Are you financially ready for retirement?

amother

Fri, Mar 06 2015, 1:04 pm

amother wrote:

to the last amother- this is probably off topic nut with regards to closing the loop- I think I've heard of a school that says if you pay more than x amount of real estate taxes etc.. you can't qualify for a scholarship. There are probably other ways as well.

Same amother: Then they will just pay less in property tax. For instance they will transfer a life estate to an elderly person or give part for use of a shul or sell it to a not for profit and take a 200 year ground lease.

amother

Fri, Mar 06 2015, 1:20 pm

We save for both.

I have a retirement plan through work I try to put in the maximum because they match me and its free money so I might as well try to get as much as I can.
My DH does not have a retirment plan were he works but he does put away something every month.

We also have separate u accounts under each of our children's names we put money in every month. That money is earmarked for bar mitzvahs, weddings, college and support.

I find the money for my kids much more satisfactory. The amount grows nicely and it looks like it will cover what we need it for.

The retirement money is not as exciting. We have been saving for 10 years at least, and its a decent amoung, but nothing close to what we will need to live on after we stop working, I don't see how it every can be.

[We actually live in a tiny house considering my families size and our income. Instead of paying tremendous property tax and a large mortgage we are paying full tuition and saving for the future. I sometimes wonder if part of it is a mistake]

SRS

Fri, Mar 06 2015, 1:38 pm

amother wrote:

I chose the large house as my savings plan. I live in a frum area and the prices are sky rocketing. You can do both. Live in a large home and have that be your retirement savings. I was smarter than you because I am not the one being penalized. You shouldn't be so smug about saving for retirement because there will always be someone smarter than you who grasps more of the big picture.

If I choose to take my profit in my house, I will not pay taxes on it.

This has got to be one of the more misinformed things I've heard today. You can cash in your house and take 500K tax free married. But you can only take 500K tax free. And in all that time, you have to pay out higher property taxes and utilities.

One could fund ROTH IRAs with 8% annual growth over many years, take all of that money out in retirement tax free, live in a lesser or average home, pay it off, and still walk out with up to 500K gain tax free.

In fact, it is known that more average homes have better appreciation. Homes that are larger or above and beyond tend to be more difficult to sell. In my neighborhood the regular homes that get listed, are usually off the market within a month or so. Even in the housing slump, the average homes sold quickly. But nicer, larger, more customized homes will sit 5, 6, 7, or 8 months and only sell after a serious price cut.

nyer1

Fri, Mar 06 2015, 1:41 pm

am I financially ready TODAY? no. Will I be by the time I retire? yes.
assuming nothing gd willing happens to my job, I'll have a pension, plus a tax derred annuity that I contribute about 15% of my salary to, and my husband has a retirement account as well. we own one property that we make small payments on, with enough to save aside from that, and gd willing enough to keep up with other costs like tuition etc.

it's tough, but we make it work. would rather scrimp to save now than suffer later.

Barbara

Fri, Mar 06 2015, 1:50 pm

SRS wrote:

You missed her point. Instead of having cash on hand, she bought herself a big-tuchus house. Then she goes to the tuition committee and says that she can't afford to pay for her kids. You don't expect her to sell her house, do you? How cruel would that be.

So you and I pay for her kids' tuition, she sits back in her $1.8 million home laughing at you for having savings and living frugally.

amother

Fri, Mar 06 2015, 2:00 pm

SRS wrote:

Sorry, I think your post is way off.

The $500,000 is gains is total price. I bought my home for $300,000 and put another $300,000 into it over the last 4 years. It appraised for 1.8. That is not a seller setting setting a pie in the sky price or a Realtor trying to get a listing so they tell you that your house is worth X when it is really Y. Also, wealthier people can hold on for longer.

If I were to list my home, I would ask for well over two so that it would appear to a bargain to the gullible when I would be willing to sell it for 1.8.

My last home: I paid $675,000 in 1999 and it was sold in my late DH's estate for slightly over two million in 2006. My property taxes when he died were $48,000 annually. They started off at $15,000. I will take those gains and expenses every single day over a an IRA unless the IRA owns real estate which I direct. I would take a share in a commercial building in Williamsburg.

amother

Fri, Mar 06 2015, 2:04 pm

Barbara wrote:

FYI The only tuition break I ever demanded was not to pay illegal mandatory donations. I have no problem paying legal tuition. My post was directed at the smug amother who said she was smarter than those with big houses.

SRS

Fri, Mar 06 2015, 2:05 pm

Barbara wrote:

I have nothing nice to say about people who push their tuition onto me, you, and the rest of the less "fiscally sophisticated". I'm working my tuchus off to make sure that we can pay our not-so-fair-share and still be financially responsible in the short and long term.

I responded because she presented herself as smarter than those who engage in slow and steady savings and I'd rather not see this "smarter than everyone else" financial advice spread. Most people who try to make a quick buck are long term losers. There is very little risk in buying a normal home, paying it off in 20-30 years, saving each and every year for a rainy day and retirement into a very boring mix of funds, cutting coupons, and doing the things the frugal do. We don't have to convert our homes to shuls, contemplate turning a "big tuchus" home into a rental home so that we can do a 1031 exchanges, and everything else suggested.

There is no shame in living in the financially responsible slow lane and there is little I loathe more than people who are regular people who try and popularize what really isn't all that viable for the regular person. And I wish schools would just get out of this scholarship business because look what they have done. . . instead of launching a movement towards financial planning, they have launched a movement towards "tuition planning" or how to get your fiscally responsible neighbor to pay your tuition which means less people are willing to buy into fiscal responsibility and the Orthodox world comes to face a big problem when the ball can no longer be kicked down the road.

SRS

Fri, Mar 06 2015, 2:12 pm

amother wrote:

The $500,000 is gains is total price. I bought my home for $300,000 and put another $300,000 into it over the last 4 years. It appraised for 1.8. That is not a seller setting setting a pie in the sky price or a Realtor trying to get a listing so they tell you that your house is worth X when it is really Y. Also, wealthier people can hold on for longer.

If I were to list my home, I would ask for well over two so that it would appear to a bargain to the gullible when I would be willing to sell it for 1.8.

My last home: I paid $675,000 in 1999 and it was sold in my late DH's estate for slightly over two million in 2006. My property taxes when he died were $48,000 annually. They started off at $15,000. I will take those gains and expenses every single day over a an IRA unless the IRA owns real estate which I direct. I would take a share in a commercial building in Williamsburg.

I'd like a show of hands as to how many people could write a check for a 48K property tax bill? Nuff said. I'm glad you are doing well in real estate. Everyone else should go ahead and start by putting $1000 into a 401k or ROTH. And then increase it and increase it all while living in an affordable home. They will make it to the end of the day without having to call in a $500/hr law firm for all their fancy planning. And in their regular home, they may well walk out with some tax free gains when they sell their regular properties. I know we have.

(editing to add: this discussion started out with a poster who is concerned about having anything for retirement. I think that it is quite rude to come in and talk about taking a 300K home, paying for another 300K of improvement, paying 48K in property tax bills. . .. let's try and help posters like this one and others get to 15K/annually in retirement savings, or 5K, or perhaps 1K. They don't need the 600K solution, they need the 1K at a time solution which is an old fashioned, slow and steady, nothing too fancy solution. Yes, the wealthy can do things differently. They can absorb more risk. It might even make an interesting thread. But that isn't the audience or advice the paycheck-to-paycheck people need. They need to some support as to how to move the meter on retirement savings. Investing in real estate isn't something that those with only a little money left at the end of the month should ever consider over a 401k).

amother

Fri, Mar 06 2015, 2:58 pm

SRS wrote:

Once again I disagree with you. You can be smart and invest in real estate.

I bought my first house for $115,000 - again with a mortgage. It was a two family. I converted it to a one family and sold it for $250,000. I put $10,000 down. These opportunities are still available. It is a big mistake to think there is a one solution for all. Real estate works for those who can see good opportunities. $10,000 is a years worth of savings at your 1K a month savings. My plan has the money work for me.

The property tax didn't start out at $48,000. It tripled in a short time because the assessor saw the same thing I did. The principles are the same.

A $300,000 house is not the high end in my neighborhood. It is the low end. It is probably in line with most posters here. I don't think it is rude. I think it is instructive.

Most posters can live in their home while raising a family and simultaneously save for retirement by paying the mortgage for said home. They are forced to pay. When some one is counting on discipline to save the 1K, there are very few who can do so when they are in the verge.

SRS

Fri, Mar 06 2015, 4:08 pm

amother wrote:

I only knocked her saying she is smarter than those with big homes. There is no one size solution.

She took a low risk, low expense route. That is smart and good for the community as a whole. There are room for many other solutions. Everyone can benefit from steady, regular savings into tax deferred retirement accounts in combination with buying a average home and paying it off. Are there other ways to get to retirement? Sure. But there is nothing to knock in a conservative, low risk path and frankly the community would be better off if more people were on a conservative path.

LittleDucky

Fri, Mar 06 2015, 7:11 pm

Barbara wrote:

This has got to be one of the more frustrating parts about tuition committees. Maybe the schools should all switch to a flat fee-no reductions based off of income/financials etc. one low fee, no matter your $ status. Otherwise people will figure out how to game every system, cheat the schools, and basically steal from everyone else who pays for a full ride. People used to not buy bigger homes than they could afford. Now they do (while some of us are in tiny apartments) so they can pay less in tuition.
Maybe they should downsize if they can't pay more in tuition. Or homeschool in your fantastically humongous house.