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Discussions like this remind me of the silly formulas. Should we budget for retirement expenses that are 85% of pre-retirement expenses? Nonsense. Most of us will spend what we can afford. That could mean more travel, more eating out, more spent on hobbies and activities.
I argue this in every discussion here over and over ...we all back in to what we have at the end of the day.. what our income was when we were working and had a pay check rolling in and maybe two checks is quite irrelevant when the checks stop .
It is then that we see what we have to work with with good or bad.
I see people listing all their bills here and adding them up and I always say to myself where is all the spending on things that represent the fun and wants in life .... we spend more on what I will call living life then our basic bills I can add up.
There is not a day that goes by that we are not spending on something which is not on the list of bills
Our kids got us a gift certificate to the blue hill at stone barn restaurant for Christmas...the restaurant is on the Rockefeller preserve and is owned by a very famous chef ....we waited one year to get a reservation and we had to settle for a Wednesday at 5pm ...
Dinner for 2 is 525.00 without wine pairing or 850.00 with ....dinner was 4 hours long and it was all different tastings dishes made from stuff picked or slaughtered that day ...
Only 25 tables and they have 25 master chefs , each preparing a specialty ....each table may get something different as there is not always enough of one thing .
It was an incredible experience... it cost the same as dinner and a Broadway show would and for 4 hours it was just as entertaining
I remember your post and photos. That was fabulous. We have some great chefs here now that migrated after Katrina, and others who have been attracted by Asheville’s foodie, music and beer snob reputation. So we are able to enjoy some great meals without big city prices.
We were headed to Asheville a few months ago and my daughter ended up giving birth so we cancelled ...we will get there hopefully over the year ... we have a trip back to Chicago coming up ...
One point that no one mentioned, is the income generated from your invested assets if you took out a mortgage and now have the extra money to invest. In December 2020, when I turn 66, I will draw my social security. At that time my income will be close to $80,000. That’s factoring in my pension, social security and a 3-4% withdrawal rate from the combined balance of my IRA and Roth IRA. I want to drawn from my IRA first to lower my RMD when I turn 70 1/2. My current house is paid off, but if I get a mortgage on my next house, I would put down $350,000 and Borrow $225,000. If I invest that money in equities it will generate dividends and capital gains income, even if I use ETF’s. And bonds generate too much taxable income. I want to stay under the $85,000 threshold for Medicare costs. So I have to take that into consideration too. Or should I just pay the higher Medicare premium?
Having said that, I think the smart choice is to take a mortgage with these low interest rates. It’s considered good debt.
Last edited by organic_donna; 08-31-2019 at 07:33 AM..
[quote=organic_donna;56065301]I want to stay under the $85,000 threshold for Medicare costs. So I have to take that into consideration too. Or should I just pay the higher Medicare premium?
The 2019 Medicare Part B premium rates for a single filer with an income of < $85K is $135.50/month/$1626/year and from $85K-$107K is $189.60/month/$2275/year which is a $649.20 a year difference. So ask yourself this question, do you think investing $225K will deliver you a net gain after subtracting out your mortgage interest and paying higher Federal and State taxes generated from having a higher income from investments will be greater than the $649.20/year you will be paying in higher Medicare Part B premiums then you will have the answer to your question as to whether you should pay higher Medicare premiums.
One point that no one mentioned, is the income generated from your invested assets
if you took out a mortgage and now have the extra money to invest.
Not only has it been mentioned it's been beaten into the ground.
The other beaten into the ground option is selling out altogether, then renting, and investing even more.
But if you can justify keeping or creating a new mortgage into retirement...
the same advice you got at age 35 still applies: ratio of housing costs (all of them) vs NET income.
Keep that percentage low enough (buy or rent) and you'll be fine. Too many won't.
There's a LOT of ego tied up in those home choices.
I want to stay under the $85,000 threshold for Medicare costs. So I have to take that into consideration too. Or should I just pay the higher Medicare premium?
The 2019 Medicare Part B premium rates for a single filer with an income of < $85K is $135.50/month/$1626/year and from $85K-$107K is $189.60/month/$2275/year which is a $649.20 a year difference. So ask yourself this question, do you think investing $225K will deliver you a net gain after subtracting out your mortgage interest and paying higher Federal and State taxes generated from having a higher income from investments will be greater than the $649.20/year you will be paying in higher Medicare Part B premiums then you will have the answer to your question as to whether you should pay higher Medicare premiums.
Thank you for this simple explanation. I will take out the mortgage and invest my savings in stocks that pay a low dividend and municipal bonds. I can probably stay just under the $85,000 anyway.
What about the “hold harmless” provision regarding social security? Anything I need to know about that? https://www.aarp.org/retirement/soci...ium-increases/
Thank you for this simple explanation. I will take out the mortgage and invest my savings in stocks that pay a low dividend and municipal bonds. I can probably stay just under the $85,000 anyway.
What about the “hold harmless” provision regarding social security? Anything I need to know about that? https://www.aarp.org/retirement/soci...ium-increases/
For certain purposes muni interest is added back in to magi
For certain purposes muni interest is added back in to magi
I expect that ACA subsidies is the one most people would hit. Correct?
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