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Old 08-09-2014, 01:28 PM   #101
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On a similar note, I recently read an article on fire insurance for one's home. The writer (a consumer advocate type) was warning that one should not use the current value of the structure to estimate the amount of insurance needed to rebuild a home. In his opinion, the cost of rebuilding a structure is usually greater than what the structure would sell for in most markets. Part of that is rebuilding to the newer building codes, but much of it was just the cost of material and labor itself. In other words, insure for more than the sale price of the structure. YMMV.
I agree with this - but it can go both ways. In our case the cost of rebuilding is SIGNIFICANTLY lower than the cost to buy the house. The land is the pricey part.

I recently shopped home owners (and land lord policy) - and most quotes sited a price/sf to rebuild. One was ridiculously low so I had them re-quote at a more realistic price.
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Old 08-09-2014, 02:42 PM   #102
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I agree with this - but it can go both ways. In our case the cost of rebuilding is SIGNIFICANTLY lower than the cost to buy the house. The land is the pricey part.
But, if one's house burns down to the ground, the land is usually still there and relatively unharmed. Right?
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Old 08-09-2014, 02:48 PM   #103
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The big mistake I am seeing my MIL make in retirement is not putting her food down and continuing to provide financial assistance to several of her children and their families. They are very entitled and essentially see her as an endless supply of money and time, even though they are now in their late 40's and early 50's. Due to that she has made some very poor decisions, like buying a condo with no money down at the height of the housing frenzy for a BIL who cannot hold a job. When the housing market crashed the condo mortgage went under water, BIL was doing nothing to help her pay it, then got very sick, so the home was lost to foreclosure and BIL is now living in her house.

She has learned her lesson somewhat and is cutting back on the assistance, but it is a tough habit for her to break after all these years. DW and I have never sought anything from her and she now looks to us to help her manage her finances - which is causing suspicion among her siblings and some are trying to put even more pressure on her.
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Old 08-09-2014, 02:55 PM   #104
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DW and I have never sought anything from her and she now looks to us to help her manage her finances - which is causing suspicion among her siblings and some are trying to put even more pressure on her.
No good deed shall go unpunished. Keep careful notes and document where every penny went.

It didn't become an issue for us with handling FIL's assets but if it had, we had all the documentation ready since it very well could have been needed.
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Old 08-10-2014, 04:42 PM   #105
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Originally Posted by Chuckanut View Post
On a similar note, I recently read an article on fire insurance for one's home. The writer (a consumer advocate type) was warning that one should not use the current value of the structure to estimate the amount of insurance needed to rebuild a home. In his opinion, the cost of rebuilding a structure is usually greater than what the structure would sell for in most markets. Part of that is rebuilding to the newer building codes, but much of it was just the cost of material and labor itself. In other words, insure for more than the sale price of the structure. YMMV.
While this is 100% true, it is misleading. Our house is worth about $200K (including land worth about $30K), but would cost about $300K to rebuild. Thus, if I rebuilt, I would have $330K into a house I could sell for $200K.

In fact, if my house burned to the ground, I would sell the lot for $30K and buy another similar house in the neighborhood which cost $200K, so that is all the insurance that I need (200K - 30K, or 170K). My insurance agent cannot understand this, "Why wouldn't you want to build a nicer home if yours burnt down?" In other word, insurance as a form of the lottery.

Full replacement insurance does not make sense for MOST people who live in a production home community like I do. There are always exceptions.
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Old 08-10-2014, 07:15 PM   #106
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While this is 100% true, it is misleading. Our house is worth about $200K (including land worth about $30K), but would cost about $300K to rebuild. Thus, if I rebuilt, I would have $330K into a house I could sell for $200K.

In fact, if my house burned to the ground, I would sell the lot for $30K and buy another similar house in the neighborhood which cost $200K, so that is all the insurance that I need (200K - 30K, or 170K). My insurance agent cannot understand this, "Why wouldn't you want to build a nicer home if yours burnt down?" In other word, insurance as a form of the lottery.

Full replacement insurance does not make sense for MOST people who live in a production home community like I do. There are always exceptions.

This has always been a sore point with me... Agent has no say in this with me, it's the insurance company itself. Heck I even have to pay for $50,000 of "out buildings" when I have none. It's built in profit for carriers forcing one to over insure.


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Old 08-10-2014, 08:04 PM   #107
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In fact, if my house burned to the ground, I would sell the lot for $30K and buy another similar house in the neighborhood which cost $200K, so that is all the insurance that I need (200K - 30K, or 170K).
Are you sure insurance would pay for this? I've been told they only reimburse "after" you rebuild or repair....

Would like to know if that is true.

Kindest regards.
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Old 08-10-2014, 09:04 PM   #108
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Are you sure insurance would pay for this? I've been told they only reimburse "after" you rebuild or repair....

Would like to know if that is true.

Kindest regards.
The insurance would still pay, but likely not as much as they would if the house were rebuilt. On large claims they hold back a % of the funds until repairs are completed. If repairs/rebuild is not done, then they don't pay the final %. However, since very few homes actually "burn to the ground" this is probably not a situation to even think about.
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Old 08-10-2014, 09:15 PM   #109
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This has always been a sore point with me... Agent has no say in this with me, it's the insurance company itself. Heck I even have to pay for $50,000 of "out buildings" when I have none. It's built in profit for carriers forcing one to over insure.


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So, it is not just DH and me!?!?! We questioned this years ago and I can't even remember the response. Obviously, it shut us up, but i still don't get it. We have no out buildings. Guess i keep envisioning a shed or something.
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Old 08-10-2014, 09:39 PM   #110
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So, it is not just DH and me!?!?! We questioned this years ago and I can't even remember the response. Obviously, it shut us up, but i still don't get it. We have no out buildings. Guess i keep envisioning a shed or something.
We have a 6 car detached garage. Heated, water, full bath. They tack 60k for replacement value, for us. So it's 50k for no building, but only 60k for a large one?

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Old 08-10-2014, 10:47 PM   #111
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Are you sure insurance would pay for this? I've been told they only reimburse "after" you rebuild or repair....

Would like to know if that is true.

Kindest regards.
If you have a "constructive total loss," in most states they are required to pay policy limits. It gets more complicated if you do not have a total loss. Most commonly, you will get the depreciated value of the damaged part of the building, and the rest will not come until the work is completed. However, it can get complicated depending on your policy.
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Old 08-11-2014, 06:39 AM   #112
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You think there is a difference between gambling at the casino, after-hours club or online as different from day-trading. Behavioral reactions and chances of coming out ahead are probably similar enough that it can be considered more or less the same thing I would think.
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Old 08-11-2014, 08:01 AM   #113
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So, it is not just DH and me!?!?! We questioned this years ago and I can't even remember the response. Obviously, it shut us up, but i still don't get it. We have no out buildings. Guess i keep envisioning a shed or something.
I'm a retired casualty actuary and we don't have any outbuildings, either! My take on it is that the outbuilding part of the premium would be really tiny if you strip it out. How many people have detached garages and storage sheds, how often are they destroyed and what would the likely damages be? So, the insurers just include the same % coverage for everyone knowing that it will be sufficient for the vast majority of their insureds, and knowing that the people with 6-car garages with chandeliers will make out like bandits if the garage burns down.

I did fight them on replacement value- it was getting silly. The agent went back to the insurance company, they sharpened their pencils, and they reduced the coverage, which decreased the premium by $300.
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Old 08-11-2014, 09:23 AM   #114
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Our agent claims that if we insure a place for less than the replacement value they assign that we are assuming some of the risk - that is, if they say a place is worth $500,000 and we insure for $400,000 and it burns we have assumed 20% of the risk, so they would only pay 80% of the $400,000 or $320,000. Same agent says if we don't rebuild that (AIR) depreciation is applied to the replacement cost, so taking walk away cash would be some fraction of the $320,000.

I guess I should be grateful we don't have to pay the insurance company for loss of revenue if one of our places burns down and we drop insurance.

Fire and liability insurance takes a massive cut of the rental income - I would love to self insure against fire and just carry liability, but calmer and more security oriented heads in the household prevail.
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Old 08-11-2014, 12:29 PM   #115
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A mistake in retirement that I see is people not planning for deterioration in various abilities as age progresses. Both my parents and my in-laws have made this mistake IMHO. Both couples moved to rural settings upon retiring, on acreage that needs maintenance, far distance to dr/hospital and groceries, no access to public transportation. We are the closest for my now widowed MIL at 45 min away. My sister is the closest to my parents @3 hrs away. I think planting yourself in the middle of nowhere with no plan for how to manage as your health deteriorates is just as irresponsible as managing your money badly. But I may be biased as I am in the middle of this situation right now.

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Old 08-11-2014, 01:03 PM   #116
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A mistake in retirement that I see is people not planning for deterioration in various abilities as age progresses. Both my parents and my in-laws have made this mistake IMHO. Both couples moved to rural settings upon retiring, on acreage that needs maintenance, far distance to dr/hospital and groceries, no access to public transportation.
I will add that it is just plain difficult when elderly parents choose to live far away from family. My 81 yo widowed MIL is in FL in a retirement community (been there 20 years now) far away from where any of her kids live. She is doing well enough but has had a few mini-strokes over the last year. We are worried sick about her being alone. She does have neighbors that regularly check in on her, but you can only expect neighbors to do so much. She doesn't have a lot of retirement assets outside of SS income and has no long term care insurance. Being so far away makes it difficult for us to help in any way. I send DH down her way a few times a year to fix any problems with the house and fly her up to us for a few weeks at a time. But she insists on staying there. If at some point we have to help pay for someone to come to her home for care, it will be really hard for us. We are in the throws of putting our kids through college, saving for our own retirement, etc. Money is tight. But I guess this is a common problem in America today.

I am so fortunate that my own parents live closer to us, have generous COLA'd federal pensions (both of them), as well as good LTC insurance.

So big mistake in retirement is not to plan for where you will live when eventual health issues start in. Many states away from family is probably not an ideal choice.
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Old 08-11-2014, 01:04 PM   #117
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A mistake in retirement that I see is people not planning for deterioration in various abilities as age progresses. Both my parents and my in-laws have made this mistake IMHO. Both couples moved to rural settings upon retiring, on acreage that needs maintenance, far distance to dr/hospital and groceries, no access to public transportation.
Actually, I've been thinking about this, myself. In the next 5-6 years which will put me around 49-50, I want to move to the next county over, where it's more rural. I figure at least 1500-2000 square feet (not including basement), at least two acres, and at least a 2 car garage with the space to build two more bays at the minimum.

But, I'm not going to be able to maintain all that crap once I'm into my 70's, I'm sure. I'm guessing my priorities will definitely change, as my capabilities are reduced.

The place I'm at now is on about 4 1/4 acres, but it's also fairly close to civilization, public transportation, etc. And, it's mostly woods. I can ride around on the tractor and cut the grassy part in about an hour and a half. And, if I had to, there are parts of the yard I could just let return to nature. So who knows? Where I'm at now might actually make more sense, as I get older. I'm getting the itch to move, though...
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Old 08-11-2014, 01:10 PM   #118
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A mistake in retirement that I see is people not planning for deterioration in various abilities as age progresses. Both my parents and my in-laws have made this mistake IMHO. Both couples moved to rural settings upon retiring, on acreage that needs maintenance, far distance to dr/hospital and groceries, no access to public transportation.
I agree. I saw this early on; the parents of a college BF bought a house with a lot of acreage. His Dad wasn't in very good health (didn't take very good care of himself) so every weekend my BF would drive from Cincinnati to Indianapolis to mow the lawn (riding mower but apparently even that was too much for Dad) and then drive back at some weird hour to get to his job as a night auditor in a bank. I accompanied him many times.

DH and I are looking at downsizing right now and a big priority is low maintenance. That includes a small lawn and a short driveway! I want to be able to do things myself for as long as possible (DH is 76 and already has some limitations) and don't want a house or yard that will take a lot of money to maintain if I have to hire people in the future.

Another factor in deterioration is the cost of hearing aids, extensive dental work, eyeglasses, etc. I just had work completed on 2 dental implants. They're great, but not affordable on SS alone. The generation that's hooked on loud car stereos and headphones turned up so high people next to them can hear the music is going to need hearing aids. Wait till they find out what good hearing aids cost. A lot of these my not be necessities (at least in their deluxe form) but they sure improve the quality of life.
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Old 08-11-2014, 01:19 PM   #119
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A mistake in retirement that I see is people not planning for deterioration in various abilities as age progresses. Both my parents and my in-laws have made this mistake IMHO. Both couples moved to rural settings upon retiring, on acreage that needs maintenance, far distance to dr/hospital and groceries, no access to public transportation. We are the closest for my now widowed MIL at 45 min away. My sister is the closest to my parents @3 hrs away. I think planting yourself in the middle of nowhere with no plan for how to manage as your health deteriorates is just as irresponsible as managing your money badly. But I may be biased as I am in the middle of this situation right now.

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Excellent point.
We're sandwiched right now. My FIL just passed - but prior to that he and MIL lived with us part of the year- but wouldn't commit to full time assistance because MIL didn't like CA. (She liked our casita/granny flat - but wanted it elsewhere.) MIL is now living near my SIL, but wants to live near 3 BILs. Those BILs are unable or unwilling to give her the support she needs at her age - but she is insistent. I say we're sandwiched because not only is my husband caring for his mothers finances and legally her guardian, we have minor kids at home.

DH is also my contractor-in-chief... We put in a paver driveway a month ago - and he's in the middle of changing out 5 second story windows. At age 62 he's realizing his body can't take this indefinitely.... So he's stepped up the "to do" list schedule for the house to get it all done before he's 70. Physically he won't be able to be putting in new windows, tearing out walls and plumbing to relay out the bathroom, etc.

As we get older, we need to acknowledge we'll need help. MIL didn't get the memo, DH is determined not to repeat her mistakes.
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Old 08-11-2014, 01:23 PM   #120
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RE: Parents far away

At least they can sometimes learn...

DD lives in central Florida and has made statements along the lines of I like it here, I'll never leave, I hope I die here.

Well, after his recent open heart surgery where all his kids made special travel arrangements to visit him in the hospital and during his rehab, he started changing his mind and is saying that when the time comes he'd be willing to move to a city where a few of his kids live to make it all a bit easier on everyone.

Of course, OTOH DM just moved from a house that was a few miles from me and my sister, to south Florida with no relatives anywhere to be found. We'll see how that all works out.
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