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Buy a new car for cash when you retire and chances are you will never need another one. My mother bought a new car for cash in 2000, and is still driving it. It only has 100,000 miles on it, and would easily last her another decade if she were to live that long. With no need to commute, vehicles will easily last 20 years with minimal maintenance.
Even if not, you'd only need an additional $20k in savings for a possible second retirement car.
If they had been thinking like that all along, why would they have paid off the 400K home?
From my observations, that $400k home was likely in a high tax region. Selling it and buying a lower price home in a low COL, likely would cause a huge drop in property taxes.
Certainly not just a 50% drop, as in the example, how they dropped the price of the home by 50%. I would imagine that taxes would drop to 10% [or less].
From my observations, that $400k home was likely in a high tax region. Selling it and buying a lower price home in a low COL, likely would cause a huge drop in property taxes.
Certainly not just a 50% drop, as in the example, how they dropped the price of the home by 50%. I would imagine that taxes would drop to 10% [or less].
taxes in the tristate area here are 12-20k plus a year . moving to just about anywhere else is a huge drop.
Survey respondents who expect to pay off their debts anticipate doing so at an average age of 53. But in addition to the 18 percent who expect to owe money forever, another 25 percent expect to be in debt until at least age 61.
Older respondents are more likely to believe their debt will be with them forever. Some 31 percent of those over age 65 expect to be lifelong debtors, compared to 22 percent of those aged 50 to 64 and just 6 percent of millennials aged 18 to 29.
"The more years you have left, the more likely you are to have a chance to get rid of that debt," Schulz said.
Around the country, areas with the strongest job markets increasingly have some of the costliest homes. And areas with the most affordable homes lack a solid base of middle class jobs that attract workers.
College graduates and younger families have been clustering in coastal cities such as New York, San Francisco and Seattle, where incomes are generally ample and solid middle-class jobs plentiful. Yet studies and government data show that homes in these areas have become prohibitively expensive.
The result is that the dream of home ownership for many is proving frustrating, being deferred or abandoned, even for people with comfortable incomes.
I own my home- never had a mortgage. Even though it tied up a huge chunk of money that could have been used for other investments, at the time, I made the choice that my peace of mind in owning free and clear was primary. In other circumstances I would certainly have chosen differently and chosen to take out a mortgage and invest the rest.
Yes, there is a reason that the wealthy have mortgages; it gives them liquidity and options. It makes good sense in a situation where you are already in a financially secure situation to leverage those funds in investments.
I am never going to be wealthy or even close to it, so my goal in looking at retirement in 4 years is to be as debt-free as possible with no mortgage, no car payment, no revolving debt, have all home updates completed, and have only basic necessary expenses so that I only have to draw on my savings for emergencies.
All that said, if someone is able to afford a mortgage in retirement and has enough reserves and savings set aside then good for them.
Consider this...........we have a really nice 15yo 2,000 sq. ft home in northern Ohio paid for at retirement. It is worth about $170K. After selling expenses we'll likely have less than $160K. Now, we want to downsize and move elsewhere to a warmer sunny place with low taxes. We have dogs (that we love) and so we need just a modest single home (1-story) with a fenced yard. The hope is to salvage some equity from our existing home. However, homes in the nicest places are up to 4 times more expensive. Northern Ohio has among the lowest real estate values in the country. Especially the Akron area. Florida was an option during the crash, but I have now learned that if we use all the funds from the sale of our home in Ohio, we still couldn't afford a little home in a nice area in Florida (ie Sarasota). If, for example, you look at home prices in Sarasota you might find some foreclosures in the $140K-$155K price range. However, they need lots of $$ to make them suitable to live in.
I know that "nice" is a relative term, but moving to an area you don't know is a little scary if it isn't at least a little aesthetically pleasing. That is how I define the nicer communities I am referring to. You know, obviously well cared-for properties.
Yet, if you can afford to buy a home at a young age in one of those areas, I promise, you can sell it at retirement and move to an area that lacks the middle class jobs....................and live out your life without any financial worry!
Example:
New York is a difficult area to move to
New York is an easy area to move away from
Cleveland is an easy are to move to
Cleveland is a difficult area to move away from
So.........you need to buy a home in and live in New York (Seattle, San Francisco, etc.) during your working years. That home will be the only nest egg you need when you retire if you move somewhere like Cleveland.
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Affordable housing
