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Purchase list when approaching RE
Old 04-21-2013, 08:41 PM   #1
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Purchase list when approaching RE

Just curious if there has been discussion here about purchases to make in the year or two leading up to RE? Do people replace appliances, AC, vehicles and some of those type of expenses in the year or two before retiring?

I run my own business and our goal is to RE anywhere from 44-50, depending on market conditions and our portfolio value, if things were down significantly, I would continue until a time when it made sense to step away.

Just wondered if it was a good idea, or if there was a standard approach to cash flow replacement of some of those items that may be nearing replacement age prior to retirement?
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Old 04-21-2013, 08:48 PM   #2
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I think I have a line item of $5,000 per year in my Budget for replacement items.

I figured I would have more time in ER to do the work myself rather than try to outsource it before ER.

Not sure if there has been a previous discussion of this here or not.

-gauss
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Old 04-21-2013, 08:50 PM   #3
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It is a good idea to get a physical right before giving notice, in case you have some dire medical condition.

Personally, I put aside money for a new car upon retirement. I was ready for one anyway, since I had driven my prior car for over a decade. But still, replacing my car was not really necessary so much as fun.

To the best of my recollection I didn't replace anything else when approaching retirement. Some people go on a big trip right after they retire, but I didn't want to.
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Old 04-21-2013, 08:53 PM   #4
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For sure, a new set of golf clubs.
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Old 04-21-2013, 09:07 PM   #5
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rocking chair for the front porch
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Old 04-21-2013, 09:29 PM   #6
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rocking chair for the front porch
Now that's a good investment. Great return for your money
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Old 04-21-2013, 10:07 PM   #7
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Shhhh...wife will want a front porch if I suggest the rocking chair!
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Old 04-22-2013, 08:02 AM   #8
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We bought our "near to" dream retirement home 2 years before I retired. DH still works. I just love spending time at home esp with a fully equipped kitchen since I like cooking.
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Old 04-22-2013, 08:15 AM   #9
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It is a good idea to get a physical right before giving notice, in case you have some dire medical condition.
Agreed historically, and still true to some degree today, but I think PPACA makes this less of a concern than it was before July 2012 (at which time COBRA could get you all the way into 2014). That said, if you can't afford COBRA this still very much applies, because you won't be able to get other individual or short-term health insurance to get you to January 2014 if you have a significant medical condition that can be excluded (or deny issuance of a policy altogether).

In my case COBRA would have cost $968 per month compared to the $320 per month I'm paying on a short term policy through January 2014, and that's not chump change. That said, if 7-8 months of higher COBRA premiums are enough to break a retirement plan, you may not be ready...
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Old 04-22-2013, 10:00 AM   #10
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Agreed historically, and still true to some degree today, but I think PPACA makes this less of a concern than it was before July 2012 (at which time COBRA could get you all the way into 2014).
Although I respect your opinions, I do happen to disagree with this one because I think you are only considering the insurance/PPACA payments and not the real life cost of dire illness. Just because one has insurance does not mean that there are zero financial repercussions related to dire illness.

Just the frequent trips to MD Anderson for cancer treatment can use up one's entire paycheck for airfare and motel for one's spouse, for example, before you even think about paying for treatments. In the first year of retirement you don't want to have an unexpected multi-thousand dollar obligation like that. If you are still working you still have a paycheck coming in to pay it off, without raiding the nestegg.

In my opinion it works just fine to retire with your eyes closed to any unknown medical conditions.... as long as you don't have any.
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Old 04-22-2013, 10:03 AM   #11
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Although I respect your opinions, I do happen to disagree with this one.

Even among those of us who have the much trumpeted supposedly gold-plated federal employee/retiree medical insurance, it is normal to get a medical exam just before retirement. That is because no insurance that I know of (much less Obamacare or Medicare) is going to leave you with smooth sailing and nothing significant to pay out-of-pocket in the event of some dire disease or condition.
I'm not saying it doesn't make a difference -- just that it's changing to not be the extreme "make or break" it used to be. Of course it's good to get all your medical "ducks in a row" while you still have subsidized employer insurance. My point was only that we aren't nearly as exposed to calamitous financial ruin because of having a pre-existing condition that can't be insured.

In other words, it's not quite the 800 pound gorilla moving forward, but perhaps more like a 200-pound baboon.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 04-22-2013, 10:13 AM   #12
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I'm not saying it doesn't make a difference -- just that it's changing to not be the extreme "make or break" it used to be. Of course it's good to get all your medical "ducks in a row" while you still have subsidized employer insurance. My point was only that we aren't nearly as exposed to calamitous financial ruin because of having a pre-existing condition that can't be insured.

In other words, it's not quite the 800 pound gorilla moving forward, but perhaps more like a 200-pound baboon.
LOL! While you were writing this, I was deleting the paragraph you quoted because I thought it was distracting from my main point. And it was. Oh well.

Yes, I DO think that avoiding an unexpected, unreimbursed $5K-$10K or more when just barely retired can make a huge, huge difference, and is worth one piddly little doctor visit beforehand. But YMMV.
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Old 04-22-2013, 10:17 AM   #13
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Yes, I DO think that avoiding an unexpected, unreimbursed $5K-$10K or more when just barely retired can make a huge, huge difference, and is worth one piddly little doctor visit beforehand. But YMMV.
As do I. Maybe I misunderstood, but I parsed this:

Quote:
in case you have some dire medical condition.
in terms of developing some new expensive medical condition that could render you uninsurable in the future. It is *that* aspect which is now mostly a memory if you can bridge your coverage into 2014. I hadn't meant to suggest that taking care of current and expensive medical needs while you have good, subsidized insurance isn't important.
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Old 04-22-2013, 10:36 AM   #14
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I am not planning on purchasing anything, but I am setting aside dollars from my portfolio for a couple of "big ticket" replacement items before calculating my "success rates, etc". I have $135k set aside for 2 "new to me" used cars, a roof, a new central AC, home "upgrades" and $5k for a pet emergency. This is in addition to a $3k / year budget for "one time items" (replacment appliances, etc).

I would hestitate to replace items before they need replacing and resetting the depreciation clock. With my method there's actually a chance that the money will grow before I need to use it.
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Old 04-22-2013, 10:38 AM   #15
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Retiring in the next 4 years. We are spreading out several remodel efforts to our home to get that out of our system prior to RE. New floors, new paint, new tile, new appliances, and several other items. Also plan to go into RE with 2 cars that are not very old.

I had not thought about a big celebration trip early on in RE but I like the idea. So maybe I'll plan for that.

As for a physical that seems like a very good idea. I already do this every year as a perk from w*rk so that is just routine for me.
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Old 04-22-2013, 10:40 AM   #16
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I was more busy getting rid of excess things and junk that I owned. I planned to do some travel so I bought a few special things for that, but mostly right after I retired.

Before I retired, I also wanted to make any charitable donations of stuff while still in a high tax bracket.

I opened extra bank accounts so I would have good and diverse ATM/debit cards for extended travel that charged low to no foreign transaction fees. Get any credit cards you need while still working and have an "income".
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Old 04-22-2013, 10:51 AM   #17
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Personally I plan on setting aside some extra funds to cover these lumpy expenses. I'm aiming to ER within 3 or so years. And I know I'll likely need a new roof, new siding (or at least partial replacement and paint), and new(er) car(s) within 5 years or so. HVAC will be 13 years old at the intended ER date, so I would probably budget for replacing it too.
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Old 04-22-2013, 11:12 AM   #18
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Personally I plan on setting aside some extra funds to cover these lumpy expenses. I'm aiming to ER within 3 or so years. And I know I'll likely need a new roof, new siding (or at least partial replacement and paint), and new(er) car(s) within 5 years or so. HVAC will be 13 years old at the intended ER date, so I would probably budget for replacing it too.
Our budget includes about $5K per year in setting money aside for major repairs, car purchases, that sort of thing. Though in reality, we are not on the hook for major home repair expenses in our current situation.

Also, DW gets reimbursed for mileage with church business -- attending regional meetings and conventions, running errands to buy things for the church, home communion and nursing home visits, hospital visitation. This is at something like 56 cents a mile, and we put every penny of that reimbursement into a separate account dedicated to car repair and replacement.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 04-22-2013, 11:37 AM   #19
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I think I have a line item of $5,000 per year in my Budget for replacement items.
We have $10K/year in our budget, but that includes replacing cars, home maint/repairs/remodeling, furniture/applicances, consumer electronics (PC, TV, etc.).

I didn't worry about purchasing anything before retiring. I expect to be retired for 30-40 years, so I'll still be replacing "stuff" for many years.

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It is a good idea to get a physical right before giving notice, in case you have some dire medical condition.
+1. I did too, wanted to know if I had any serious issues before notifying my employer of intent to retire.
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Old 04-22-2013, 02:11 PM   #20
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Perhaps open a HELOC before you don't have a salary to put on the loan application.
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