Thinking of Moving to the Big Island of Hawaii

[ShokWaveRider]

I FIRE'd last year at 59, I am now 60 and DW is 55. She still works currently because she gets healthcare. Her income is not huge, but healthcare is good. $20 Copays and $1500 total OOP Per family member (Only 2 of us)

Keiser is on the Big Island and we used to have Keiser in California when we lived there and liked it.

We currently live in North West Florida, very comfortably. House Paid for (~$600k) no debt, reasonable stash in Taxes and pre-tax accounts.

We like the idea of a slower pace and really need to downsize a bit, current place is 3300 sqft. We rattle around in it and only used about half of it. But we like the development and view from where we live, (Gated, CC environment).

Saying that, we like the Big Island, and are trying to get away from Winters all together. I am simply allergic (Tongue in cheek) to the cold and never leave the house unless it is over 70* outside.

I have read and read about the Big Island and watched every HGTV house hunters show about it. Homes seem so much cheaper on HGTV than what I see on Zillow. But we will rent for a year or so before we choose to buy.

We can control out taxable income and keep it low to end up with $40k - $50k after taxes. Is that feasible?

Anyone here live there? Or in Hawaii in general and can shed some light? We pretty much keep our own company, and will not really miss the mainland as long as we can order stuff from Amazon and such like, have good HS Internet and Cable and live within a few miles of the beach with great views. Family is all in Canada and the UK and there is not much of it left. We have no kids or grandkids ourselves.

Thanks SWR

 

[seraphim]

If your not familiar with city-data.org (maybe .com, can't remember) they provide statistical information for cities and forums designed to give you contacts with residents of that city. You might get more helpful dialogue there.

I'm a cold-weather person myself lol.

Added: it's .com

Www.city-data.com

Then locate the city you're considering moving to.

 

[Texas Proud]

I saw a show about the big island.... and IIRC, most of the houses were off grid... one was in the middle of a lava field....


The episode from Kuai was also off grid... not great construction IMO... except for one which was more expensive...


However, you view of a reasonable cost and mine are WAY different... around where I live, you are in a pretty big McMansion for $600K... I am in a decent house for less than $200K....

 

[imoldernu]

Missed "of Hawaii" Wasn't sure about "big Island"... From the FL address, was thinking Cape Coral, and there, you can buy a Mansion for about $300K, w/ canal access to the big lake.

 

[ShokWaveRider]

Cape Coral, and there, you can buy a Mansion for about $300K, w/ canal access to the big lake.

That is assuming you want to live in Cape Coral (or Port Charlotte, Punta Gorda and Fort Myers for that matter). Lots of homes damaged in Hurricanes, Insurance costs very high. VERY humid and hot. We have looked.

The West Coast of the Big Island so far is about the best I have found but at a cost.

As the gent mentioned above also about Texas, if you want to live there applies also. I have a lot of Friends who do and they are paying ~$18k per year in taxes outside Houston. My head office for years was in Texas so I am also quite familiar, for us not a contender. Unfortunately $500k is average in our area.

Would lover some info about the Big Island of Hawaii West coast in particular, as the Original Post solicits.

 

[RNwastash]

My SIL moved to the Big Island two years ago. They initially bought a 2b2ba condo and rented it out. One year later, she moved there and got herself a full time job so she wouldn't get bored. She is only 58. She seems very happy.

 

[Fermion]

I would never retire in Hawaii out of principle. They don't tax public pensions but do tax private pensions and 401K withdrawals.

 

[Turboslacker]

I would never retire in Hawaii out of principle. They don't tax public pensions but do tax private pensions and 401K withdrawals.

You mean a yearly State income tax on 401k withdrawals? What %

 

[ShokWaveRider]

It is very low I think.

 

[Fermion]

It is very low I think.

If you call the top rate of 8.25% low then Hawaii is probably the perfect fit for you.

 

[ShokWaveRider]

If you call the top rate of 8.25% low then Hawaii is probably the perfect fit for you.

for the amount I will be taking out of my IRA for the next 5 years it would be about 4% 80% of our stash is on AFTER tax money.

 

[Fermion]

for the amount I will be taking out of my IRA for the next 5 years it would be about 4% 80% of our stash is on AFTER tax money.

That might not be too bad then. It would just always bug me that I was being treated so unfairly compared to others with identical income.

Person A in Hawaii with a $48,000/yr public pension pays $0 of Hawaii state income tax.

Person B in Hawaii who was fed a 401K by their company in lieu of a pension pays $2,707.20 to Hawaii for the privilege of having a 401K over a public pension.

Person A can afford to go to quite a bit more luau parties than person B.

Hawaii Income Tax Brackets 2014

 

[Ready]

Many years ago I visited the Big Island and went to visit a new home community that was just being built. It was in Waikoloa Beach, and the name of the complex was Hali'i Kai. They had some beautiful 2,000 square foot condos overlooking the ocean, with prices in the $2M+ range. They were well appointed with Subzero refrigerators and Viking appliances, outdoor lanais with stainless steel built in barbecues, granite and stone throughout, etc. Aside from the crazy selling prices, the HOA fees were $1,800 per month. Years later the housing market crashed, and we went back to visit the place. Prices for the lower end units were selling for $400K. The ocean front units were still a bit over $1M.

Almost everyone who bought only lives there part time, and so you can rent these places on VRBO for around $300-$400 per night. With so many available, I'm sure some of the owners would negotiate. You can see a sample of one of these units here:

Hali'i Kai Vacation Rental - VRBO 153709 - 2 BR Waikoloa Beach Resort Condo in HI, Experience Oceanfront Luxury Villa - 200 Feet from Ocean!!!

About two years ago we went back to the Big Island, and looked at more moderate homes in the Kona area. No ocean view, but only about 2 miles to the beach. They were around 1,600 square feet and were selling for approximately $400K. I'm guessing by now they would be in the $500K range. They looked like standard tract homes, and there was no swimming pool or other resort style amenities like Hali'' Kai, but the monthly fees were much lower - maybe around $400.

We have always dreamed of having a second home on the Big Island, but when even a modest tract home with no amenities cost $500K, it's hard to justify. I could stay in one of those ocean front condos for six months per year and likely negotiate the rate down to about $6,000 per month, or $36,000 annually. The owners of those condos will pay $1,800 x 12 in HOA fees just to own it before they spend their first day there.

So after lots of research, we concluded that renting on VRBO, even if for six months out of the year, is far more desirable than owning a place.

Now, if we were ready to move there full time, the situation would be different. I suspect we could find something we would be very happy with. The weather in the Waikoloa area is near perfect year round. But if you go north a bit to Waimea, it gets cold very quickly. I remember reading there are 11 microclimates on the Big Island. Head over to Hilo and you will have more rain than Seattle or Portland. Something like 180 inches per year - crazy.

I would definitely rent for a year and look around the island before committing. It could be a fantastic place to live, but I would want to know as much about the island as possible before buying anything.

 

[clifp]

I would never retire in Hawaii out of principle. They don't tax public pensions but do tax private pensions and 401K withdrawals.

That isn't exactly true. Hawaii only taxes the employee portion of a pension or 401K. So if you have a pension from private employer that you didn't contribute to the state doesn't tax it. However, the portion that you contribution toward an pension is taxed. The same applies to things like employee match. When I left Intel, I rolled Intel's contribution to my 401K to one IRA and my contribution and earnings into a second IRA. My withdrawals from the first IRA aren't subject to state taxes but are from the second one.

 

[tulak]

That isn't exactly true. Hawaii only taxes the employee portion of a pension or 401K. So if you have a pension from private employer that you didn't contribute to the state doesn't tax it. However, the portion that you contribution toward an pension is taxed. The same applies to things like employee match. When I left Intel, I rolled Intel's contribution to my 401K to one IRA and my contribution and earnings into a second IRA. My withdrawals from the first IRA aren't subject to state taxes but are from the second one.

Was it strictly the dollar amount of employee contribution that isn't taxed or does it also include the gain?

It seems like the latter would be hard to calculate.

Ah, I just reread your post and it sounds like it excludes the gains. In that case it wouldn't be too bad. The only downside is that employer contributions tend to be a lot less than individual contributions and gains.

 

[Fermion]

That isn't exactly true. Hawaii only taxes the employee portion of a pension or 401K. So if you have a pension from private employer that you didn't contribute to the state doesn't tax it. However, the portion that you contribution toward an pension is taxed. The same applies to things like employee match. When I left Intel, I rolled Intel's contribution to my 401K to one IRA and my contribution and earnings into a second IRA. My withdrawals from the first IRA aren't subject to state taxes but are from the second one.

It is a pretty horrible double standard IMO. Today you have a lot of employers cutting out the 401K match, meaning all of the 401K would be taxed by Hawaii standards.

They do not say they will tax the employee portion of a local, state or federal pension.

How this got past the voters is beyond me, but there it is. The only choice if you don't like the unfairness is to not contribute to their tax base. You will never get the law changed.

 

[Silvery Moon]

I don't live there, but I can suggest you read a book: Affordable Paradise; the Secrets of an Affordable Life in Hawaii, by H. Skip Thomsen. It's a decent read with lots of practical advice from someone who has already made that journey.

 

[clifp]

Was it strictly the dollar amount of employee contribution that isn't taxed or does it also include the gain?

It seems like the latter would be hard to calculate.

Ah, I just reread your post and it sounds like it excludes the gains. In that case it wouldn't be too bad. The only downside is that employer contributions tend to be a lot less than individual contributions and gains.

The public employees union is very very strong here which is probably why the law was enacted.

The theory for not exempting employee contributions or gains is you got a deduction when you contributed the money to the 401K,enjoyed decades of tax deferred gains and now have to pay taxes on previously untaxed income and investment gains.

 

[Fermion]

The public employees union is very very strong here which is probably why the law was enacted.

The theory for not exempting employee contributions or gains is you got a deduction when you contributed the money to the 401K,enjoyed decades of tax deferred gains and now have to pay taxes on previously untaxed income and investment gains.

Except the theory doesn't work because most pension plans require very little actual contribution from the employee, and the employer gets to deduct their contribution to the pension plan. Thus you have the same or even better tax deduction with a public or private pension plan.

I mean if person A has a 401K and contributes $10,000 a year, reducing their taxable earnings from $70,000 to $60,000 while person B has a pension plan that effectively contributes $10,000 for them and they only have a base pay of $60,000.

 

[clifp]

Except the theory doesn't work because most pension plans require very little actual contribution from the employee, and the employer gets to deduct their contribution to the pension plan. Thus you have the same or even better tax deduction with a public or private pension plan.

I mean if person A has a 401K and contributes $10,000 a year, reducing their taxable earnings from $70,000 to $60,000 while person B has a pension plan that effectively contributes $10,000 for them and they only have a base pay of $60,000.

I am not arguing that system is fair. The fair thing would to be tax all pension income just like wages and interest.

States compete for affluent retirees, who don't need jobs, and generally don't have kids in school and until they are really old generally contribute more to an economy than they consume. Exempting most pension income makes Hawaii more affordable to state workers and military retirees so it was smart politics.

I'm simply pointing out the system isn't as bad as you said. If you don't want to retire here as matter of principal, that is fine. There are plenty of us who like retiring here.

 

[Fermion]

I'm simply pointing out the system isn't as bad as you said. If you don't want to retire here as matter of principal, that is fine. There are plenty of us who like retiring here.

I would like to have the option of retiring there but Florida is good enough and they are a little more fair on taxes. I can always visit Hawaii without sacrificing principal or principles.

 

[FIGuy]

Bit late on the reply, but the parents are currently retiring to the big island so I can offer that experience. They bought a big chunk of land for a pittance in the Puna region on the East side.

Hawaii probably has the biggest range of cost of living of any US state. Everyone knows how expensive it can be, but few consider how cheap off-grid living can be in a tropical climate. The East side of the island gets a lot of rain, mostly at night, and is truly a rain forest in parts. Solar PV, rainwater harvesting, and wireless internet have really changed the game there. It was pretty rough 20 years ago and is rapidly turning into a retirement destination in my opinion.

 

[heyyou]

Affordable Paradise; the Secrets of an Affordable Life in Hawaii, by H. Skip Thomsen.

Yes, that one and look for the latest edition. It explains the numerous microclimates where you can choose your neighborhood temperature and precipitation by its altitude and position relative to the trade winds.

Another resource is Punaweb Home where you can read the forums about what stirs the locals in that district.

Hilo is a blue collar town with a protected bay, two colleges, the county seat, and significant ethnic groups. The daytime rain there is warm so the locals just get wet. The bay is nice for swimming and fishing, and there are numerous parks fronting the ocean on Kalanianaole Street.

This is where we stay Kohala Guest House Big Island of Hawaii Vacation Rental North Kohala Hawaii Vacation Rental on the northern tip of the island when we want to pretend that we are living on Big Island. It is a half mile to a beach park that has waves from Alaska beating on lava rocks and cliffs, so you have to drive elsewhere for swimming beaches.

An MLS real estate search site: AlohaLiving.com Property Search Property Search that helps you see the differences in the prices in different districts. Some are very exposed to new lava flows and priced accordingly.

Look for maps that show Big Island precipitation and other ones that show lava risk.

 

[Ready]

The Big Island is my favorite island in Hawaii. In fact, I'll be vacationing there as of this Saturday. If anyone is living out there on the forum, let me know if you have any good locals advice for me.

 

[Koolau]

Late to the party - again.

Couple of comments to OP. Big Island is thought to be the least expensive island for housing - which is the biggest single component in most folks expenses who live here in the Islands. As always, there is a reason the houses are less expensive. Big Island has MUCH more land than the other islands. Also, Big Island is "less desirable" in terms of features/amenities most folks want in their living area (see below for some examples).

In addition to Skip Thompson's book (which focuses on living on the Big Island) I would suggest Tony Polancy's book "So You Want to Live in Hawaii"
So You Want to Live in Hawaii: Toni Polancy: 9780966625301: Amazon.com: Books
Her book gives you a lot of details about the issues of living in all the Islands (the good and the not so good).

I love the Big Island - to visit. It is a very interesting place with lots of different features to view and experience. It's just too laid back for me. There is not much to do other than to enjoy the weather and explore the beauty of the Island. If you can exist on that (and not get rock fever) more power to you. I couldn't. I like my paradise a little "spoiled". I'm willing to pay for it.

Health care would be an issue to me. For many procedures (and even tests) one must fly to Oahu. While you are healthy, that should not be a major issue, but emergencies can be more life-threatening. Air ambulance runs are fairly common as I understand it. Check for yourself.

By the way, do you know what "VOG" is?

Costs OTHER than housing tend to be rather much higher on Big Island (as well as all the Islands other than Oahu). Makes sense. Almost every thing comes to Oahu FIRST on container ships or other cargo vessels. THEN it gets barged to the other Islands. IIRC, gasoline is only produced on Oahu, so our $4.25 gas could be $5 on Big Island (don't quote me - google it). Electricity which is outrageous on Oahu is worse on the other islands - if you can get it.

Several folks have complained about the "unfairness" of the private pension taxation. Two things. They are incorrect. Private AND public pensions are NOT now taxed in the islands. True, 401(k) distributions are taxed. I wish they were not, but I don't see anything unfair about that. All states have tax needs (and wants) and they decide how to extract that money from their citizens. If folks really want to change the system, they can do so - though Hawaii is like all states. Citizens want more "free" stuff, not less. My biggest complaint about Hawaii taxes is the same as fed taxes. They are often wasted. But that could be construed as "political", so I won't pursue it further. Suffice to say that Hawaii is a relatively high tax state - BUT for retirees, there are several tax breaks (larger RE exemptions, no pension OR SS taxes, BUS passes cheap for 65+, etc. etc.) We LOVE our keiki and kupuna in the Islands.

Sounds like SWR has spent some time on Big Island. A very good way to determine if it is for you. I suggest renting first, just in case it doesn't work out. I also suggest looking at other islands - just for fun, or to see if you might be missing something. Good luck and, as always, YMMV.