Staying the course here, as well. Goal for me has always been partial or total retirement as soon as the youngest is done with high school. Still a number of years off so we're still stashing assets away as we can and remembering that the retirement date can be flexible depending on what state the world is in.

38 now, and planning to retire (if I feel like it!) at 55. My peak earning years are behind me. I worked at an internet company previously and was able to pay off student loans quickly, and put a good chunk into investment accounts and paid off all debt except our house (2.85% on that, so no rush). I left that job due to stress. I've been in my current role for 5 years, and am now vested in a fully-funded pension program. My wife and I are still contributing to individual retirement accounts (maximizing most years) and have a good amount set aside in 529s for each of our 3 kids. We've relaxed on the 529s now because of some of the restrictions associated with those accounts.

I like what I'm doing now, and most of the people I work with. I could see myself going part time at some point to avoid retiring early and drawing on the pension immediately (one of the requirements in order to continue on the associated healthcare), and instead continue to accumulate years of service and reduce the penalty. The ability to work remote and a generous amount of vacation has also changed my outlook a bit on 'getting out'. There's still a lot of factors in play, but I plan to just continue to toss money into the accounts and see where life ends up.

My only real advice is the simple stuff - live below your means, pay off debts, and throw money into index funds in tax advantaged accounts.

Exactly why I will never own rental real estate

We are implementing the cut back plan now. Wife and I have a business and we started Jan 2022 with only working 4 days a week. At first we were only 50/50 successful, the only solution was to cut customers. We did that all of last year, went from 11 to only 4. We do not take on new business and if anybody gets out of line, they will get cut. Ultimate goal would be to only have 1 or 2 customers, then zero (maybe special projects). It's worked out this year, since my dad was diagnosed with cancer and we have been able to go down to GA and spend quality time with him, without feeling guilty that we had work that needed to get done. Our largest expense, is healthcare. It goes up to $2450/mo in August. I'm willing to work enough to pay that, but come 65 and medicare, I will find it very hard to work.

We went thru the same thing with my mother in law, so it's opened our eyes to what we will need to prepare for in 25-30 years.

Don't forget that unless you and your wife are the same age, only one of you goes on Medicare. The other still pays for health insurance until 65.

I'm trying to decide what to do next year w the house I'm in, sell it or turn it into rental #2.

59 yrs old, recently divorced, kept the house, owe about 230k after buying her out. 75k of that is a HELOC I had to take for the buyout - I plan on selling a few games to whittle that down. Girlfriend is selling her house, should be on the market in a few weeks. Hers is paid off, she wants to get a condo or something maintenance free, so that will probably happen next year (I plan on going with her).

I'm trying to decide if I should just sell (probably get $325k or so), or rent it out for 10 years or so, let the tenants pay off some more of the principal, and then sell. This house has a much bigger payment than my other rental though, so an extended vacancy (which I've never experienced w my other one in 12 years) could be problematic. It's also bigger, so fixing it up between tenants will be more costly, both time-wise and materials (repainting, etc).

i think his case is the exception more than the rule. Even with the challenges he had, he came out ahead.

There is the occasional Bill Gates or Rockefeller, but the vast majority of wealthy people got that way from real estate.

I'm sure many people do, and I think it's a great way to do it, but I think "the vast majority" might be an overstatement. I think if you read books like The Millionaire Next Door you'll find statistically a lot of people...likely the majority...get rich from owning their own business or working hard at a "normal" job.

Oh, it was profitable, just it turned into a hassle this last year. Approximates:
-Paid 350K cash 5 years ago
-Rent for 4.5 years = 100K
-Taxes and repairs = 85K
-Will sell for around 485K

I should net around 100K after selling costs and taxes.

thanks, I realized that at one point, we'll have 22 months after I'm on Medicare.

I read it years ago, lots of those books.

“90% of all millionaires become so through owning real estate,” this famous quote from Andrew Carnegie.

Granted, he died a long time ago, but I believe it's still true that the majority of wealth is/was built through real estate. The average Joe won't start a million dollar business. Some can live below their means and scrimp and save their way to a million dollars with a "normal" job. But most got there from investing in real estate. I'm not referring to the Hiltons and the Marriotts, just the millionaire next door that owns 10 or 15 rental units.

Not looking to argue and wont be coming back to fight about a reply. My brother is a year younger than me, never went to college, worked at a lumber yard his whole life and bought/sold/rented/flipped houses and property the entire time. Retired at 55, he's worth between $4.5 and $5 million. Owns a golf course, a storage unit facility, rental properties. Still flips a house once in a while for kicks but mostly just travels now. He's not a genius, he lost money at times, but I think that most people got to the top of the mountain just like him.

Real estate is a good option, and he did great no doubt. Over the years I worked with several people who started their own companies from nothing, built them up over the years, and then sold. That path if you can pull it off is also pretty good. Their final payoffs were in the range of your brother’s but with another zero added on.

We had a Zoom call with a guy who sells LTC (long term care) insurance from various companies. It’s expensive, $7-10k a year for the 2 of us, and it would only pay out of one of us became disabled. “Disabled” is defined as needing help with 2 or more daily functions. We talked it over, and decided we’ll roll the dice and self-insure.

We also started talking about downsizing from our 3-story home to a single-level house or condo, at some point. My mom used to live with us, and she became unable to use the stairs in her mid 70’s. I reckon we’ll stay here as long as we can. My great aunt just turned 102 and she still lives at home alone. Regular exercise is the key.

The biggest point of disagreement we have is over my dream of opening an arcade or pinball museum when I retire. My wife thinks it’s a guaranteed money-loser (she’s probably right) but I haven’t let go of the idea yet.

When is everyone planning on taking SS? I want to start at 62 and have my wife wait until 67 as she’ll live longer.

If you do alcohol, you have a fighting chance to break even
Don’t let your passion bury you long-term

I am curious what those 2 properties are worth today?

Never get involved in real estate if you are going to be forced to sell, if it is not long term it is timing the market which can lead to your situation. Not often but 100% it happens

Perfect scenario to show how simple real estate is and why it can be a life changer.

Sell your home and get 325k today

Rent it out for 10 years and how much will you collect on it monthly (10-15% annually)

And int 10 years you still have the house valued at what? More then today.

I’m kicking myself for selling our first house for $175k in 2001. It’s worth $500k+ now, and it would have made a perfect rental property.

You can run various scenarios here:

https://opensocialsecurity.com/

Factor in if the social security money is needed to live on and family history of long/short life expectancy. Barring anything extreme it usually works out best if lower earner takes benefit at their full retirement age. Higher earner waits until 70 years old to gain an extra 8% per year on their paycheck.

Starting at 62 there is a significant reduction in pay amount. https://www.fidelity.com/viewpoints/retirement/social-security-at-62

YMMV

Yes on collecting at 62 ...
Here's an interesting video, skip ahead to 4:00 and watch from there.

Don’t. I can’t predict the future. Can you?
Even then 2001 was over 20 years ago. I’m sure you did something constructive w that cash

Yep. It’s almost always best to start collecting at 62

Same here, we started at 62.

SS income is taxable. But many people drawing it have a lower income so their taxes are lower.

Also Medicare B, C, D and gap aren't free.

Retirement is great. It does take a period of adjustment.

Good video! One other thing to remember going into retirement is to be debt free. Our house is paid off, cars are paid off, no loans, only bills are expenses.

Right - short term, buy a piece of junk, renovate and flip it (we're talking months in this scenario, not years). Long term, buy and hold (rental).

Yeah I'm really leaning towards turning it into a rental. We won't have a payment at our new place. My daughter and her family are relocating from Florida soon and she's expressed interest in renting it. She said I won't have to downsize my collection if we move someplace smaller, I can leave my overflow games there lol.

And even if the house doesn't appreciate a dime in the next 10 years, my tenants will have paid down 1/3 of the mortgage by the time I sell.

..

lol - nevermind. my math skills suck apparently

Not trying to change anyone's mind. It could definitely be the way to go if you need the money to live on.

Everyone's situation is different so taking a reduced benefit at 62 isn't a black and white numbers only exercise comparing the payment amounts to figure payback age, etc.

Just a couple examples of other things to consider:
What if you want to do Roth conversions in between retirement and collecting without bumping up to a different tax bracket?
What if you want to avoid the IRMAA extra costs for Medicare premiums? These can be significant.
What if you have a spouse and don't want to permanently reduce their survivor benefits by not waiting until at least your full retirement age?

All I'm saying is there can be a lot of moving parts to factor into the decision.

What is critically important at any age- if you haven't yet, get your mySocial Security online account set up. This ensures that no one else can pretend to be you at ssa.gov

I've asked this previously, but has anyone used SEPP (separate equal periodic payments) program to access their IRA/401k funds prior to age 55 or 59.5 for early retirement? I've found articles about it, but have never heard from anyone that has actually gone through the process and I'm curious how it has worked out.

https://smartasset.com/retirement/what-is-a-sepp

TLDR: There are potential tax costs you may not have planned for in retirement, especially if you will be withdrawing from deferred accounts.

This is an area that a lot of people don't think about. Including me, until I started to get near the finish line and started to take deep looks into the tax situation after retirement. There are potential issues there. These issues are rarely mentioned in the mass of online guidance articles.

It is a good idea to plan out all of your retirement income so you can see where you stand tax wise. This includes looking at everything that is deferred (401ks, 403bs, SEPs, IRAs etc) and planning for any withdrawals you will want to take from those for your retirement income.

You will have a certain baseline income, which might include your SS, a pension, and returns on investment. This will put you in a certain tax bracket. If you take a withdrawal from any deferred account in any year, that will count as additional income. You will pay income tax on that also. But worse, depending on where you sit in the brackets and how much you withdraw you might jump a bracket or even two. That will make your marginal tax rate even higher and cost you more. You might take 50k out of a 401k for whatever use, but it could end up actually being 35k after you pay the taxes.

And as you said, you should be aware of the IRMAA trip points. If you exceed any of those, up goes your Medicare payments. You will have to pay those higher rates for a year at least. These IRMAA brackets are not very friendly, although it is possible they may be raised in the future.

Right there with you! In 3 years, my wife will be 65, my son will be 27 and I’ll be 62. I should be pretty close to my target savings too, stock market permitting.

I think of my 2 grandfathers a lot. One retired at 51 and built a campground from the ground up with a convenience store and a putt-putt golf course. He’s smiling in every picture I have of him. My other grandfather retired at 63 and died the same year - he was a heavy smoker and drinker, I think that’s why he had a heart attack so early.

Sounds like you should start at 62. My dad died at 66 of a massive heart attack, (quick way to go) so I started collecting at 62, figured this was my fate too. Shitting bricks when I turned 66, Haha

I up'd up my savings prior to retirement so we could live off of that the first year (age 61, so I wasn't drawing SS), then I did some IRA to Roth conversions. since I had no income (other than the conversions).

Thx, basically have to consider how long you expect to live and what you might do with the money taking it early. The payoff point in his example is about 14 years. So in his example, once they both hit about 81 years old, collecting at 67 becomes more advantageous. I am personally thinking I’d rather have the funds at 62, and just in invest the money in an interest bearing account. Traveling and spending the money I’d guess won’t be quite so easy at 81, if I’m lucky enough to live that long.

The bigger issue as some here have been discussing is IRA/401k distributions, this is a really troublesome issue because of the tax implications. I haven’t quite figured it out yet, but am thinking about how I’ll approach it and have been consulting with an advisor/accountant. I think ultimately there may be years where my tax bracket gets bumped up.

Not trying to read too much into your statement but the less one actually needs the money then the more sense it makes to take it early.

The other way to look at it is (in the example above) they have ~$100K from early SS. That means they didn't have to withdrawal $100K for a 401K, etc. (i.e. it's still in the market, hopefully making more money).

You’re not missing anything, you’ve summed it up perfectly.

I'm off track. I was hoping to retire last year but was unable to pay off the house due to settling my roommate's estate, I had to close his IRA to distribute funds to family and took a $32k tax hit, which I have overcome but had to refinance his house in my name instead of paying it off. The good news is the estate is settled so I'm done with that, and my house payment is only $600/month despite the 6.5% interest rate.

My company wanted me to stay longer so they gave me a new, less stressful job. They want me there for 5 more years but I will probably be done in 1-2 years. In 2 years I'll be 58 so I'll do the rule of 55 and draw off my 401k for any major unforeseen expenses that cash can't cover until I reach 62. For medical I don't need COBRA now, I'm planning on using VA, just have to get ACA until I'm off the VA waiting list. I also have funds in my HSA.

My property values continue to rise, the 3 properties are at almost a million in value. The plan now is to snowbird, sell the main house, sell the beach house, develop hookups for my paid acreage next to the beach house, and camp there during the summer in a travel trailer with a small shop/garage for more room. This will also keep taxes low and it's still 5 minutes to the beach. Then retreat to a winter condo in Florida or Texas.

I go back and forth on paying taxes and HOA for a condo, but on the other hand I'd have to pay taxes on a home and I won't have to deal with yardwork, pests, maintenance etc., just paddle my kayak, fish, volunteer, and play pinball. In fact most HOAs + property taxes are around $1100-$1200, cheaper than an apartment. I'll buy with proceeds from the house and beach house sales and be debt free with a ton of equity. Plus I can have someone run my condo as an airbnb or Vacasa while I'm not there during the summer if I want more money, just have to buy in a place that's not 55+ only.

Maybe I'm missing something, but why would you take a tax hit on your roommates estate? His estate should be responsible for any taxes related to all distributions, not you personally as the estate administrator.

Ever since the building collapse in Miami, I've read articles that the condo maintenance fees have gone bonkers. Maybe that's just near the coast and not so much inland. Or perhaps for the older, bigger buildings. I don't have first hand experience, maybe some of the articles are click bait.

Are maintenance fees sperate from HOA? When I hear HOA - I think of yard work, painting, swim in the pool. Maintenance I think of structural, roofing, etc.

Normally you'd be right. But I was his default beneficiary, so Fidelity moved it into an account with my name. You only have 30 days to decline accepting the transfer, in which case it would have gone into the estate. It was long past that when I learned what the estate requirements were. I thought it would be great that the money went to me - I could pay off the house - now, not so much. If I had a do-over I would have declined it and let it roll into the estate.

His parents were entitled to 25% of the estate, and to get them their share I had to liquidate the IRA because I wasn't ready to sell the property and there weren't enough other assets. So I got to keep the property, but at the cost of closing the IRA to get them their money.