Retirement Planning - Lessons Learned

[Larry Caldwell]

The reality is if you own a home you have money to many...

If you own a home and timber land, etc... well, you might as well be rich

My biggest expense in life are taxes of all shapes and sizes...

A rental property in WA takes 8 months rent to cover property tax and another for property management and another for insurance and it is vacant at the moment...

Expecting taxes to take a big leap next year...

The path to home ownership that I took is no longer available. We bought 93 acres of timber and pasture and a 22 year old 1700 sf. ranch style house in 1994, for $159,000. Property taxes were $1,000/year. The planning was that we would have it paid off by the time we retired, and the fact that there were no steps made it practical as we aged. Over the years, we used income fluctuations for home improvement, aimed at comfort and affordability rather than resale value. That was things like insulation, upgraded windows and doors, a heat pump, a deluxe kitchen, bath expansion and finishes, landscaping, a gazebo overlooking the creek, a shop building, deck repairs, a new roof, etc. It was very much "one piece at a time" home ownership. Next year the house will be 50 years old, and it incorporates most modern amenities and some that no one would expect, like a front projection home theater with a retractable projection screen and THX certified sound system. I logged 20 acres in 2013, cleared about $50k, and put it right back into the property, when contractors were eager to sharpen their pencils.

For several years, we were a two income family living on one income. My wife is not known for being frugal, so I stuck her with paying all the bills while I saved 90% of my income. She was a top executive while she was working. In 2009 she was named C of C Woman Of The Year. We're not talking NYC salaries, but we could live comfortably on her income alone. She got the bills, I got the savings. I also got the companionship of a dynamic and fascinating woman. Having a true life partner is a great pathway to success.

Property taxes are still just $2400/year. Oregon doesn't tax SS. I figured it out a couple years ago, and my total state tax bill is about 3.5% of my gross income. The feds are another issue, starting with taxing 85% of my SS.

Anybody today would have a tough time doing what we did. In 2004, just 10 years later, a co-worker paid $275k for 40 acres and a mobile. We thought about moving in 2006, but couldn't find any comparable property under $1 million. That's nice to know. If we ever need 24/7 nursing care, we can probably sell cheap and have enough cash to die in comfort. However, anyone starting out today would be servicing a much larger mortgage, in an environment where wages have not tripled or quadrupled like real estate prices. That would blow a huge hole in anybody's cash flow.

 

[ultrarunner]

Amazing your property taxes are so reasonable on a million dollar property...

 

[goeduck]

Larry, you gamed your non-frugal wife into paying for everything. I am impressed!

 

[Sigarms]

I'm also a student of history. I'm familiar with the horrible abuses of aristocracy. I know about the private armies killing miners and their families. I see the same thing coming in the United States, fueled by vast accumulations of wealth beyond any possible use. We're turning into a third world country controlled by the wealthy, while the ranks of the poor grow and grow.

I think your missing the trees looking at the forest.

Both sets of my grandparents came off the boat in the 1900's from Eastern Eruope and both grandfathers worked in the coal mines until their deaths from working in those coal mines.

Dad was one of 11, mom was one of 12. I have some aunts and uncles (slowly dying off) and some cousins who still live in the same area of coal towns and will probably never leave.

My dad enlisted in 1952, and got out around 1975. Never had a college degree, but after getting out in his 40's, he worked another job for 15 years, then two part time jobs just to keep himself busy until his late 70's. My father isn't a rich man money wise, but he saved when in the military, and saved when he got out and although he's not a millionaire, he will never want again in his life.

Funny thing, I always thought we were poor when my dad got out of the military because they always bought second hand cars, smaller house than most of my friends, and I never got really big expensive chirstmas gifts like my cousins at family Christmas's.

If I wanted to go to college, I was paying for it, they would help with the room and board. My excuse when my dad was pissed when I enlisted out of high school

It wasn't until later that I found out that my parents could probably afford whatever they wanted, but that's NOT the way they lived their lives.

When you live through the great depression as a kid and don't have a pot to piss in, guess being greatful for what you have really sticks with you and when you get money, you try to use it wisely.

My one cousin who always got the cars and motorcylces as a kid at Christmas time who I was envious of growing up, he got some cash when his dad died (mom had passed previously) plus his dads house. I believed my cousin basically pissed everything away and he lives in a trailer because that's all he can afford now (still remember when he got married, bought a new house and a harley, but that's all gone now along with the wife). Thing is, when I talk to him, he makes decisions that boggle my mind with his line of reasoning.

THIS is why our country is great. Yes, sometimes you are born with the wrong deck of cards and you don't do anything about it, but with hard work, saving, and some luck, you can do anything you want to do.

I can assure you I understand all about big coal and the coal wars, but in spite of that, I still had family that were able to better for themselves.

Right now, I've got two teenage sons, one who seems to get it about saving and being thrifty, and another who has to blow it all alway.

No different for retirement.

 

[Fuddy1952]

Dad & I were close, and before he passed in 2015 at 88 was the greatest thing he gave me was his wisdom, but never ever a dime.
I had to work for everything, clothes, college, car, then business with $145!
I had less than a two income experience since my wife was an employee!
She's a sweetheart. We have each other's best interest at heart 1/2 century and I hope lots more in future. Retired now over 8 years.

 

[Larry Caldwell]

Larry, you gamed your non-frugal wife into paying for everything. I am impressed!

No games. She held up her part of the deal, and I held up mine. I did mention that she was a top executive. You bet we built spreadsheets and did budget projections to make sure we were being realistic.

Early this year the transmission went out on her car. I wrote the check for a new one - $4200. It's her money as much as mine. I wrote the check because I'm the family CFO. Her name is on every account. She could take the money and leave if she wants. I don't worry about it.

I read occasional stories saying most people can't handle a $500 emergency expense. That would make retirement very uncomfortable, because there are always unexpected expenses. A retirement needs:

1. Adequate cash flow to meet ongoing expenses (housing, food, utilities, taxes, insurance, transportation, clothing, entertainment)

2. Budgeted funds for lifestyle enhancements (travel, tools, art, charities)

3. Reserve funds for emergencies.

How anyone structures their retirement is up to them. My cash flow needs are minimal. Living here is almost free. Thanks to major insulation upgrades, our electric bill today is 70% of our 1994 electric bill even though we have built a shop, and that's our only utility bill. Heat is a wood stove, and we have more wood falling off of trees than we can burn. Not everybody can live in the country. If they have a 7500 sf. lot in the city and plan their retirement differently, that's none of my business. Thanks to galloping asset inflation, people have to downsize. People look at my assets and think I'm rich because they couldn't afford to buy what I have. Neither could I, if I were buying today.

 

[MossRoad]

...

When you live through the great depression as a kid and don't have a pot to piss in, guess being greatful for what you have really sticks with you and when you get money, you try to use it wisely.

...

Same thing with both of my parents. My dad was born in 1919, so he was about 10 when the depression started. My mom was born in '27, so she was about 2. Both of them had great stories about how they and their families dealt with it. It showed in their examples to us growing up.

 

[Larry Caldwell]

Amazing your property taxes are so reasonable on a million dollar property...

Welcome to timber deferral. Plus, real estate is taxed on its 1992 valuation, and increases are limited to 3% per year.

 

[ultrarunner]

Would be nice if WA limited increases... one year it went up 80% using a crazy nearby sale as a comp...

 

[Sigarms]

Same thing with both of my parents. My dad was born in 1919, so he was about 10 when the depression started. My mom was born in '27, so she was about 2. Both of them had great stories about how they and their families dealt with it. It showed in their examples to us growing up.

My father was the baby and my mother second to the last in her family. They were both around 10 by 1940, but with all their siblings, couldn't forget what the families went through. Then most of the boys of both families went off to war for our country.

Watched a movie last night called "The good lie". Although it was fictional, it was based off the plight of the "lost boys of Sudan".

Watching the movie reminded me how it seems that immigrants who come to our county who have nothing, actually realize what it means to work to be paid, work hard, and try to better yourself. Say what you will about immigrants today, but from my own peresonal experience, they seem to work just as hard as most "hardworking Americans" I know.

There is work out there, you just have to want to do it and show up on time, put your time in giving 100% and taking advantage of any breaks you get.

 

[Frankenkubota]

Welcome to timber deferral. Plus, real estate is taxed on its 1992 valuation, and increases are limited to 3% per year.

same here, i'm a tree farmer!

 

[JethroB]

Brother, from what I can tell from your posts, you get it. I quit a high paying job to teach HS Economics in a school with 3/4 of families living below the poverty line. Today I showed them how to use a spreadsheet to put together a personal budget. You would think I invented fire.

When I was a senior in college I needed to take an elective to fill a gap so I took a class called Personal Finance (I was a Finance major). I have always thought that course should be required in every high school.

 

[Oaktree]

Watching the movie reminded me how it seems that immigrants who come to our county who have nothing, actually realize what it means to work to be paid, work hard, and try to better yourself. Say what you will about immigrants today, but from my own peresonal experience, they seem to work just as hard as most "hardworking Americans" I know.

Probably harder. It takes a lot of drive to leave everything that's familiar and start all over again in a new country. More likely than not, this translates into a very good work ethic.

 

[arto98607]

I hope you all recognize the difference between legal and illegal immigrants?

The mainstream media and so many politicians are trying their best to fudge it the best they can...

 

[Sigarms]

I hope you all recognize the difference between legal and illegal immigrants?

The mainstream media and so many politicians are trying their best to fudge it the best they can...

The only difference I really see between my grandparents (who came to ellis island) and illegal immigrants is that both sets of my grandparents HAD to take a boat to get to this country instead of being able to walk.

When you make peanuts and come to our country, and you're willing to break your back and work hard for what we as American Citizens see as "chump change" which we think people are idiots for to work for as no Americans would be "disgraced" as to taking a lower wage.

Not saying anything is right or wrong, just I can understand people making a better life for themselves.

Both of my grandfathers (who came legally) died working in the coal mines, living in a "company town" for peanuts as well just trying to provide for the family.

I can repsect anyone willing to work.

Funny enough a good friend is a local born and bred NC farmer. He feels the same way, and if I need some "local labor work", he always knows the guys who are available. Let's just say they don't look like Billy Bobs or Hanks LOL

 

[Snobdds]

This will kill a retiree's retirement planning pretty quick if interest rates do not follow along...

 

[newbury]

Right now it's looking like my CSRS COLA will be 5% to 6%.
/edit - Civil Service Retirement System, Cost of Living Allowance

 

[MossRoad]

I became a legal adult in 1979. I've lived through worse. So have most of you.

 

[arto98607]

The only difference I really see between my grandparents (who came to ellis island) and illegal immigrants is that both sets of my grandparents HAD to take a boat to get to this country instead of being able to walk.

...............snip...............

It's only the difference between lawful and law breakers, no big deal!

Among the law breakers who enter illegally are some who have nothing to loose and will disregard any and all laws as they wish.

I mean as an example, no need for a car insurance if they have nothing to loose and what's another hit and run - no big deal eh?

And if they are caught it's really no big deal since we don't even know who they are or where they came from; they will be released soon anyway and go on and on.