Scenario 1 vs Scenario 2

[Submariner]

I like the idea of renting your first year in a new area, to become acclimated to that area. However I am strongly against the idea of 'spending down' your investments. Now is the time to build your Net Worth, once you retire the remainder of your life you will be left guarding it. In the hope that you do not go broke.

[suziq38]

Rent until you figure out where you really want to live.

You don't have to pay property taxes and upkeep if you rent.

[BijouBaby]

Originally Posted by mschrief

^^^this is absolutely true. Owning makes no difference on our taxes. Just did 2017 taxes and pfft, no difference.

House value has been going up about 15k every year, so there's that.

True here too. Owning gave me NO BENEFIT with the new tax law. In fact my taxes went up about 1K. If I'd been renting it would have been the same. Equity in the house, yeah. But taxes are going to be painful for me going forward, and incentive to own a house and all it's hassles is looking less and less attractive.

That said, if I were in your boat, I'd rent for a year to see if it's a place you REALLY want to be, then depending on how the economy and housing market is in a year, maybe consider buying. Things could look very different in a year considering all the political craziness and market instability.

Also very true that if you are thinking to withdraw this amount from a non-taxed IRA, and at your age, you're going to pay thru the nose. I wouldn't do it.

[SLoriginal'71]

Hi all! Thanks for all the replies! I purposely did not give a lot of info because I wasn't looking for a financial lesson. I meant this to be a more of a light hearted "poll" of scenario 1 vs 2. Sorry if it didn't come out that way.

Since so many are questioning for more info. Here ya go.

*We have 2 IRA's that equal well into seven digits.
*1 IRA is set up as a 72t to eliminate the 10% penalty
*200,000 is our budgeted number in our financial plan.
*We have a financial planner
*Yes, we have to pay taxes on our money withdrawn no matter what (ouch) and a 10% penalty only if it does not come from our 72t IRA
*Taxes are why I said 1 year until we retire if we buy a home. Withdraw 100,000 2018 no penalty and 100,000 2019, yes penalty since we need money to live on also.
*We are choosing to live in a high cost area because we can afford it and want to be somewhere were there are all the things we love to do right at our doorstep.
*Just because we can afford that does not mean we are not being frugal with our money. We have a budget in place and have always been great at sticking to one.

Since we have a budget in place that is part of where my dilemma came from and why I came up with scenario 1 vs 2. Because we are retiring at a "young" age our retirement nest egg has to last a long time and has to make it thru any unforeseen stuff that might come up. We made a conservetive budget for the amount we have that we are happy with. We just didn't think of budgeting in yearly expensive overseas trips. Oops! Anyway, we are not going to change our budget to ADD in those yearly overseas trips. As some suggested, we could rent first then buy. I know myself though. We rent, then I'm not planning on holding back on us going on all those fantastic exotic trips. Bye bye housing down payment.

[Mikala43]

Originally Posted by mschrief

^^^this is absolutely true. Owning makes no difference on our taxes. Just did 2017 taxes and pfft, no difference.

House value has been going up about 15k every year, so there's that.

2017 was the old tax rules, 2018 is completely different. In general you will not have the same write offs (like mentioned unless you can itemize over 24K).

Depends which scenario would bring you the most joy. Personally, I wouldn't want the tax hit on taking out 200K.

I am assuming you don't own now? Can't really tell as you don't have enough info in your post. But if you have a financial planner they can give you the ins-and-outs of which is the financially wiser decision, and only you and your wife can answer which will make you happier.