 posts, read 69,269,944 times
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Originally Posted by k374 View Post
My point is that housing even in cheap areas is inflating at a 6-7% per year rate which is far more than inflation or even the forecast for the stock market. You need to get a real return in stocks of 7% to keep up with current Real estate inflation which means a pre tax + inflation return of something like 12% which is impossible. So the strategy of accumulating wealth in a HCOL and then buying something in retirement in a LCOL may not work out.

Example - Tampa, FL: 2012 median home price was $85,000, currently it is $220,000. Granted 2012 was the bottom of the Real estate crash but the forecast for Jan 2020 is $233,000 which is a 6% appreciation from today.

Extrapolating that to 2030 @ 6%/year the median in Tampa, FL would be $425,000. This would result in taking an expensive mortgage in retirement which would not be feasible. If one has a $1M portfolio generating 4% it would be unsustainable to service a payment on that.

https://www.zillow.com/tampa-fl/home-values/
it is very localized .. we are in a very high cost area and saw 3% appreciation in our zip . my son is in westchester . their zip saw .40% last year. on the other hand their zip in scarsdale ny where they sold 6 months ago , one of the wealthiest communities in the country fell 6%
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Old 03-05-2019, 10:37 AM
 
Location: Lower East Side, NYC
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I will retire in NYC and I have over 40 years to make it happen. I don't mind being rent stabilized forever, but I can also see my needs changing over time. I can also see temporarily changing my situation for my kids so they can go to good schools if need be. The only wrench will be if international retirement becomes a possibility or I severely screw up my economic situation. I'm on a good trajectory though.
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Old 03-05-2019, 10:40 AM
 
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we retired in queens in nyc ... we were going to retire to the poconos in pa where we had a house...it just lacked way to much that we felt would be important down the road once we put our retirement hats on .
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Old 03-05-2019, 12:31 PM
 
511 posts, read 151,588 times
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Originally Posted by mathjak107 View Post
we retired in queens in nyc ... we were going to retire to the poconos in pa where we had a house...it just lacked way to much that we felt would be important down the road once we put our retirement hats on .
The ability to get around without driving is huge! Close to world class medical facility is important too. Distance from kids counts too.

We are waffling all over the place. Florida, NYC, Delaware or Portland ME? We have two years to decide.
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