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Old 04-28-2019, 09:33 AM
 
2 posts, read 758 times
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I am all too familiar with how expensive it is to live, and raise a family, here in Westchester. My spouse and I are both professionals, earn a combined upper middle class income (outside of the coasts/Chicago it would be downright upper), and have a modest house/small lot in a mostly affluent town with a great school system and the bonkers property taxes that accompany it. Two small kids.

Here's the thing -- we are recipients of a windfall. Low seven figures. Again, just about anywhere other than the coasts/Chicago, that would be instantly enough to call it a day and retire. But, Westchester.

So, curious about what people think would be a ballpark amount to retire comfortably (not lavishly) in said unnamed Westchester town? Here are the parameters:

Mid 40s.
Two small kids.
Between ourselves and the grandparents, 529s already fully funded for college, not grad school.
Own house outright, no mortgage (but given property taxes, effectively rent from the government)
Assume modest Social Security in 60s and modest retirement savings (mid six figures) to date in tax-advantaged accounts
If we both stopped working, assume we would have to buy family health insurance via ACA/NY equivalent
Assume the amount is in a taxable/brokerage account and immediately accessible, i.e. the exercise is what is the amount on hand now, without having to wait until 59.5.
Assume we are not about keeping up with the Joneses (Toyota not Audi, Costco not Whole Foods, Public/Y pools and not private clubs, etc.), but also want to be able to give our kids the opportunities we had (travel, summer camp, enrichment activities, etc.).

So what say you, interwebs, would it take as far as a nest egg to live comfortably in this little slice of heaven? Property Taxes, Health Care, dental, enrichment, high cost of living for everything, and then having a bit left over after the kids are in college and move away -- what is the magic, realistic number to make this happen? The total amount saved, that would be drawn down annually as needed with balance invested?

Thank you

p.s. If you don't know what F.I.R.E. refers to, it's Financial Independence, Retire Early
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Old 04-28-2019, 03:35 PM
 
86 posts, read 25,422 times
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Westchester County is a great place with lots of top-rated restaurants, music and art. It's not however a great place to retire (30-year retiree) unless you're a multi-millionaire. I once read that in order to retire in the Metro area while maintaining the same standard of living enjoyed by the average retiree, one would need about $2.2MM in savings. The largest cost being housing (rent/ or mortgage) which is 2-3x higher in Westchester than the rest of the country. Taxes also are another concern for many retirees here in the County.
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Old 04-28-2019, 05:07 PM
 
448 posts, read 373,005 times
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Sounds like there isn’t much to pay for minus property tax and general cost of living (food, clothes, vacation, etc). I would think 100-150k (untaxed) a year should be more than ample. Assuming you have 25-30k in property tax as the biggest expense and home repairs, landscaping general upkeep. So 30 years, that’s 3-4.5mm. Even if it’s growing at 2.0% risk free should be fine even if property taxes go up 3.0% a year. Not sure if you’ll be helping on kids COL on college or funding weddings etc which makes a big difference. In any regard, keep in mind even owning mortgage free you’ll still be spending a fair amount on fueling the other carry costs of that Westchester Home. You’re money would go much further somewhere else. If you still want to stay in the tri state area but not sacrifice on quality of the neighborhood, It would make sense to move to a low tax area. Like Saddle River, Armonk, etc. or a town that lacks in schools/nyc train access

The crazy thing are those saying they are stretched thin on 500k in towns like Larchmont or Scarsdale etc. that means post tax they are spending almost 300k a year. And to retire for 30 years that is 9mm. And those people are complaining they aren’t saving enough. So safe to say nothing near that 9mm mark.

But you situation sounds much different based on your needs/wants. Besides you’re house is paid off and the college funds are there.
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Old 04-29-2019, 08:36 AM
 
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Correction. Didn’t notice you said mid 40s. My estatimations above were assuming not working for 30 years...not 50 years. Retiring in Westchester for 50 years would be a staggering number. More than your low 7 figure mark.
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Old 04-29-2019, 09:58 AM
 
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Two wildcards are (1) what rate of return to assume on the invested savings, and (2) the rate of inflation.

Let's assume you spend about $180K post-tax in today's dollars, you'd need a return of about $220K pre-capital-gains tax. If you assume 4% return on your savings and withdraw that amount each year, you'd need about $5.5M saved to generate $220K annually. S&P historical return is more like 6.5% inflation-adjusted, so if you assume that rate of return you'd only need about $3.5M saved, but when you run historical scenarios over historical 40-year periods and include inflation, sometimes you don't make it (i.e. you run out of money with a string of bad returns) if you're pulling out 6.5%, which is a disaster, of course. You can buy some annuities if you don't want the stress of worrying about future stock market performance, but the return may be lower to commensurately lower that risk.

Having said all that, if you've got $5-6M you're hopefully good.
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Old 04-29-2019, 12:30 PM
 
1,199 posts, read 1,094,658 times
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go post this on the Bogleheads forum. WC is a terrible place to try to FIRE - or retire at all.
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Old 04-29-2019, 02:47 PM
 
Location: Westchester, NY
191 posts, read 278,499 times
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I grew up and still live in Westchester. 90% of the parents of my school peers have left NY to retire to a lower COL State. I'm in my mid 40's now. I know for sure when my time comes to retire, I am out of here!

Before you know it, NYS\Westchester will start to tax you on breathing fresh air.
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Old 04-30-2019, 06:11 AM
 
68 posts, read 21,395 times
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Quote:
Originally Posted by ld75 View Post
I grew up and still live in Westchester. 90% of the parents of my school peers have left NY to retire to a lower COL State. I'm in my mid 40's now. I know for sure when my time comes to retire, I am out of here!

Before you know it, NYS\Westchester will start to tax you on breathing fresh air.
Most Westchester retirees I know have incomes between $35,000 and $45,000 (not counting rental income,) and they never left. Granted, they don't live an upscale lifestyle, but they can afford a few vacations yearly, go out to a nice restaurant a few times a month, etc. The retirees who are the most financially comfortable are the ones who bought two family homes in the 50's or 60's. When the property taxes go up, they raise the rent of their tenants, that's the smartest thing to do, let someone else pay your bills. The lower COL states leave a lot to be desired, I know, I lived in one. You must be willing to put up with high crime rates, sub par medical care, horrific traffic congestion with everyone moving in. Additionally, law enforcement does nothing about residents running businesses out of their homes, my neighbor had ten cars on his lawn he was painting, the smell was horrible in the heat! No thanks, I'm staying here!
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Old 04-30-2019, 09:39 PM
 
930 posts, read 277,403 times
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Quote:
Originally Posted by wp169 View Post
Most Westchester retirees I know have incomes between $35,000 and $45,000 (not counting rental income,) and they never left. Granted, they don't live an upscale lifestyle, but they can afford a few vacations yearly, go out to a nice restaurant a few times a month, etc. The retirees who are the most financially comfortable are the ones who bought two family homes in the 50's or 60's.
Incomes between $35,000 and $45,000 isn't including social security? If you add in $42,000 a year from social security, then $87,000 is doable without mortgage payments and rental income.

If the OP retires at 40, then his social security check would be far less than $24,000 per year.

The cost health insurance has changed so drastically in the last twenty years. Twenty or thirty years ago, your employer carried the entire cost. Copayment or deductibles were practically non-existent. I have good insurance for 2019, but it nothing like my health insurance from 1990.

My college costs were less than $5,000 per year and now the same college is $50,000. Who knows if a 529 fund amount today is anywhere near what is needed in fifteen years?

My point is you don't know how the economy is going to change like predicted rising health care costs or college costs. Forget fifty years, thirty years is long time to predict changing costs.
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Old 05-01-2019, 03:54 AM
 
1,562 posts, read 2,732,636 times
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If you own the house outright before the windfall, maybe it's doable but health care costs are a big unknown.

Smarter move: put that low-7 figures windfall into S&P 500 so when you hit 59 1/2 in 15 years it doubles in size and is true f.u. money. Continue to work but take no guff.
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