Investments/Retirement-how much should we have?

[ICF]

Our house will be paid off, but our property taxes are around $1000 a month, and increase every year. It's like an endless mortgage payment.

Your property taxes are $12K a year??? That's nuts.

 

[crisi]

Nothing at all wrong with wanting a Mercedes lifestyle and planning for it. The problem I have is that not everybody wants/needs that but they're being sold on that template, on the idea that it's a necessity so that disconnect isnt really ok especially if it's leading people towards stress & being unnecessarily fearful because fear drives people to do unreasonable things.
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A million dollars in retirement funds isn't a Mercedes lifestyle. $1M will give you about $40k a year using the "4% safe withdrawal rate" If you have pension income, and you think social security will be there for you, and you max out social security for two people, and your house is paid off, and your other expenses are pretty reasonable, you might get a Mercedes, but probably not the rest of the "lifestyle."

Remember you are likely to be retired for about 20 years - and during that time inflation will eat away at your purchasing power.

The 25x or 30x spending rule is pretty good - it 25x will almost certainly see you through your retirement - 30x has an even better chance of getting you through. You do get to subtract pension and social security income (depending on how confident both will be there for you) from what you need.

Since we are not confident at all social security will be there, and we don't have pensions, and we are twenty years from retirement, my target number is around $3M.

 

[eliza61]

Our house will be paid off, but our property taxes are around $1000 a month, and increase every year. It's like an endless mortgage payment.

which was a huge reason I left NJ. I had the same issue. My property taxes on my house in NJ in 2012 were 12,300 bucks. INSANE. my property taxes in Philly are 845 a year. So even with a brand new mortgage my living expenses went down..

I'm planning on retiring in about 3 years. I've calculated that I can safely budget for 6500 bucks a month and be good for 30 years. The first decade or so will probably be the high output years as I'll still be relatively young so I'm guessing baring any health issues I'll be going a lot. I do have a pension which I calculated in and while I didn't add in ss, I'm not worried about it running out at all within the next 15 years.

 

[nunzia]

This is all very interesting reading. We are approaching retirement, and are about as ready as we'll ever be, I guess. You are all in the small percentage of folks who are looking ahead and making plans and saving and good for you! Most of the country is not and that is a coming huge disaster.
I see time after time plans shift quickly when huge health care bills start. My friend's folks have that long term health insurance and the cost savings will not be what they'd hoped. They will still need to pay a third of the facility costs, even after paying huge premiums. They are very wealthy so they can handle it, but it is still more out of pocket then they were led to believe.
Our health premium rate has more than doubled this year and our deductibble has as well..who knows what 20 years will bring?

You must save and save, but you also must enjoy NOW. We are taking our big expensive trips NOW, traveling with the grandkids while they are small and we can keep up. We also try and live frugally to still be able to put some away. House is paid for, cars solid and paid for, house as we like it. Our basic bills are $1,500 a month with the biggest costs being insurances and I don't see that changing in a good way. We live in a area where property taxes are about $50 a month, car registration $60 a year. Where you live has a HUGE impact and it's a dorky little town, but when you can buy an 1,800 square foot house 14 years ago for $60,000 you can excuse alot of small town dorkiness.

Another thing to watch for, and I know folks say it will never happen to them, is ending up finding they are caring for an elderly parent in their home and finding themselves feel like they have to help out grown children. I know more folks than you'd think who have been sucked into being financially responsible for grandkids in some way or another, and one who now has two houses to pay for since an elderly parent had to move into a 2nd home they had that was intended to be an income producer and is now a drain since they have all utility costs, TV, etc going out instead of rent coming in. You can say you won't get sucked into financially helping grown children, but when your find yourself there and the grandkids are the consideration, you will help and it will hurt all your well laid plans.

Oh yea, one more thing. I also see over and over ( I worked for a long time at a church full of folks heading into retirement with plenty of money), be careful where you pick that retirement home! We live in a valley with wonderful mountain villages close by, so often folks buy a retirement home in the mountains with dreams of sitting on the deck watching the deer...until they are snowed in, the steps are a challenge and icy and uneven, the power is out for lengths of time, you cannot easily get down the hill and medical asistance cannot get up, the altitude is too high for you as you age, etc., and then you just want to go back in the valley in a single story house on even surfaces with a store close by. Think ahead, you aren't always going to to have the strength and health you do now.
Do we have 'enough'? Probably not, but hopefully so. You hit a point where you know the saving portion of your life is heading to a close and then you will adjust to do the best you can on what you've saved, keepiong your lifestyle as close as you can to what you want for as long as you can.

 

[Disneybuckeye]

Your property taxes are $12K a year??? That's nuts.

Property taxes and insurance combined. The property tax portion is just under $10k and insurance is right at 2k. We do have almost 7k in square footage in a pretty pricey neighborhood.

Yes, we should sell, but I love my house and my neighborhood. Too big of a pain to move to a smaller house a few blocks over.

 

[ellochka]

I am not surprised with $12K a year taxes/insurance. We pay $4,500 a year in taxes, and we live in a 1,800 sq ft condo in a crappy school district. Most likely, the number will almost double when we move into a better district. Still, it's cheaper than paying private school for two kids.

I check my retirement calculator in Fidelity, and it usually says we are on track for $1.5M to $2.5M in savings, which should be enough. I would assume, it's in today's money.

 

[mjkacmom]

Property taxes and insurance combined. The property tax portion is just under $10k and insurance is right at 2k. We do have almost 7k in square footage in a pretty pricey neighborhood.

Yes, we should sell, but I love my house and my neighborhood. Too big of a pain to move to a smaller house a few blocks over.

My $12,000 is just for property taxes, not insurance. I live in an 1800 square foot house on a 60 x 100 lot, no garage, no a/c, 1 1/2 baths, home built 100 years ago. Decent schools, though.

 

[tvguy]

My $12,000 is just for property taxes, not insurance. I live in an 1800 square foot house on a 60 x 100 lot, no garage, no a/c, 1 1/2 baths, home built 100 years ago. Decent schools, though.

That's nuts. We had a revolt here in California in 1978, voters capped property taxes at 1% of what you paid for it (or 1% of what it was worth in 1978 if you owned your home then), with a cap of 2% of that 1% for inflation each year.

So $12,000 in property taxes would be what a house worth $1.2 million would pay, and that could not go up by more than $240 the first year.

What really fueled the Prop 13 revolt were what property taxes were doing to senior citizens. Folks who had owned their homes 40, 50 or 60 years, and were being asked to pay more in property taxes each year than they paid for the house.

 

[mjkacmom]

That's nuts. We had a revolt here in California in 1978, voters capped property taxes at 1% of what you paid for it (or 1% of what it was worth in 1978 if you owned your home then), with a cap of 2% of that 1% for inflation each year.

So $12,000 in property taxes would be what a house worth $1.2 million would pay, and that could not go up by more than $240 the first year.

What really fueled the Prop 13 revolt were what property taxes were doing to senior citizens. Folks who had owned their homes 40, 50 or 60 years, and were being asked to pay more in property taxes each year than they paid for the house.

It's probably the biggest crisis NJ has (and there are many...). More people are leaving this state than any other, including businesses. Many people have had families here for many generations (arrived at Ellis Island, and got jobs), and so many seniors are really suffering. And besides the COL, NE NJ is a GREAT place for seniors to live! Good public transportation, health care, senior programs, everything close by... It's a shame.

When we bought our home 16 years ago, taxes were under $5000.

 

[GAN]

That's nuts. We had a revolt here in California in 1978, voters capped property taxes at 1% of what you paid for it (or 1% of what it was worth in 1978 if you owned your home then), with a cap of 2% of that 1% for inflation each year.

So $12,000 in property taxes would be what a house worth $1.2 million would pay, and that could not go up by more than $240 the first year.

What really fueled the Prop 13 revolt were what property taxes were doing to senior citizens. Folks who had owned their homes 40, 50 or 60 years, and were being asked to pay more in property taxes each year than they paid for the house.

This is true, but as I understand it, the biggest benefit is to those who could actually afford to pay the taxes. The person with the $1.2M home isn't sweating 12G's a year(that's a joke) -what that amounts to is lost revenue for the state/municipality which in turn makes it more difficult for seniors who might rely on programs that are eventually/possibly cut. So who really won in the end? There are people with multiple homes, say FL and CA -their paying $120,000 without blinking an eye in FL, but a similar home in CA they pay $12,000.

 

[kathy884]

Our house will be paid off, but our property taxes are around $1000 a month, and increase every year. It's like an endless mortgage payment.

Our house will be paid off in four years too, but the mortgage is not very big. The property tax and insurance though will stay around and go up. And those are already almost as much as the mortgage. I hear you on this one.

 

[perdidobay]

Owning a house near the coast equals big $$$ for wind insurance and flood, not to mention a general homeowners policy to cover the rest. Our yearly outlay for the 3 insurance policies mentioned plus $1600.00 a year in property taxes, fire tax and $1200.00 a year in HOA fees, equals $1200 a month for us. House is paid for thank goodness. We have plans to live on 120k a year, so we plan to have 3 million in investments by age 60.

 

[tvguy]

This is true, but as I understand it, the biggest benefit is to those who could actually afford to pay the taxes. The person with the $1.2M home isn't sweating 12G's a year(that's a joke) -what that amounts to is lost revenue for the state/municipality which in turn makes it more difficult for seniors who might rely on programs that are eventually/possibly cut. So who really won in the end? There are people with multiple homes, say FL and CA -their paying $120,000 without blinking an eye in FL, but a similar home in CA they pay $12,000.

Yes, those with the financial resources certainly can afford it. It just was nuts here, because it wasn't the senior citizens fault that their houses were worth so much more than then paid for them. Hard to believe that after World War II houses could be had for $2,500, houses that would be paid for over 30 years by low income folks.....and then they find out their house is worth $250,000 and they were now living on social security of $9,000 a year and being asked to pay $2,500 a year in property taxes.

 

[Dakota731]

Seems like they get you one way or another though. We pay high property taxes here, but other cities where property taxes are lower then they often pay higher local and state income taxes. You can't win!

 

[eliza61]

Seems like they get you one way or another though. We pay high property taxes here, but other cities where property taxes are lower then they often pay higher local and state income taxes. You can't win!

I think it depends. New Jersey is absolutely the worst (LOL, I was there for 24 years and could not wait to get out. I was in south jersey).

not only is the property tax situation horrible but it has I think the third highest state and local tax rate. Now seniors do get some exemptions but they tend to be phased out if your income is over 75000 (single). That's not a terrible high salary in this neck of the woods.

but I guess home is where the heart is. so I guess it's best to plan based on where your heart is.

 

[georgina]

That's nuts. We had a revolt here in California in 1978, voters capped property taxes at 1% of what you paid for it (or 1% of what it was worth in 1978 if you owned your home then), with a cap of 2% of that 1% for inflation each year.

So $12,000 in property taxes would be what a house worth $1.2 million would pay, and that could not go up by more than $240 the first year.

What really fueled the Prop 13 revolt were what property taxes were doing to senior citizens. Folks who had owned their homes 40, 50 or 60 years, and were being asked to pay more in property taxes each year than they paid for the house.

How are your public schools funded in CA? In PA it is almost completely through property taxes. Some states contribute more to local school districts from other taxes.

 

[tvguy]

How are your public schools funded in CA? In PA it is almost completely through property taxes. Some states contribute more to local school districts from other taxes.

Yes, state is the biggest source of funding.
About 60%. The state constitution requires 50% of the state's income to be spent on schools.
Then there is a mix of state and federal grants that generally have to be spent on specific itmes.
And then districts can ask voters to approve bonds for specific things. I pay about $178 a year because voters approved a bond measure to replace landscaping at each school.


http://www.cbp.org/pdfs/2009/090202_SFF_HowSchoolsGetTheirMoney.pdf

 

[chicagodisneyfan]

Just logged into my retirement account - it estimates I will get $135,000 a year (I am 46).

Can I live off that? Probably.

But I will always have a mortgage as long as interest rates are low - my parents are in their 70s and just took out a new loan - they make too much money in the market to want to pay cash for a new house. They put down the bare minimum and financed the rest.

 

[Dakota731]

How are your public schools funded in CA?

But that's not working out well either with city after city in California going bankrupt. We need to get the school costs under control. In our area we spend a lot more per student for public school than what you could send you child to college with room and board included! A lot of the money goes for pensions not for the students, so something needs to be changed. A 401K for employees is a good start. We have senior citizens who can't afford to stay in their homes because of the property taxes not to mention young people who can't even afford to buy a house because of those same taxes. Which of course then hurts our local economy with less building and buying going on.

 

[eliza61]

This is a pretty interesting discussion. Also what is so interesting is that "where" you ask will give you a totally different perspective.

I chat on another site, dedicated to investing and a poster there is worried because he's not sure if he can retire with ONLY 4 million bucks saved up.

He does want to spend 1 million on a house soon.

Perspective is every thing.