# Retiring Issues- How/ Where/When?



## borrego (Jul 5, 2019)

Struggling over a few issues, thought maybe some could advise or opine......? I know I can't be thinking of everything, not nearly smart enough....so this may be just a way to vent and rattle it around, but any advice sorely welcome..!

I'm 65, wife is 62. Both still working. I want/need to retire (body just won't do it any more), but trying to work a few more years to put aside some $$ and pay off remaining bills so we can retire debt-free. I am a self-employed Contractor so have ridden the waves of economies over the years...boom times/bust times......  (Yes, I know I should have stayed in college and got a corporate job)
Let me bullet point some facts:
- Savings = very little savings, for the sake of this discussion, assume none <$100k
- Assets = quite a few that could be liquidated if need be but would rather not <$100k
- Debt = $10k credit card, $30k on 2 vehicles, $30 equity line
- Property = main residence free and clear, weekend off-grid house free and clear

I have not taken SS yet, waiting until age 66 which seems to be the best time, but I will go see an expert about that before I decide for sure...?

Another BIG issue (for us) is that we live in the state of California, which as you may have heard, is losing residents like you wouldn't believe due to it's liberal policies and the cost-of-living issues. We'd like to leave as most of our friends are doing, but have 2 sons in their early 30's and can't stand to leave them (at least not until we absolutely have to which may come at some point) A key factor there would be if they get rid of Prop 13 and our property taxes quadruple as they say might happen, that would force us out. So that would free up a lot of home equity......

I do have the option (for a while longer) of buying raw land somewhere and building a home myself. Our 2 current homes I built myself, one completely single handed (not bragging , just another asset of sorts) but my body is failing fast....

Well there we are for starters.....as you can see it's confusing, with lots of options, not all bad of course, but just confusing for us........

Any thoughts?


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## StarSong (Jul 5, 2019)

It's really a matter of dollars and cents, isn't it?  

Is your wife planning to continue working until she hits 66? 

At 66 will your SS plus her salary be sufficient to pay your bills? Since you have no savings to speak of, that income will need to sustain you unless you cash out of your properties and keep some of the equity as a retirement savings cushion. CA real estate remains red hot in most areas which should work in your favor.   

I've heard nothing serious about any attempts to repeal Prop 13 for residential properties. That would be political suicide.


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## Knight (Jul 6, 2019)

Money,two sons & failing body the issues. 

Money you seem to have a handle on. 

Body issues you recognize but maybe fail to realize it may get worse. Age has a nasty way of sneaking up on you and causing health issues you were not expecting. If you haven't already checked into medicare start now to figure out what might work best for you.

Two sons. Only you & your wife can decide if moving away will cause problems. Ask yourselves what is the worst that would happen if it took several hours to visit.  

As for California. I just read a comment about the latest earthquake. The comment was Politicians will eliminate earthquakes by taxing them. Do you really want to live where taxes eat up income that could be spent on things you could enjoy in retirement?


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## borrego (Jul 6, 2019)

StarSong said:


> It's really a matter of dollars and cents, isn't it?



Well yes, except for the political thing....



StarSong said:


> Is your wife planning to continue working until she hits 66?



Yes, and after



StarSong said:


> At 66 will your SS plus her salary be sufficient to pay your bills? Since you have no savings to speak of, that income will need to sustain you unless you cash out of your properties and keep some of the equity as a retirement savings cushion. CA real estate remains red hot in most areas which should work in your favor.



Once we get debt free, I think we'll be close.....




StarSong said:


> I've heard nothing serious about any attempts to repeal Prop 13 for residential properties. That would be political suicide.



They will almost certainly modify it to raise taxes on commercial properties, which will in turn lead to price increases. And once they modify it, the door is open....


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## borrego (Jul 6, 2019)

Knight said:


> Body issues you recognize but maybe fail to realize it may get worse. Age has a nasty way of sneaking up on you and causing health issues you were not expecting. If you haven't already checked into medicare start now to figure out what might work best for you.



I'm on Medicare and am overall in very good health, just joints and such.....



Knight said:


> Two sons. Only you & your wife can decide if moving away will cause problems. Ask yourselves what is the worst that would happen if it took several hours to visit.



We would look at Arizona, maybe a 6 hr drive at most, I guess it'd be doable if it comes to that, but would put an end to any impromptu beers after work  



Knight said:


> As for California. I just read a comment about the latest earthquake. The comment was Politicians will eliminate earthquakes by taxing them. Do you really want to live where taxes eat up income that could be spent on things you could enjoy in retirement?



They will tax and fee everything.....the savings just on auto registration and the like would be huge...


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## StarSong (Jul 6, 2019)

Without question, many parts of California are very expensive places to live.


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## Lethe200 (Jul 6, 2019)

>>and once they modify it [Prop 13], the door is open >>
Extremely unlikely, and I do mean EXTREMELY. There is no point to doing so, since when homeowners sell and move elsewhere, a property is reassessed at the new "market rate". 

My MIL paid $500/yr on her SF home. When she sold it in 2006, the property tax assessment was $116,000. It went up again when the home was resold in 2014. That was the whole point of the way the law was written; sooner or later all properties turn over and are reassessed.

Hate to burst people's bubbles, but CA is not even in the Top 5 for "States Least Tax-Friendly to Retirees":
Kiplinger State by State tax rankings

Now, back OT:
*Family:* A good reason to stay, but how do you know your sons will never move? Maybe they have jobs that are 100% secure (my spouse did) but most people don't. My nephew had to move to Boston, MA - it was sheer luck his company was purchased three years later, and the buyer had a CA office so he was able to transfer back at company $$$. Even so he lost $200K on RE selling/buying in such a short time. And that was in a super-hot RE market on both coasts!

Employment just isn't forever any longer, and the older one gets, the less options are available unless you're in an unusually specialized field. It's pretty much accepted among the Gen Y and Millennials we know, that they might well have to "follow the money" at some point in their careers.

*Health. *It can be tricky moving to a LCOL (low cost of living) area, only to find that corporate mergers and state budget cuts devastate LCOL medical availability. And you WILL need care; we all do, to some extent. 

Not much use in having a good GP or geriatrician nearby, but the closest hospital is now 90 minutes away and specialist appointments are 2+hours each way. Everything that was nearby you at first, has been shut down as unprofitable.

So you have to be careful about where you choose to move. There are more factors to consider than just property or income taxes. And with a big move, it's always wise to "feel out" prospective new areas by spending time (in all seasons) and looking at the various social opportunities. 

*RE. *Only you can decide where you want to move. I would not build a custom home; I honestly don't think you have enough financial cushion to do it. Also, people have a tendency to "build to their wants", forgetting that the next generation may not be so thrilled with somebody else's tastes. 

For example, a must-have for me is a separate dining room. But half the younger couples I know, have turned their DRs into other uses. They eat together in front of the TV, lol. Even the ones with kids hardly use a formal DR except for 'special events'. The rest of the time it's a crafts table! The kids eat in the kitchen nook and the parents eat after the kids go to bed.

If it's not a financial burden, keep the cabin - have you been to AZ in the summer? killer heat! - or sell it to your kids if you want to keep it in the family. 

*Finances. *Yes, clear all debt before you retire. You have very little leeway and I assume, do not have Long Term Care insurance either? Inflation eats away at your income. Even at 2% in 20 yrs your monthly income's buying power is cut by a cumulative -32%; e.g., $40K in 2020 is only worth $26.4K in 2040.


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## borrego (Jul 6, 2019)

Thank you all for your thoughtful advice...!


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## Don M. (Jul 6, 2019)

IMO, Step 1 when contemplating retirement is to be Debt Free.  Then, finding a retirement location/lifestyle which allows you to live comfortably on your retirement income comes in at a close 2nd.  From what I've heard, California is a bad place to retire unless you have a hefty sum of money built up.  Leaving the kids behind can be a problem, but financial security would allow for visits.  Arizona, year round might be too hot in the Summer, but you might consider States like Oregon or Idaho.  My wife's Sister/Family is in Idaho, and they love it....and it is affordable.


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## borrego (Jul 7, 2019)

Don M. said:


> Arizona, year round might be too hot in the Summer, but you might consider States like Oregon or Idaho.  My wife's Sister/Family is in Idaho, and they love it....and it is affordable.


Arizona is actually quite surprising.....much of the state is at >5000 ft , with nice 4 season weather.
Oregon is out of the question, just as liberal as Cali, maybe more so.
We have some good friends that just moved to Idaho and love it. Might be a little too much snow, but we could keep the cabin in the desert and come back there .....one of our options.
Thank you for the advice......


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## Lethe200 (Jul 7, 2019)

borrego said:


> Oregon is out of the question, just as liberal as Cali, maybe more so.



On the contrary, CA, Wash, & OR are liberal in the cities but solidly conservative in the rural counties. In OR you also get the benefit of liberal social legislation on healthcare and end-of-life issues.


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## borrego (Jul 7, 2019)

Lethe200 said:


> On the contrary, CA, Wash, & OR are liberal in the cities but solidly conservative in the rural counties. In OR you also get the benefit of liberal social legislation on healthcare and end-of-life issues.



You're correct that the cities are liberal in the cities and conservative in the rural areas, but there are more people in the cities, and hence, those States vote overwhelmingly left. And then those of us in the rural areas get stuck with those policies. CA is only 25% Republican last I looked.....If we leave CA, it certainly won't be for another liberal state. And I don't care about the alleged 'benefits' of liberal healthcare, they are only benefits if you agree with those policies....
Thanks for your input though, all views welcome, it's making me/us think this whole situation through....


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## Manatee (Jul 7, 2019)

We lived in a 55+ community in Arizona and a very, very large number of the folks there were escapees from "Kalifornia"and Washington state.    We had some friends who were snowbirds without leaving the state.  They spent half the year up in the cool high country and wintered in the valley.  Phoenix and the valley are at 1100' elevation, Flagstaff is at 7000, huge difference.


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## Lc jones (Aug 1, 2019)

Give Dave Ramsey a call ( he has a show on TV and takes calls )he gives financial advice.


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## Patio Life (Aug 1, 2019)

Your situation looks fairly good.

Arizona is about 6 hours from most places in Ca. As you will be retired you can drive there and pick a time that is not the insane traffic on holiday weekends. 

Housing costs are much lower, taxes are lower. You could sell in Ca, before the tax changes when lots of people will want/need to sell. Buy a place, or two, cash. My recommendation would be to spend a month, if possible, checking out different areas. Lots of snow at times in Flagstaff, super hot in the summer in Phx. Prescott is nice most of the year. Sedona is very expensive. Bisbee is a hippy town with very little work available. 

What do you want to do to keep busy and happy in retirement? How big/small of a home do you need? No stairs? Will the new home be your last home and how can you age in place happily?

The internet is your friend and you can check out most places in good detail. Make a list of must haves, then wishes and check off each thing by city/town.


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## StarSong (Aug 1, 2019)

What tax changes, PL?


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## GreenSky (Aug 1, 2019)

I left the Los Angeles area 3 years ago and moved to Vegas.  There were 4 reasons:  1) Traffic; 2) Taxes 3) Jerry Brown (who seems sane compared to the current idiot governor); and 4) Traffic.  Yes, I did write that twice for good reasons.

My wife wanted to be within a 4-5 hour drive of her then 92 year old mother, who finally moved in with us.  Now that I'm here the politics is no better than CA as the liberals have 1 seat short of a supermajority in the legislature and our governor hasn't found anything he didn't like to spend money on.  (They handed the Raiders $750,000,000 for a stadium where there is zero chance of a profit for the state and almost a zero chance of even getting our money back).

Given a choice, I would have moved to one of the Carolinas.  Even less expensive than Vegas, housing is cheap, land is plentiful, and mac & cheese is a veggie.

I'd certainly avoid Dave Ramsey for many reasons but the first reason is he doesn't know what he's talking about.

Rick


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## Liberty (Aug 1, 2019)

GreenSky said:


> I left the Los Angeles area 3 years ago and moved to Vegas.  There were 4 reasons:  1) Traffic; 2) Taxes 3) Jerry Brown (who seems sane compared to the current idiot governor); and 4) Traffic.  Yes, I did write that twice for good reasons.
> 
> My wife wanted to be within a 4-5 hour drive of her then 92 year old mother, who finally moved in with us.  Now that I'm here the politics is no better than CA as the liberals have 1 seat short of a supermajority in the legislature and our governor hasn't found anything he didn't like to spend money on.  (They handed the Raiders $750,000,000 for a stadium where there is zero chance of a profit for the state and almost a zero chance of even getting our money back).
> 
> ...


Rick...yeah, they couldn't make money on the stadium like we did here in Texas.  You guys have cabs that go everywhere.
Try renting a car in H Town and you'll see what I mean.  That's how our stadium was paid for, ca-ching ca-ching every time a car gets rented !
Don't live in H town so not many traffic worries; hey Texas "been very very good to us"...lol!


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## WhatInThe (Aug 2, 2019)

Would trying to staying current home be feasible once retired ie taxes, utility bills etc. Because if you throw on utilities on top of renting sometimes it comes out the same. You have more control in your own home for the finance because rent is due every month. In a home you get to pay utilities when ever if you are running late at least you get another billing cycle. Landlords aren't so forgiving.

That being said I would get a consult on or invest in income type mutual funds like bond or high yield fund. If you have an IRA make sure it's in high yield dividend and distribution paying stocks and funds. Selling any assets is fine but that money should be making more money for you.

Any spare cash either pay down/eliminate many current bills or try putting a small amount in an aggressive but mainstream investment not an obscure penny stock or gold scheme.

And as mentioned I've heard good things about living in Nevada/Vegas as far as cost of living and taxes.


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