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Old 02-11-2016, 09:34 AM
 
Location: Tennessee
23,651 posts, read 17,632,423 times
Reputation: 27762

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Quote:
Originally Posted by mathjak107 View Post
Healthcare yes ,it will sky rocket. Owning a home is a mixed bag

It is all about location and where you want to be. We no longer need to support and maintain an entire house. Taxes and up keep on a house would be more then we pay in rent on an apartment in a high rise.

Plus the money we would have tied up in that house would not be generating any income which more then offsets rent increases.

You are fixated on this homeownership thing but it is not always a factor in many cases .

In fact a renter who goes from a 3 bedroom apartment when the kids live with them to a 1 bedroom apartment would likely see better cash flow then a home owner supporting the same entire house.
Location and where you live are what is the deciding factor. Most folks buy way more home then they would ever think of renting so it rarely is an apple to apple comparison.

Homes in our area start at 800k but we would never rent one. Instead we rent an apartment in a luxury building for a fraction of what that home would take to support. In fact just the money that would be tied up in the house if it was paid off even at todays low rates can generate more then our rent cost us.
Well, yeah, if a person/couple is going from a three bedroom apartment or house to living in a one bedroom shoebox in retirement, they ought to experience better cash flow. With that said, do you see many people at retirement beating down the doors to get into one bedroom apartments?
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Old 02-11-2016, 10:03 AM
 
Location: Idaho
1,457 posts, read 1,159,257 times
Reputation: 5540
Quote:
Originally Posted by Nor'Eastah View Post

Children have "wishes and dream lists". Retirees have good times while dealing with reality.

I am a realist all my life but completely disagree with your assertion that only children could have "wishes and dream lists". Different strokes for different folks. There is absolutely nothing wrong with someone having wishes, dream list and/or bucket list if they give them life purposes or just simple pleasant, enjoyable day dreams and thoughts.

If the reality is good or wonderful, yes, retirees can have good times. What if it is bleak and one is plagued with financial or physical constraints, then maybe wishes and dream lists are the only things that help one coping with the harsh reality.

Bottom line is that your reality is not everybody's reality. There is nothing wrong with other people's wishes and dream lists if they can pursue their goals while not having negative impact on their reality. Even if they do, it's their life, their choice. On makes the bed one lies in.
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Old 02-11-2016, 10:33 AM
 
Location: Albuquerque NM
1,663 posts, read 1,530,975 times
Reputation: 3650
Quote:
Originally Posted by Serious Conversation View Post
Well, yeah, if a person/couple is going from a three bedroom apartment or house to living in a one bedroom shoebox in retirement, they ought to experience better cash flow. With that said, do you see many people at retirement beating down the doors to get into one bedroom apartments?
Agree. I will rent my first year or so of retirement but it is not going to be a 1 bedroom apartment or a condo and I'm single. It will be a small house that allows pets and has some outside space. I do agree with MJ that the house I rent does not have to be as nice as a house that I would buy. But it has to be in a decent neighborhood and those rental homes can be expensive so are not saving that much. MJ's comment did not differentiate between married and single. But for some reason, many married people on this forum seem to think that a single person should be content to live their retirement in a shoebox. That may be the case if you are on a very tight budget but it is not my preference.

Last edited by ABQ2015; 02-11-2016 at 10:42 AM..
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Old 02-11-2016, 11:14 AM
 
71,859 posts, read 71,942,576 times
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Quote:
Originally Posted by Serious Conversation View Post
Well, yeah, if a person/couple is going from a three bedroom apartment or house to living in a one bedroom shoebox in retirement, they ought to experience better cash flow. With that said, do you see many people at retirement beating down the doors to get into one bedroom apartments?
Where we are in ny we have lots of retirees selling off their homes and retiring to one and two bedroom apartments in both co-ops and rentals.

In fact i sold both our primary and 2nd home over the years and rent a two bedroom 2 bathroom apartment in a building with a pool and tennis courts.

I want no part of maintaining a house anymore , i hate chores

Even the one bedrooms are hardly shoebox and are actually junior 4's.

It is headache free and costs are lower then maintaining a house as well as provides income from the money no longer tied up in the house.

Don't forget the house cost you the income you are not getting on the dough tied up in it .

We can buy a similar apartment like ours for 300k which would cost us 6k a year less then rent . But once we buy the co-op and tie up the money in it we will give up 12k in income so renting is still 6k ahead cash flow wise at this
point. Compared to homes co-ops are 1/3 to 1/2 the price in our area.
This relationship pretty much holds true through out long island ,nyc and westchester as well as many other desireable areas in the tristate area

Last edited by mathjak107; 02-11-2016 at 11:31 AM..
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Old 02-11-2016, 11:20 AM
 
Location: Forests of Maine
30,714 posts, read 49,511,045 times
Reputation: 19152
My pre-retirement income was the same pre-tax as post-tax. Portions of my take-home pay were nontaxable [allowances for housing and rations] and my actual 'pay' was tax-free. Our investment portfolio was entirely Multi-Family-Residences that were fully sheltered. As a result, we did not have any pre-retirement taxed income.

Now that I am on my pension, it is low enough that it is below the Standard-Deduction / Personal Exemption threshold. This year our governor also passed a law making my pension tax-free. We also have a farm income, we are keeping it low enough that we will not be paying Income Taxes on any of it.

I have not seen any "phantom increase" in real income from lower taxes. I have not paid into Income Taxation since 1983.
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Old 02-11-2016, 11:33 AM
 
Location: Loudon, TN
5,809 posts, read 4,859,778 times
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I didn't count on any "phantom increase" because I did my planning the opposite way. Rather than trying to estimate my income and figure out if I could live on that. I did a zero-based budget using our historical spending data and info about our future living place (gleaned from various sources) to come up with a plausible spending plan. Only then did we look at our expected gross income from all sources and it was easy to see that we would be fine. Our tax bracket definitely fell as our income is about 60% of our working income, but we made our plans as if it would stay the same, that gave us a little bit of cushion and a nice windfall after tax time. Over time our income will approach 85% of our working income as we become eligible for SS, that covers inflation and gives us more money to cover deductibles and unexpected expenses as we grow older.

I am so glad that we looked at it this way rather than listening to everybody who tried to tell us to keep working a few more years for a few hundred more a month. I was tired of selling my time for money. Now my time is my own to spend or waste as I see fit.
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Old 02-11-2016, 01:36 PM
 
Location: SoCal
13,323 posts, read 6,375,629 times
Reputation: 9952
When my kid graduates from college that would be my phantom income. But I've been planning my retirement base on what I spent, not what I made.
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Old 02-11-2016, 01:41 PM
 
71,859 posts, read 71,942,576 times
Reputation: 49413
Quote:
Originally Posted by Nor'Eastah View Post
To heck with "wishes and dream lists". We live in our own time and space now, and had the good sense to move to a state with lower COL. That has saved us a bundle. Property taxes before the move were $4K+ and now they are just shy of $800.

We both by-passed Medicare as a waste of money and time. I don't know why so many age 65ers think that because they are eligible, they "must" sign up. It isn't mandatory. You may be able to get a better deal elsewhere, and we have.

Children have "wishes and dream lists". Retirees have good times while dealing with reality.
You give most seniors an extra 50k or 100k a year in income and they will enjoy every minute spending it one way or another. Maybe not you , but most of us would have no problem finding things we always wanted to buy or do or do for others.

As big as our budget ever could be it still would not cover everything i would want to do or try while stll able to
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Old 02-11-2016, 01:57 PM
 
Location: Murrieta, CA
1,274 posts, read 1,511,519 times
Reputation: 2242
Default Me, Me, Me!!!

I did count on the "Phantom Increase". I used to pay FICA 7.65%, 8% into CalPERS (pension program), saved 15% in retirement accounts. There went over 30% of my gross income. CA is a high income tax state so there went a few thousand more, high property taxes living near the ocean (sold that house), and we are paying the highest gas taxes in the nation and so on and so on and so on.


I retired at 38% of my income but it came to 65% prior net. Yes I do pay my own heath care now but am using a Co-Op that is accepted by "Obamacare" so I won't pay a penalty. I pay $150 per month and my cost-share is $500. My "Obamacare" coverage was over $500 per month with a $5,000 deductible. Dumped that when I did end up in the hospital 6 hours and walked out with a $5,000 bill. Did some research and found the Co-op.


My employer coverage was higher out of pocket than my co-op. Meaning I am paying less now than I did for my "Cadillac" coverage. My husband is on a Medicare Advantage plan (around $105 per month from his check). His plan covers the best hospital in San Diego County and he is on many meds but our out of pocket cost runs $2,000 per year for his meds. We don't hit the "donut" hole.


This works for us, will not work for everyone. When I figured out I was working so hard and could make 65% of my net income to enjoy life, sleep in, do volunteer work, move to a beautiful community and be 20 miles from the Beach vs. 1 mile from the Beach it was so worth it!


By the way I paid into social security for 38 years, 34 years full time so the "WEP" is a tiny hit for me. This is not the case for all government employees. When I can collect social security at age 62 I will make more (net) than I did working. Naturally my income taxes will go up but still worth it!


Many of my prior co-workers worked until they hit 100% CalPERS, and then hit required distributions in their retirement plans, and collect social security and are freaking out that they pay way more in taxes by being retired. It pays to figure out the math. They worked so long to avoid paying for healthcare and now are paying major taxes.
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Old 02-11-2016, 02:56 PM
 
33,046 posts, read 22,099,000 times
Reputation: 8970
Quote:
Originally Posted by Submariner View Post
My pre-retirement income was the same pre-tax as post-tax. Portions of my take-home pay were nontaxable [allowances for housing and rations] and my actual 'pay' was tax-free. Our investment portfolio was entirely Multi-Family-Residences that were fully sheltered. As a result, we did not have any pre-retirement taxed income.

Now that I am on my pension, it is low enough that it is below the Standard-Deduction / Personal Exemption threshold. This year our governor also passed a law making my pension tax-free. We also have a farm income, we are keeping it low enough that we will not be paying Income Taxes on any of it.

I have not seen any "phantom increase" in real income from lower taxes. I have not paid into Income Taxation since 1983.

Aha, 47% alert.
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