Portland Thom Wants to Ease Out

[pdxthom]

Greetings:

I'm 55 and still working in Portland, OR. I am married with three grown children. Here's the bottom line:

1. Housing: We have successfully raised three children in a house we bought in 1989 when we moved here. We owe about $185K on it and it's time to get out. It is now more house than we need, and with rise in property tax, we cannot afford to stay. It is in a desirable neighborhood, but while it might have sold for $850K 3 years ago, we will feel fortunate to get $750K. Therefore, when it sells in the next year (we hope), we will be sitting on between $400K and $500K. No gains taxes, we will be able to qualify with improvements, etc.

2. Employment: I work as middle school teacher, a career I started in 2006 at the age of 50! With teaching at night one night a week and my bride working halftime, we make a bit over $49K.

3. Debts: about $12K in consumer debt. Too high, and working hard to pay it down; in the next month it should be down to $9K. House sale would wipe it clean, and we've learned our lesson.

4. Pension: For 30 years I worked in the entertainment industry and as a result will have two pensions at retirement at age 65. I haven't calculated the spousal benefit reductions in the pension,(you know, all the pop-ups if we take less so my wife can have survival benefits) but without all the pop-ups the straight pension adds up to about $4800 monthly. Social security for me (HA, if it's there) would be $2000 a month (and I think my full retirement age is 68). For the bride, about $900. In addition, I have about $50K in a straight taxable IRA, right now sitting in cash because as a teacher here in Oregon I could be out of a job at any moment, and my seniority is only 4 years and I'm an arts teacher. We have no cash savings so that $50K was the life raft. Once we get out of the house it can be put to better use.

5. Inheritance: We stand to gain between $500-600K, providing our beneficiaries still have estates at the time they meet their makers. They are all elderly, and we're happy they're still with us. If the should need long, long care then we will not inherit and those assets will be used for them. So that really can't be counted on.

5. GOALS

Okay, here it is. We'd like to sell the house, and rent for a few years, investing the capital in income producing instruments. Ideally, I'd work one or two more years full time, and then switch to half time, where our income before investments would be about $28K. I think we could do it on that. We'd continue to rent unless we came into an inheritance, when we might buy a townhouse. Halftime until 65, and then retirement, and probably out of Oregon because of COL.

Do you think this "semi" early retirement pencils out? Where would you invest the cash for the safest return, and what kind of yearly income do you think we could produce off $400K or so?

Sorry for the long post, but there it is.

Thanks!~

[knucklehead 61]

high cost of living in Oregon? it is dirt cheap compared to California!
you have no sales tax, we have 9.25%
you have cheap prop tax, ours is crazy high! (almost $14,000 / yr on our house)
we plan to move to one of our rentals in Cottage Grove Oregon in a few years when i pull the plug on my career.
where do you think you can go that is cheaper with a better quality of life than Oregon?

[pdxthom]

Quote:

Originally Posted by knucklehead 61 high cost of living in Oregon? it is dirt cheap compared to California! you have no sales tax, we have 9.25% you have cheap prop tax, ours is crazy high! (almost $14,000 / yr on our house) we plan to move to one of our rentals in Cottage Grove Oregon in a few years when i pull the plug on my career. where do you think you can go that is cheaper with a better quality of life than Oregon?

Uh huh. I know. That's why we moved out of California. But guess what? There are lots of places in the United States with a good quality of life, and low property taxes, and low sales taxes without 9% income tax .

So, I'm glad for you that you are coming to Oregon when you retire. Good for you! We are leaving the State. But that wasn't really my question. But thank you anyway for your response.

[militaryman]

Sorry ... Did u mention health Insurance in there? If not, What is your plan for that? Living on 28k is doable if you have a place to live (paid for) and health insurance....

Renting and living on 28k a bit tougher even with Health Ins.

What kinda sticks out to me is that you indicate selling your house in the real estate market slump but not buying in the slump. To me I have always not really cared whether the real estate market was much up or down because I figured if I did sell and someone got a deal on my house that I would certainly have a contract on another house that I was getting a deal on. But what you describe is the possibility of taking a big hit on your sale and then waiting for the real estate market to recover before buying your replacement. That would make me a bit nervous.

Other than the above noted concerns I think your in good shape and have some nice options as long as you can maintain health ins. until medicare age.

[walkinwood]

Please read Bob Clyatt's Work Less Live More and at least one of the John Bogle or William Bernstein's books. Also, use FireCalc (see link at bottom of page) to see if your plan works.

[homestead]

Quote:

Originally Posted by knucklehead 61 high cost of living in Oregon? it is dirt cheap compared to California! you have no sales tax, we have 9.25% you have cheap prop tax, ours is crazy high! (almost $14,000 / yr on our house) we plan to move to one of our rentals in Cottage Grove Oregon in a few years when i pull the plug on my career. where do you think you can go that is cheaper with a better quality of life than Oregon?

What some do is live in washington just across the river from oregon where there is no income tax and do their shopping in oregon where there is no sales tax.

[calmloki]

Yep - hop across the bridge to Portland and the Costco off airport way. (i luv Costco)