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Thinking of Moving to the Big Island of Hawaii
Old 03-15-2014, 08:01 AM   #1
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Thinking of Moving to the Big Island of Hawaii

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
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Thinking of Moving to the Big Island of Hawaii
Old 03-15-2014, 08:21 AM   #2
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Thinking of Moving to the Big Island of Hawaii

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.
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Old 03-15-2014, 10:20 AM   #3
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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....
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Old 03-15-2014, 10:48 AM   #4
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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.
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Old 03-15-2014, 10:56 AM   #5
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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.
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Old 03-17-2014, 08:02 PM   #6
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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.
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Old 03-17-2014, 09:37 PM   #7
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I would never retire in Hawaii out of principle. They don't tax public pensions but do tax private pensions and 401K withdrawals.
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Old 03-18-2014, 12:16 AM   #8
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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 %
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Old 03-18-2014, 05:55 AM   #9
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It is very low I think.
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Old 03-18-2014, 08:00 AM   #10
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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.
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Old 03-18-2014, 08:12 AM   #11
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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.
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Old 03-18-2014, 09:29 AM   #12
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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
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Old 03-18-2014, 09:44 AM   #13
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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.
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Old 03-18-2014, 03:47 PM   #14
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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.
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Old 03-19-2014, 10:55 AM   #15
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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.
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Old 03-19-2014, 11:10 AM   #16
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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.
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Thinking of Moving to the Big Island of Hawaii
Old 03-22-2014, 08:52 PM   #17
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Thinking of Moving to the Big Island of Hawaii

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.
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Old 03-22-2014, 09:51 PM   #18
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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.
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Old 03-22-2014, 10:00 PM   #19
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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.
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Old 03-22-2014, 10:35 PM   #20
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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.
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