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Old 05-23-2016, 09:49 PM   #21
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Thanks Meadbh. Hard to hear but I know it's true. Living in the city can be really crazy but the thought of not being able to return after we've worked so hard to get here.... I'm not sure we're ready for that.
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Old 05-23-2016, 09:52 PM   #22
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Thanks Meadbh. Hard to hear but I know it's true. Living in the city can be really crazy but the thought of not being able to return after we've worked so hard to get here.... I'm not sure we're ready for that.
Then I think you have your answer.
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Old 05-24-2016, 06:38 AM   #23
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I haven't done a tax proforma. The 14% rate is based on 2015 tax rates on 84k less standard deduction. I Calculated both federal and state these are both included in the 14% rate. ....
This calculator will do both federal and state income taxes. I'm guessing your combined effective tax rate will be 11% or less.

Income Tax Calculator - Tax-Rates.org
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Old 05-24-2016, 06:46 AM   #24
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Is the condo worth about $1,500,000? Has to be to generate $36k in rent.

Sell that, add it to your investments, and you have $2,500,000. At a 3.5% WR that would give off $87,500 which would easily last you the rest of your life especially with the SS kicking in.
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Old 05-24-2016, 08:11 AM   #25
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Why does it need to be worth that much, in a hot rental market?

Our $290K townhouse was renting for $23K/year in 2013, and that was below market.

(Didn't stop us from selling the miserable thing, and good riddance, but that's beside the point).

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Is the condo worth about $1,500,000? Has to be to generate $36k in rent.

Sell that, add it to your investments, and you have $2,500,000. At a 3.5% WR that would give off $87,500 which would easily last you the rest of your life especially with the SS kicking in.
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Old 05-24-2016, 08:56 AM   #26
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Why does it need to be worth that much, in a hot rental market?

Our $290K townhouse was renting for $23K/year in 2013, and that was below market.

(Didn't stop us from selling the miserable thing, and good riddance, but that's beside the point).
My mistake, I was thinking he meant after paying the mortgage he was clearing $36k. For sure that would be a million dollar property.
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Old 05-24-2016, 09:00 AM   #27
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The condo is only worth 700lk.
The market looks like it is beginning to correct as a lot of new inventory is hitting the market.
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Old 05-24-2016, 09:25 AM   #28
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My mistake, I was thinking he meant after paying the mortgage he was clearing $36k. For sure that would be a million dollar property.
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Old 05-24-2016, 03:05 PM   #29
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Huh.. that's only 4.8% on $1 million plus they have reinforcements with $30k of SS.

Have you done a pro forma tax return as if you were retired? 14% sounds a bit high but then again you are in California.
Based on 2016 data my equities are at -.7% and fixed income is at +2.2%(approx equal size investments). It would give 1.5% gain. But equities are very volatile this year and hard to predict where it is going to end.
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Old 05-24-2016, 03:24 PM   #30
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Is the condo worth about $1,500,000? Has to be to generate $36k in rent.

Sell that, add it to your investments, and you have $2,500,000. At a 3.5% WR that would give off $87,500 which would easily last you the rest of your life especially with the SS kicking in.

Same recommendation I would have made. Reduce uncertainty and risk of being a landlord too.

What are your two properties worth? Carrying this further, you could sell all the real estate and have a very nice life in a small bedroom community where cost of living is less and housing is 30% of what it is in SFO
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Old 05-24-2016, 03:33 PM   #31
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Based on 2016 data my equities are at -.7% and fixed income is at +2.2%(approx equal size investments). It would give 1.5% gain. But equities are very volatile this year and hard to predict where it is going to end.
While it is true that equities returns vary the OPs returns will be over a number of years so it is foolish to look at just YTD 2016 or even the last 12 months... you really need to look at average 3 or 5 year returns.

Vanguard Target Retirement 2020 is ~60/40 and has returned 4.97% and 6.42% for the last 3 and 5 years, respectively. Vanguard Wellington is also ~60/40 and has returned 6.69% and 8.65% for the last 3 and 5 years, respectively. From 1926-2015 a 60/40 portfolio returned 8.7% on average so a $48k/4.8% return on a $1 million portfolio over a reasonable time period is not at all unrealistic.
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Old 05-24-2016, 04:18 PM   #32
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While it is true that equities returns vary the OPs returns will be over a number of years so it is foolish to look at just YTD 2016 or even the last 12 months... you really need to look at average 3 or 5 year returns.

Vanguard Target Retirement 2020 is ~60/40 and has returned 4.97% and 6.42% for the last 3 and 5 years, respectively. Vanguard Wellington is also ~60/40 and has returned 6.69% and 8.65% for the last 3 and 5 years, respectively. From 1926-2015 a 60/40 portfolio returned 8.7% on average so a $48k/4.8% return on a $1 million portfolio over a reasonable time period is not at all unrealistic.
I would rather not to take data from 2009 through 2014 due to the Feds "easy money" policies what greatly moved most investments up "artificially". Since now Feds are talking tightening and rates increases, the returns could be much different.
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Old 05-24-2016, 04:45 PM   #33
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Yep, taxes are included at a 14% rate. Health insurance at 1k per month for both of us. However I don't have the deductible factored in.
I firecalc almost daily ��.
This plan is on the cusp to be sure. Both my parents passed at 76 and pretty much all of my relatives get cancer at some point. My FIL just passed at the age of 69. So we are aware that we don't stay healthy forever. Thus the desire to enjoy while we can.
I appreciate the conservative nature of this group it will keep me grounded.

By the time you're 60 the health insurance cost is almost 900 per person. I.e., 2500 deductible etc. just be sure you factor in those rising costs that are merely age related (not even counting the ones related to increases in health care costs)


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Old 05-24-2016, 05:33 PM   #34
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I would rather not to take data from 2009 through 2014 due to the Feds "easy money" policies what greatly moved most investments up "artificially". Since now Feds are talking tightening and rates increases, the returns could be much different.
Well then what data would you accept?

Let's start with John Bogle... equities 6%, bonds 3%... 60/40 4.8%... well isn't that an interesting coincidence... $48k on $1 million.

How about Rick Ferri...domestic equities 7%, international equities 7.4%, bonds 5.3%... 42/18/40 mix 6.4%

How about Vanguard...3-5% real for a 60/40 portfolio + 2% inflation translates to 5-7% nominal... again more than 4.8%.
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Old 05-24-2016, 09:54 PM   #35
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By the time you're 60 the health insurance cost is almost 900 per person. I.e., 2500 deductible etc. just be sure you factor in those rising costs that are merely age related (not even counting the ones related to increases in health care costs)


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Health insurance will be 900 per person just because we're 60 yo!! I'm not aware of this! What do you think would be a reasonable figure to use?
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Old 05-24-2016, 09:57 PM   #36
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Same recommendation I would have made. Reduce uncertainty and risk of being a landlord too.

What are your two properties worth? Carrying this further, you could sell all the real estate and have a very nice life in a small bedroom community where cost of living is less and housing is 30% of what it is in SFO
Condo is worth 700k but market has started to correct. I'd put the cabin safely at 150k. This is what we bought it for when the market bottomed in 2011.
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Old 05-24-2016, 10:27 PM   #37
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For many years, to sell a condo in a reasonably good SF neighborhood long term has been a huge mistake. The Karma lady is right, if they sell out and leave they are unlikely to get back in.

Ha
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Old 05-24-2016, 10:27 PM   #38
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Health insurance will be 900 per person just because we're 60 yo!! I'm not aware of this! What do you think would be a reasonable figure to use?
Check out healthsherpa.com

I think $900/person is probably high but it will be $1,350-1,450/month for a 60 yo couple in your area.
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Old 05-24-2016, 11:19 PM   #39
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Yipes! Nevada may be looking better and better. Our cabin is 40 min from Tahoe which is half in CA and half in NV. Although we can't afford Tahoe , being 40 minutes on the other side and on Nevada, May have a lot of benefits...
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Old 05-25-2016, 06:12 AM   #40
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Health insurance will be 900 per person just because we're 60 yo!! I'm not aware of this! What do you think would be a reasonable figure to use?

I live in the bay area with a health plan that's grandfathered into ACA. When I turned 60 this year it jumped from 670/mo to 920 just because I turned 60


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