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usually moving from a high cost area to a lower cost area is a big plus .
high cost of living areas tend to be high cost because that is where the greater amount of higher paying jobs are . that can lead to a life time of higher ss checks .
also housing is higher . over the years a house that went up 3% and is 600k vs a house that went up 3% and is 200k is a whole lot more money if you have equity , to take with you .
most of the time transplants later in life tend to be far better off than locals because of the high equity values and bigger checks if they have them .
usually moving from a high cost area to a lower cost area is a big plus .
high cost of living areas tend to be high cost because that is where the greater amount of higher paying jobs are . that can lead to a life time of higher ss checks .
also housing is higher . over the years a house that went up 3% and is 600k vs a house that went up 3% and is 200k is a whole lot more money if you have equity , to take with you .
This is often discussed around Silicon Valley by forty-ish people who are thinking of cashing out and quitting the rat race. Then someone says, "But what if you want to come back? You can't."
And thus endeth the conversation because nobody wants to be stuck in Podunk.
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most of the time transplants later in life tend to be far better off than locals because of the high equity values and bigger checks if they have them .
Sure. Just ask people in other states how they feel about ex-Californians.
pretty much the same thing asking those in the poconos in pa about new york and new jersey transplants .... but the fact is there can be a long term financial benefit to living in these high cost areas and then relocating .
the higher home prices tend to act like a greater forced savings channeling more dollars from pay in to it .
There are people all around me living in 1+ million dollar homes, paid off, who still cannot afford to retire in place. But they have options. Many choose to retire, sell the modest Bay Area house, move to a low cost area and buy a nicer home. That’s wealth. Wealth buys you options. Doesn’t matter that it’s currently tied up in a home. The guy in a 200k home in the middle of the country doesn’t have as many choices.
Personally, I like having options. It’s part of the “freedom” mindset that many early retirees have.
This is often discussed around Silicon Valley by forty-ish people who are thinking of cashing out and quitting the rat race. Then someone says, "But what if you want to come back? You can't."
And thus endeth the conversation because nobody wants to be stuck in Podunk.
Sure. Just ask people in other states how they feel about ex-Californians.
This is very true. The way home prices escalate, you can be priced out quickly.
My mid life crisis had me selling my Bay Area home and moving back to New England. One winter was all it took to make me want to move back. I moved back to a similar home in the neighborhood, but the whole mess cost me about 150k in real and opportunity costs (ie, vs. never having left). I was lucky I could absorb that hit.
This is very true. The way home prices escalate, you can be priced out quickly.
My mid life crisis had me selling my Bay Area home and moving back to New England. One winter was all it took to make me want to move back. I moved back to a similar home in the neighborhood, but the whole mess cost me about 150k in real and opportunity costs (ie, vs. never having left). I was lucky I could absorb that hit.
Yeah, I guess you were lucky. A couple more New England winters and it would have been harder.
If we didn't already own our Bay Area home, we couldn't afford to buy it today.
This is often discussed around Silicon Valley by forty-ish people who are thinking of cashing out and quitting the rat race. Then someone says, "But what if you want to come back? You can't."
And thus endeth the conversation because nobody wants to be stuck in Podunk.
Sure. Just ask people in other states how they feel about ex-Californians.
Maybe. Maybe not. There's several of us ex-Californians that have assimilated quite nicely into our lower COL Podunk town. We'll go back to visit, but no one wants to move back. All that money that went to housing can now go to other things.
If you moved where Eddie lived you would be at least a Prince, if not a King. So yeah location matters.
It does seem like a mostly home equity millionaire in a high cost area lives a completely different lifestyle.
Plenty of low cost areas within 35 minutes or less of cities with populations of 1M+. Is that really podunk? Maybe because of what I’m used to, but “podunk” is somewhere that you drive 35 minutes just to reach a grocery store and maybe Dollar General surrounded by not much else.
The mostly home equity millionaire in a high cost area still needs to pay property tax ($20,000/year?) and home insurance (~$1,500/year). They pay more for everything else too (food, gas, roof, HVAC, etc, etc). Plus all the normal stuff everyone pays. Thus the need to work a relatively high paying job to maintain their millionaire status.
Location is what the home equity millionaire has, but one could argue that the low COL millionaire could likely vacation 5-6+ weeks per year because their living cost are lower and any return on their $1M (maybe $800k excluding home) can be used to buy things. Maybe the low COL millionaire has the money to visit NYC or SF every few months. High COL millionaire could somewhat keep pace on returns if their property value increases but that equity doesn’t really buy anything unless they move...which likely gets much, much harder the longer they stay (friends, family, familiarity, significant other, kids, etc).
For 27-years, we lived in Satellite Beach (Fl), an upper middle class working area where a lot of pre-retirees had a $million+ in their 401K's, but, didn't spend it because they were saving/planning for retirement. Retiree homes there run the full gamut from $150K to $multi-million homes.
Destin, where we've lived for the last 8-years, is more of a higher-priced tourist area where many (including retirees) have 2nd/3rd homes in the $million range. There aren't as many lower-priced homes as in Satellite. Even though there are more millionaires here, I don't find that much difference in the people, but, the price of homes is a pretty good indicator of who is a 'millionaire'.
Even so, a $million, including one's home, isn't as much as it used to be - or may sound to some. Also, since homes and lifestyles cost more (25%) in a higher cost area (ie; Destin), one must have and pay more to maintain a Satellite home and lifestyle in Destin ... or vice-versa.
In short, most folks choose to live where they can afford to live, which means there are more millionaires in high cost areas than in low cost areas (not necessarily cities, but, even sections of cities). Thus, a comparison of how millionaires in low cost areas live, versus those in high cost areas, lacks sufficient participants for a practical comparison.
Maybe. Maybe not. There's several of us ex-Californians that have assimilated quite nicely into our lower COL Podunk town. We'll go back to visit, but no one wants to move back. All that money that went to housing can now go to other things.
I think the idea then and now is that most people want to have choices.
In 2008 my MIL was gently pressing us to sell our Peninsula home and move to a house a few doors away from her in Roseville/Granite Bay. We were in our fifties then, not yet ready for retirement. But had we done this in order to take care of her (she was still hale and hearty then) in 2016 we would have found our caregiving duties ended. That's when she passed away.
No way could we have gone back to Silicon Valley and bought back in. We would have been permanently priced out.
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