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Old 01-31-2020, 06:33 PM   #41
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Originally Posted by doneat54 View Post
We have very little hard cash, maybe $15k.

The challenge is that in about 2 years, I'll want to replace 2 cars, and depending on where we go with the property, would want to have $10-$20k or so to work with.
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Overall canít understand why if things are tight OP would buy undeveloped land and second home and not generate income off either.
It makes no sense to me at all, unless there is some reason that he is not communicating or that I somehow don't understand.

I know we all have different ideas of how to fund retirement and what our retirement should look like, but reading this thread makes me so very glad that I am single and like Frank Sinatra, can do things "my way".

I don't have a lakefront second home, or a large parcel of undeveloped land with a view, or antique cars, and I still manage to have more fun in retirement than anybody ever had, along with enough cash to play with.
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Old 01-31-2020, 07:07 PM   #42
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"More fun in retirement than anybody ever had"

All bow to the master.
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Old 01-31-2020, 08:28 PM   #43
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Have you considered working FT or PT for a year+, seems like you need to ramp up cash reserves, especially with cars needing to be refreshed.

I have not. Going back to w*rk, of any kind, is out of the question. I will live in a van down by the river, if need be.......
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Old 01-31-2020, 08:31 PM   #44
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Do you have a hobby you love, that could be turned into a side gig? Doesn't really count as w*rk, in my mind.

I do have a hobby that generates income. Since 2003. I make some parts for very early VW Beetles, '53 and earlier, and do some part restorations. But it's all "fun money" and I don't ever want it to be "required". I piss it away, DW has some nice finger ornaments from it, and we have taken some great trips...... but I don't want it to ever be something that I feel like I HAVE to do. For now, it acts as a back buffer sometimes, but IMO, it has to remain something I have the choice to do. Or not.
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Old 01-31-2020, 08:43 PM   #45
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It makes no sense to me at all, unless there is some reason that he is not communicating or that I somehow don't understand.

I know we all have different ideas of how to fund retirement and what our retirement should look like, but reading this thread makes me so very glad that I am single and like Frank Sinatra, can do things "my way".

I don't have a lakefront second home, or a large parcel of undeveloped land with a view, or antique cars, and I still manage to have more fun in retirement than anybody ever had, along with enough cash to play with.

Please go back and re-read, if you are interested. I bought the undeveloped land 25 years ago, purely as an investment. In today's dollars, paid peanuts for it. It has never been on the retirement/portfolio radar at all. Having second thoughts now about selling it, or building on it as a next step home. There is ZERO stress or anxiety here.



I have been into antique cars for 30+ years and have never lost a dime on any of them, making $$ on anything that I have re-sold. And, I would challenge anyone to a contest of "who is having more fun" in retirement. This whole post was about asking for opinions on options that we have, to use a small fraction of retirement portfolio to get us past replacing a couple cars and bridging a period when we are real estate heavy.

But let me get back to the collective brain trust here, and ask this:

If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?
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Old 01-31-2020, 10:31 PM   #46
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My opinion is that a second home is really a splurge, and it requires a lot of ongoing investment to keep a second home going: repairs, utilities, taxes, insurance. It gives me a headache. Do you spend a lot of time there? I would sell it unless you do. Carrying the second home is where a lot of your budget is probably going. The land can sit there without work and it sounds like you may want to build on it? And the taxes are certainly minimal. Keep in mind there will be capital gains taxes due on the sale of either property.

I had an Audi, and it was a beautiful car and I did love it. However, as another person said, they do require a lot of maintenance. So, definitely keep that in mind. You will be doing some work on it. And they are not cheap.

Lastly, one thing to remember is that there is no tax on borrowed money! So if you got a HELOC and used those funds to tide you over, you don't pay any taxes on those funds. There are usually no fees to get a HELOC, only an early termination fee if you sold your home and had to close the HELOC out before two years were up. You will pay interest, and interest rates are at a low right now. So maybe you would want to do that instead of taking distributions and paying the taxes on the distributions? You would want to sit down with pencil and paper and analyze this strategy carefully. And I would be very cautious with the HELOC funds, if I chose the HELOC! You will need to pay those back in full at some point! You don't want to go crazy and start remodeling or vacationing or buying Audis.
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Old 01-31-2020, 11:48 PM   #47
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Originally Posted by doneat54 View Post
....
If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?
I would not touch the ROTH, as it sounds like it's the only ROTH you folks have, and you are young enough that it will grow tax free for many decades. I wonder if you would be so quick to spend the ROTH if it was your ROTH ?

Get a mortgage on the farm/lake house while you ponder what to do with the property, there is zero tax on mortgage money and interest rates are historically low.
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Old 02-01-2020, 07:04 AM   #48
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Your wife's income doesn't support you and your chosen lifestyle.

Either modify your lifestyle by:
  • Selling off a piece of property, or
  • Selling off some of your car collection

Or go back to work to increase your income.

Three viable solutions.
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Old 02-01-2020, 07:47 AM   #49
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The first time I took out a HELOC I was reviewing the paperwork and was shocked to learn that one could make the payments using the HELOC checks - using the loan. I asked the loan officer if this was right and they said "sure".
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Old 02-01-2020, 08:15 AM   #50
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Please go back and re-read, if you are interested. I bought the undeveloped land 25 years ago, purely as an investment. In today's dollars, paid peanuts for it. It has never been on the retirement/portfolio radar at all. Having second thoughts now about selling it, or building on it as a next step home. There is ZERO stress or anxiety here.



I have been into antique cars for 30+ years and have never lost a dime on any of them, making $$ on anything that I have re-sold. And, I would challenge anyone to a contest of "who is having more fun" in retirement. This whole post was about asking for opinions on options that we have, to use a small fraction of retirement portfolio to get us past replacing a couple cars and bridging a period when we are real estate heavy.

But let me get back to the collective brain trust here, and ask this:

If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?
You can ask all the closed end questions you want and the answer will still be to sell property and have a sufficient amount of cash so you can, you know, cash flow things you need to pay for in retirement.
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Old 02-01-2020, 08:36 AM   #51
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We found that in RE we just did not need 2 cars. We sold both that we had an bought one new car. 2.5 years later, we are still very happy with that.
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Old 02-01-2020, 09:14 AM   #52
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Originally Posted by doneat54 View Post
Please go back and re-read, if you are interested. I bought the undeveloped land 25 years ago, purely as an investment. In today's dollars, paid peanuts for it. It has never been on the retirement/portfolio radar at all. Having second thoughts now about selling it, or building on it as a next step home. There is ZERO stress or anxiety here.



I have been into antique cars for 30+ years and have never lost a dime on any of them, making $$ on anything that I have re-sold. And, I would challenge anyone to a contest of "who is having more fun" in retirement. This whole post was about asking for opinions on options that we have, to use a small fraction of retirement portfolio to get us past replacing a couple cars and bridging a period when we are real estate heavy.

But let me get back to the collective brain trust here, and ask this:

If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?
Neither...as another posters recommended just borrow against your existing real estate holdings (e.g. HELOC) for such a short-term need.
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Old 02-01-2020, 10:02 AM   #53
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Oh one thing I didn't think of earlier in my reply. .you may not qualify for a HELOC or a mortgage due to your lack of cash flow. Unless they will do it based on your assets. As for a reverse mortgage, I believe you need to be 62 to get one of those.
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Old 02-01-2020, 11:48 AM   #54
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I wouldn’t do either of the 2 options. Sell a property or go back to work.
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Old 02-01-2020, 12:09 PM   #55
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I would not touch the ROTH, as it sounds like it's the only ROTH you folks have, and you are young enough that it will grow tax free for many decades. I wonder if you would be so quick to spend the ROTH if it was your ROTH ?

We each have a Roth. She's beyond 59.5, I'm not. That is why hers is a viable option.
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Old 02-01-2020, 12:24 PM   #56
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We each have a Roth. She's beyond 59.5, I'm not. That is why hers is a viable option.
Actually you can take out the contributions you made to your Roth tax free anytime.

https://finance.zacks.com/can-withdr...ties-6393.html
" You can withdraw Roth IRA contributions at any time without penalty."
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Old 02-01-2020, 12:26 PM   #57
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My opinion is that a second home is really a splurge, and it requires a lot of ongoing investment to keep a second home going: repairs, utilities, taxes, insurance. It gives me a headache. Do you spend a lot of time there? I would sell it unless you do. Carrying the second home is where a lot of your budget is probably going. The land can sit there without work and it sounds like you may want to build on it? And the taxes are certainly minimal. Keep in mind there will be capital gains taxes due on the sale of either property.

I do spend a good bit of time there actually. One of the reasons I am/was comfortable with the bit of a stretch to buy was that it I have/will done many simple, low cost improvements to it that will make it way more marketable should we sell it. It is a 120 year old farm that was pretty run down but all the expensive stuff like furnace, water heater, well pump, elect panel etc. had been replaced recently. It just needed a bunch of junk cleaned, out rooms painted and some minor repairs.
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Old 02-01-2020, 12:41 PM   #58
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Actually you can take out the contributions you made to your Roth tax free anytime.

https://finance.zacks.com/can-withdr...ties-6393.html
" You can withdraw Roth IRA contributions at any time without penalty."

Ahh, good to know thanks. Irrelevant now however, as I agree it is not the best choice to do so.
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Old 02-01-2020, 01:37 PM   #59
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Absorb some tax benefits. Flip a rental to yourself, renovate, live there two years, do it again. You can serially work your way through your properties and minimize taxes along the way. Downsizing likely, why not enjoy the ride? Just keep selling, renovating, and downsizing till you land in a single story flat, no stairs, with easy access to hospitals. About 1k sf is all you really need. Elderly friends did this after hurricane damage to rental, no upfront cash outlays due to insurance, paid all costs monthly on credit cards for massive free travel points. Big fun!
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Old 02-01-2020, 03:48 PM   #60
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+2. I actually typed the exact comment about paying off at least one property and un-leveraging yourself, but forgot to press Post.

The reason I'm typing a new comment is to caution you against buying an Audi unless you want to spend a LOT of time or money keeping it running. I got to know my Audi guys way too well during my tenure driving my A4. Granted I put a ton of miles on it, but a lot of stuff that shouldn't have broken repeatedly did. Never again. I drive a boring Hyundai Sonata Hybrid now and my maintenance is a tiny fraction of what it was with the Audi.
Opposite for me. I bought a 2004 TT with about 34k miles when it was 6 years old, paid less than a Baha I was looking at with over 70k miles and it ran great. I sold it a year ago.
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