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Curious how others handle principal residence...
Old 10-08-2017, 01:25 PM   #1
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Curious how others handle principal residence...

... in calculators like FireCalc and its impact on "allowable" spending.

Personally I have not included house value by selling it at some future date as a lump sum payment a la FireCalc. Thus, house becomes a substantial $ amount for margin of error spending in later (much) years.

Still, makes me wonder if I am being way too conservative on spending...
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Old 10-08-2017, 01:27 PM   #2
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I ignore it as I have no plans to downsize or sell. If I did, I would enter the downsizing benefit in other portfolio changes.
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Old 10-08-2017, 01:59 PM   #3
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I agree with pb4uski. I don't include it. It's our plan D or E if one (or both) of us needs to go into a nursing home for an extended period of time. At that time our spending number is so much more...

FWIW - our house, because of our overpriced real estate market, is about 1/3 of our net worth - but not considered at all in firecalc.
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Old 10-08-2017, 02:10 PM   #4
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WE look at our house as a plan B if we decide to downsize further to a small condo. We set our yard up to be low maintenance with astro-turf, etc so could hire out the little bit of work to be done if necessary. Mostly we don't think about it.
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Old 10-08-2017, 02:11 PM   #5
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Can't eat my house, so I see no point including it in my spendable portfolio.
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Old 10-08-2017, 02:16 PM   #6
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I suspect most don't include it.

But a few a deliberately planning to downsize after retiring, and these folks may include part of the value of their home to count on for future retirement assets.
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Old 10-08-2017, 02:17 PM   #7
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I don't include it, but realistically if we get so sick that we must live in assisted living, it becomes my backup plan to cover the LTC costs so that I don't have to pay for LTC insurance.
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Old 10-08-2017, 02:30 PM   #8
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We're in the don't include camp. It is our LTC insurance if the need arises to prevent emptying our retirement portfolio for the remaining spouse who would then have enough for their remainder of life.
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Old 10-08-2017, 02:40 PM   #9
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We include our primary residence because we consider Estate ďdeathĒ taxes and inheritance taxes from our estate in our planning. Weíre just below the threshold for the federal estate tax and assume we may cross it. Our kids will definitely pay inheritance taxes for Pennsylvania unless we eventual change states.
We also like the bigger number on our spreadsheets!
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Old 10-08-2017, 02:40 PM   #10
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I don't include it, but realistically if we get so sick that we must live in assisted living, it becomes my backup plan to cover the LTC costs so that I don't have to pay for LTC insurance.
+1.

We looked at LTC insurance, but think they are, at best, a mediocre value. Deductibles, co-pays, and caps all water down the policy. So, if needed, we throw in the house and call it a day.
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Old 10-08-2017, 02:45 PM   #11
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Like others, we look at home value as the LTC fund.
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Old 10-08-2017, 02:49 PM   #12
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I don't include it, but realistically if we get so sick that we must live in assisted living, it becomes my backup plan to cover the LTC costs so that I don't have to pay for LTC insurance.
Assisted living is not the same as a nursing home. You don't have to be sick to live in such a facility.

I don't mind the idea of communal living where someone will clean my place, meals are prepared and I don't have to deal with most chores. I can choose to use such a facility while I still drive my own car and come and go as I please, even travel. Nothing nightmarish about it.

LTC insurance does not cover those aspects of assisted living.
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Old 10-08-2017, 03:01 PM   #13
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Assisted living is not the same as a nursing home. You don't have to be sick to live in such a facility.

I don't mind the idea of communal living where someone will clean my place, meals are prepared and I don't have to deal with most chores. I can choose to use such a facility while I still drive my own car and come and go as I please, even travel. Nothing nightmarish about it.

LTC insurance does not cover those aspects of assisted living.


Youíre confusing assisted living with independent living. Memory care is often in assisted living but with locked facilities so they donít wander off. Assisted living also ensures you get your needed medications, assists in bathing and dressing, if needed, and deals with incontenence. I donít think they drive. Long term care is when full time nursing care is required. Independent living they can drive, but are checked on daily. The typically eat in a cafeteria, so they donít have to cook, but can cook in their apartment if they choose. Assisted living they canít cook.
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Old 10-08-2017, 03:25 PM   #14
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I don't add my primary residence into FireCalc and other planning software for retirement planning. I do, though, consider it as a large backstop if everything else went south. Gives me some assurance of a back-up plan if needed.
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Old 10-08-2017, 04:00 PM   #15
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IORP has an option for a house sale late in life. Probably one of the reasons its max projected income is higher than most are comfortable with.

Like others, our home equity will be LTC or estate.
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Old 10-08-2017, 04:04 PM   #16
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IORP has an option for a house sale late in life.
As does FIRECalc. See the "Portfolio Changes" tab.
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Old 10-08-2017, 07:26 PM   #17
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I use the Fidelity RIP as our main planning tool.

We recently bought a fairly expensive house that will will likely stay in until the kids are launched, but probably not too much longer -- it has too many stairs to be good for aging in place, and will be too big once the kids aren't living with us. Youngest is 12 so we've probably got 10 years or so here.

I have sale of the house and purchase of a condo roughly 1/2 the current house value plugged in as our estimate. That drops us down to a 1-2% at that point. Works for me....
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Old 10-08-2017, 07:31 PM   #18
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Quote:
Originally Posted by LARS View Post
... in calculators like FireCalc and its impact on "allowable" spending.

Personally I have not included house value by selling it at some future date as a lump sum payment a la FireCalc. Thus, house becomes a substantial $ amount for margin of error spending in later (much) years.

Still, makes me wonder if I am being way too conservative on spending...
I do not choose to include it either, but YMMV.

Your choice to include or not include it, depends on what you want the results to represent. If you get "95%", do you want that to mean you would have a 95% chance of not running out of money, before you sold your house in desperation, or even after you sold it, without buying another? That should help you to decide on your input values.

If you plan to downsize, the portfolio changes inputs will help as REWahoo points out. I am in my retirement house already, and do not plan to downsize further.
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Old 10-08-2017, 07:45 PM   #19
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House is a little money pit. I don't think of it as a spendable asset. The plan is eventually move to a more tax friendly State. Hopefully will break even on the retirement home, and decrease overhead.
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Old 10-08-2017, 08:01 PM   #20
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My house is my castle and I love it. Upkeep is much cheaper than rent.

Not a spendable asset but decreases my overhead and helps me to live large -
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