45 yrs old | Married | 2 Kids | Is it Time To Quit?

[rodi]

Welcome, Shrimp, from another So Cal type. (San Diego in my case).

Financially, you look ok. I'd be nervous not having *any* fixed income allocation to temper the marker swings, and my asset allocation reflects that.

Some questions:
- Will you keep the rental when you retire? Do you use a management company? Is it local to you now, (which means you'd have to add the expense of a management company if you move.)
- What part of Washington are you interested in? I lived in Bellingham for 3 years and LOVE that area. My BFF lives there and it's a gorgeous place to live. I have friends in Seattle, Bellvue, Snohomish, and Vancouver (WA). They've all found their dream homes... but the prices vary a lot depending on the location.
- Is your spouse on board with these ideas?

Other thoughts:
- You will enjoy being a stay at home parent as your kids grow up. I retired when my boys were 11 and 13 and it was the best thing ever. Being actively involved in your kids business is a good way to keep them on the right track. Sure it's frustrating at times, but I have no regrets that I was home as they went through middle and high school.
- You'll need to look at school districts with your new location.

If you haven't yet - run firecalc (link at bottom of page). Explore the tabs. Input of spending on first page is *all inclusive* (include taxes, health insurance, etc.). Make sure you adjust your asset allocation to 100% stock so it can look at market swings for the historical analysis.

Again, welcome to the forum from another SoCal type who loves Washington state.

 

[HawaiiShrimp]

How does that work with two young kids at home especially if you move away from friends and family?

I think that's one of the challenges. Moving away from CA means moving away from grandparents. We are trying to motivate some other family members to move with us. They are eager to pull the plug and started looking for out of state jobs already.

With the way CA is going though, it's just a matter of when to move. Kids are not too attached to their friends, so the transition will not be TOO difficult. Finger-crossed.

 

[HawaiiShrimp]

Not paying state income taxes is not a very good reason to relocate IMO. If your kids are in good schools that they like and your friends and family are near by then I don't see a good reason to move. You can easily afford the state income taxes, they shouldn't even be that high after you retire.

Totally agree. One of the major reasons I want to leave South Cal is the HEAT. I like rainy, pacific northwest, cold climate. I will dry-out living here in CA's desert-like climate. I hate the heat.

Kids are in good schools right now. This "move" is a 5-year plan. It does not have to be executed right the way. We can wait until the kids finish up elementary schools before moving. But, eventually, we like to live in a different climate altogether.

When it comes to state income taxes, the problem is: If I want to take out $1.2M cash to pay off a house, I'll be subject to 14% more CA state tax than a different state with no state tax. Also, I do anticipate lifestyle creep, if I ever need to take out $300k annually for traveling and other lifestyle expenses, I will get taxes an arm and a leg. I don't prefer to get punished financially here in CA for the sun tax especially when I don't prefer the sun to begin with. I prefer a cold climate. That's just my logic at the moment. Subject to change over time. I am speaking my mind as I type. Hope it makes sense. Thanks!

 

[aaronc879]

I think that's one of the challenges. Moving away from CA means moving away from grandparents. We are trying to motivate some other family members to move with us. They are eager to pull the plug and started looking for out of state jobs already.

With the way CA is going though, it's just a matter of when to move. Kids are not too attached to their friends, so the transition will not be TOO difficult. Finger-crossed.

With the massive wealth that you have you could afford to bring the Grandparents with you(at least one set) and build them a small place on your property. That way you have automatic babysitting if you want to spend a couple months at a time travelling the world as you stated.

 

[HawaiiShrimp]

With the massive wealth that you have you could afford to bring the Grandparents with you(at least on set) and build them a small place on your property. That way you have automatic babysitting if you want to spend a couple months at a time travelling the world as you stated.

That is a great suggestion. I didn't consider that before. It makes perfect sense. Thank you.

 

[pb4uski]

We have some friends who just moved into a new casita/small house that was built on their daughter's property. About 1,000 sf... two bedrooms, one bath, small kitchen with countertop dining and a small living room.

They plan to winter there in Texas and summer in New England. Kids are older... 6th grade and HS junior but they do want to be near to grandchildren.

 

[OldShooter]

... you have automatic babysitting if you want to spend a couple months at a time travelling the world as you stated.

Err ... speaking as a grandparent this idea of being tied down for months would be a nonstarter for us. Being tied down for a couple of afternoons a month, yes. Beyond that, we negotiate. I think our weekly rate for babysitting would be in the $5,000 range, which would allow us to profitably subcontract the work.

 

[aaronc879]

Totally agree. One of the major reasons I want to leave South Cal is the HEAT. I like rainy, pacific northwest, cold climate. I will dry-out living here in CA's desert-like climate. I hate the heat.

Kids are in good schools right now. This "move" is a 5-year plan. It does not have to be executed right the way. We can wait until the kids finish up elementary schools before moving. But, eventually, we like to live in a different climate altogether.

When it comes to state income taxes, the problem is: If I want to take out $1.2M cash to pay off a house, I'll be subject to 14% more CA state tax than a different state with no state tax. Also, I do anticipate lifestyle creep, if I ever need to take out $300k annually for traveling and other lifestyle expenses, I will get taxes an arm and a leg. I don't prefer to get punished financially here in CA for the sun tax especially when I don't prefer the sun to begin with. I prefer a cold climate. That's just my logic at the moment. Subject to change over time. I am speaking my mind as I type. Hope it makes sense. Thanks!

Not sure where that $1.2M came from? If you do eventually move to Washington State I would suggest selling the CA house and renting in WA until you establish permanent residency. Then sell the equities needed to buy your dream house with no state tax on the capital gains. You could even get a mortgage so you can stay in a lower Federal tax bracket if your capital gains are really high. With assets like yours you have a lot of options

 

[aaronc879]

Err ... speaking as a grandparent this idea of being tied down for months would be a nonstarter for us. Being tied down for a couple of afternoons a month, yes. Beyond that, we negotiate. I think our weekly rate for babysitting would be in the $5,000 range, which would allow us to profitably subcontract the work.

True. That would be too much like raising another couple kids rather than jujst spoiling the Grandkids a couple times a month. Just a thought. It could work for them, but may not

 

[HawaiiShrimp]

Welcome, Shrimp, from another So Cal type. (San Diego in my case).

Financially, you look ok. I'd be nervous not having *any* fixed income allocation to temper the marker swings, and my asset allocation reflects that.

Some questions:
- Will you keep the rental when you retire? Do you use a management company? Is it local to you now, (which means you'd have to add the expense of a management company if you move.)
- What part of Washington are you interested in? I lived in Bellingham for 3 years and LOVE that area. My BFF lives there and it's a gorgeous place to live. I have friends in Seattle, Bellvue, Snohomish, and Vancouver (WA). They've all found their dream homes... but the prices vary a lot depending on the location.
- Is your spouse on board with these ideas?

Other thoughts:
- You will enjoy being a stay at home parent as your kids grow up. I retired when my boys were 11 and 13 and it was the best thing ever. Being actively involved in your kids business is a good way to keep them on the right track. Sure it's frustrating at times, but I have no regrets that I was home as they went through middle and high school.
- You'll need to look at school districts with your new location.

If you haven't yet - run firecalc (link at bottom of page). Explore the tabs. Input of spending on first page is *all inclusive* (include taxes, health insurance, etc.). Make sure you adjust your asset allocation to 100% stock so it can look at market swings for the historical analysis.

Again, welcome to the forum from another SoCal type who loves Washington state.

1. Yes, I am keeping the rental. No mgmt agency needed. I have reliable tenants (relatives) live there. They are close to us and trouble-free for the last 12 years.
2. I'm considering Bellingham, Blaine. Mainly Bellingham. Is Homelessness an increasing problem there?
3. Yes, my wife is on board with this. Shes likes the idea. Trust me, she's not easily convinced but she's convinced.

I'm working from home at the moment and will continue to do so in the next 6 months to a year. It's great to spend time with family. Since the kids have a school schedule, even if I call it a quit now, we can't really go travelling full time. They have school to return to. That's another reason I'm still staying put.

I love to hear the pros and cons of living in Bellingham. For example:
1. Is it easy to get used to the weather since you are from SD?
2. Is it easy to get used to the new neighborhood?
3. Are people in general nice there?
4. What kind of hobbies do you have? Any outdoor activities you recommend?
5. Do you drive up to Vancouver? If so, how long it usually takes for you?
6. How's the home buying experience up there? Which real estate agent you recommend?
7. Any tips and tricks in terms of home buying?
8. Any tips and tricks in terms of relocation? Things you'd do differently?
9. Any cultural shock? How long it takes to adapt to the new state/city?
10. Are the cost of goods and services more expensive? Less expensive?
11. How frequent you travel? Is it a pain to travel out from nearby airport?

Sorry in advance for so many questions. I am just trying to learn. Thanks!!

 

[HawaiiShrimp]

Err ... speaking as a grandparent this idea of being tied down for months would be a nonstarter for us. Being tied down for a couple of afternoons a month, yes. Beyond that, we negotiate. I think our weekly rate for babysitting would be in the $5,000 range, which would allow us to profitably subcontract the work.

Ha ha.. I love the honesty. Never assume the grandparents can endure the kids for months.

 

[HawaiiShrimp]

Not sure where that $1.2M came from? If you do eventually move to Washington State I would suggest selling the CA house and renting in WA until you establish permanent residency. Then sell the equities needed to buy your dream house with no state tax on the capital gains. You could even get a mortgage so you can stay in a lower Federal tax bracket if your capital gains are really high. With assets like yours you have a lot of options

Thank you, aaronc879. That's a great suggestion. I intend to sell the house here in CA because I simply don't want to maintain an out-of-state house. The condo is fine since it has relatives to maintain it, but not the CA house.

Renting in WA until establishing permanent residency. I agree. The downside is: We will have to move twice (or store all things in storage). Not a big deal, but it certainly is a sensible thing to do. Do you hire any local WA CPA to handle tax/accounting? This is something I don't have at the moment but will start looking into (after the move), preferably local firm.

 

[someguy]

Congrats on your situation!

A quick question. Your HHI is $230K and your annual expenses are $60K (very low for SoCal) for a rough net of $100K/yr. Even assuming you had that salary (and net) available for all 20 years, that's still a 14% annual compounding rate of return! I'm guessing it wasn't always $100K/yr so the question is what did your investment strategy/numbers look like over time?

In terms of moving, it's hard for me to fathom leaving SoCal for the PNW (and doubling housing to boot), but different strokes! That said, I recommend all four of you spending ~2 months for a summer or two up in WA and see how you like it. See how likely you are to make new friends, and see what it's like being away from family.

How do you (or your wife) feel about being a full-time teacher and/or stay at home parent? If you want to travel 3-6 mos/yr, I'm assuming you'd take the kids and home school them? I know Rodi mentioned she loved being at SAHM, but I don't think all folks would feel the same.

 

[someguy]

One other thing: the CA FTB is notorious in going after former or potential CA residents. All the more so if you are high net worth and moved to avoid high CA state taxes. I believe if you maintain that CA rental after moving to WA, you will still be required to file a CA tax return which will give them visibility into your total financial picture. I would definitely consult a CPA attorney at some point.

 

[HI Bill]

Not paying state income taxes is not a very good reason to relocate IMO.

+1. At your asset level and potential income, you can afford to live in the highest COL areas, including Hawaii, the Caymans, etc. You can afford to live in the geographic area that you most prefer. If that's Honolulu, San Francisco, or an island in the Bahamas. Paying taxes is part of the price of success, so why not move to the place where you'd really love to be?

I deferred ER by at least 5 years to be able to continue to live in Hawaii, and factored in the state taxes and higher COL. Except for growing up, I've only lived in great cities (San Diego, Monterey, Honolulu, Kihei), and can't imagine moving somewhere less great, just to avoid taxes.

 

[rodi]

1. Yes, I am keeping the rental. No mgmt agency needed. I have reliable tenants (relatives) live there. They are close to us and trouble-free for the last 12 years.
2. I'm considering Bellingham, Blaine. Mainly Bellingham. Is Homelessness an increasing problem there?
3. Yes, my wife is on board with this. Shes likes the idea. Trust me, she's not easily convinced but she's convinced.

I'm working from home at the moment and will continue to do so in the next 6 months to a year. It's great to spend time with family. Since the kids have a school schedule, even if I call it a quit now, we can't really go travelling full time. They have school to return to. That's another reason I'm still staying put.

I love to hear the pros and cons of living in Bellingham. For example:
1. Is it easy to get used to the weather since you are from SD?
2. Is it easy to get used to the new neighborhood?
3. Are people in general nice there?
4. What kind of hobbies do you have? Any outdoor activities you recommend?
5. Do you drive up to Vancouver? If so, how long it usually takes for you?
6. How's the home buying experience up there? Which real estate agent you recommend?
7. Any tips and tricks in terms of home buying?
8. Any tips and tricks in terms of relocation? Things you'd do differently?
9. Any cultural shock? How long it takes to adapt to the new state/city?
10. Are the cost of goods and services more expensive? Less expensive?
11. How frequent you travel? Is it a pain to travel out from nearby airport?

Sorry in advance for so many questions. I am just trying to learn. Thanks!!

1) I had to get used to doing stuff in the rain that I would never have done in the rain when in San Diego: biking, camping, hiking.... Buy some good rain gear. I also had to get over the idea that raining days were for baking cookies. (That was my go to for 'cozy' feeling in San Diego). Too fattening since too many days were raining. I took up making soups on rainy days.
2) Not an issue at all.
3) Folks are very nice. I had no problem making friends - some of whom I'm still good friends with despite having moved away from there over 20 years ago. And I imported my best friend (she ended up moving there after I did - and stayed.)
4) B'ham is great for hiking, biking, kayaking, boating/fishing, skiing, pretty much anything outdoors. I learned to ski at Mt. Baker. The interurban trails are great for biking and hiking. Kayaking on Lake Whatcom or Lake Paddon is great - as well as B'ham bay. We always had a party for our work team that competed in the Ski-to-Sea race every memorial day.
5) Absolutely. I was in my late 20's/early 30's so to see great bands you had to head to Seattle or Vancouver. Went to Vancouver at least twice a month. Had two friends meet Canadians and ended up married and settled in suburban Vancouver.
6) I had an easy time buying. Both my buying and selling agent were Windemere. One is retired, but the other is still active with that office. (Kevin Geraghty)
7) Get a good inspection
8) None I can think of.
9) Culture shock... the only thing I can think of is that it seemed like people got married a lot younger than southern CA.. and since I was single in my late 20's I felt like an old maid. You're married so that won't be an issue for you.
10) I don't specifically remember costs being less or more. Housing is obviously cheaper for what you get. Gas is cheaper.
11) Travel - at the time few airlines flew full size planes out of B'ham international... and it's still not a lot of carriers. I typically flew out of Seattle. (There's a great shuttle bus on a regular schedule.) My BFF does at least 2-3 international trips a year and travels for work frequently. Domestically she mostly flies out of Seattle (mostly work trips). Internationally she flies out of Vancouver. She's able to get some great flight deals for her annual trips to France and Italy out of Vancouver. She invested in a Nexus pass - so border crossing is easy.

 

[HawaiiShrimp]

+1. At your asset level and potential income, you can afford to live in the highest COL areas, including Hawaii, the Caymans, etc. You can afford to live in the geographic area that you most prefer. If that's Honolulu, San Francisco, or an island in the Bahamas. Paying taxes is part of the price of success, so why not move to the place where you'd really love to be?

I deferred ER by at least 5 years to be able to continue to live in Hawaii, and factored in the state taxes and higher COL. Except for growing up, I've only lived in great cities (San Diego, Monterey, Honolulu, Kihei), and can't imagine moving somewhere less great, just to avoid taxes.

Again, I am not moving to WA just to avoid tax. I like the weather in Pacific Northwest and the close proximity to Vancouver.

 

[HawaiiShrimp]

1) I had to get used to doing stuff in the rain that I would never have done in the rain when in San Diego: biking, camping, hiking.... Buy some good rain gear. I also had to get over the idea that raining days were for baking cookies. (That was my go to for 'cozy' feeling in San Diego). Too fattening since too many days were raining. I took up making soups on rainy days.
2) Not an issue at all.
3) Folks are very nice. I had no problem making friends - some of whom I'm still good friends with despite having moved away from there over 20 years ago. And I imported my best friend (she ended up moving there after I did - and stayed.)
4) B'ham is great for hiking, biking, kayaking, boating/fishing, skiing, pretty much anything outdoors. I learned to ski at Mt. Baker. The interurban trails are great for biking and hiking. Kayaking on Lake Whatcom or Lake Paddon is great - as well as B'ham bay. We always had a party for our work team that competed in the Ski-to-Sea race every memorial day.
5) Absolutely. I was in my late 20's/early 30's so to see great bands you had to head to Seattle or Vancouver. Went to Vancouver at least twice a month. Had two friends meet Canadians and ended up married and settled in suburban Vancouver.
6) I had an easy time buying. Both my buying and selling agent were Windemere. One is retired, but the other is still active with that office. (Kevin Geraghty)
7) Get a good inspection
8) None I can think of.
9) Culture shock... the only thing I can think of is that it seemed like people got married a lot younger than southern CA.. and since I was single in my late 20's I felt like an old maid. You're married so that won't be an issue for you.
10) I don't specifically remember costs being less or more. Housing is obviously cheaper for what you get. Gas is cheaper.
11) Travel - at the time few airlines flew full size planes out of B'ham international... and it's still not a lot of carriers. I typically flew out of Seattle. (There's a great shuttle bus on a regular schedule.) My BFF does at least 2-3 international trips a year and travels for work frequently. Domestically she mostly flies out of Seattle (mostly work trips). Internationally she flies out of Vancouver. She's able to get some great flight deals for her annual trips to France and Italy out of Vancouver. She invested in a Nexus pass - so border crossing is easy.

Thank you for the awesome insight!! I learned a lot from it. Much appreciated.

 

[Finance Dave]

Something doesn't look right about your current spending. $60k/year seems low.

You're maxing out 401k? That's $23k/year if you are limited to 10% of income.
Kids education at $200/mo is $2.4k/year
Mortgage amount in a HCOL area = $260k...your payment around $1,800/mo? If so, that's another $22k/year.
Food and utilities for a family of four?

Adding those things up makes it hard to see how you can limit spending to $60k/year.

Regardless, your net worth is high enough that you could give half your money to charity and still FIRE lol.

As for when to FIRE, each person has to decide for themselves. Lonely? Join a club? or a church. Do volunteer work. Those things will keep you active and happy. Develop a new hobby. I do woodworking and it fits me well.

 

[HawaiiShrimp]

Something doesn't look right about your current spending. $60k/year seems low.

You're maxing out 401k? That's $23k/year if you are limited to 10% of income.

We, my wife and I, are both max'ing out 401k. That's ~$36k annually

Mortgage amount in a HCOL area = $260k...your payment around $1,800/mo? If so, that's another $22k/year.

I'm paying $2.3k/mo (15 yrs fixed at 2.5%). ~$29k/year.

Food and utilities for a family of four?

We spent quite a lot on foods. Utilities, not too bad, we have solar.

Adding those things up makes it hard to see how you can limit spending to $60k/year.

I just roughly estimate my monthly expense, based on how much I have left after subtracting all my recurring expenses from the paychecks. I don't maintain a budget or checklist of each expenses. It's too tedious for me. Never intend to waste my time on that.

Regardless, your net worth is high enough that you could give half your money to charity and still FIRE lol.

Thanks. Glad to hear. We expect our annual expense to grow significantly to $200k since we intend to travel a lot more after ER.

As for when to FIRE, each person has to decide for themselves. Lonely? Join a club? or a church. Do volunteer work. Those things will keep you active and happy. Develop a new hobby. I do woodworking and it fits me well.

That's the goal, indeed. I'm going to develop more hobbies that keep me occupied.

Thank you for your advice. Cheers!

 

[rrs26ja]

At 45 you and your wife have done every well. I highly recommend that you take much less risk, your playing with fire. You can live high on the hog on what you have now especially if you leave CA and sell your home and move to a no income tax state.

 

[stepford]

At 45 you and your wife have done every well. I highly recommend that you take much less risk, your playing with fire. You can live high on the hog on what you have now especially if you leave CA and sell your home and move to a no income tax state.

I often see this recommendation to bail out of California to state avoid income tax. This is a much bigger issue during one's working years than in retirement. Even with a net worth as large as the OP's depending on how the assets are structured the state tax burden may not be all that high.

What a lot of people forget when condemning CA is property taxes. Particularly if one has lived in the state for a long time the property tax can be much lower than if one were to move to a comparable property out of state - even more so if one is contemplating a big expensive place out of state as is the OP. This can easily negate any advantage obtained through the elimination of state income tax.

The OP has certainly done well and should live wherever he wishes, but avoiding state income tax in and of itself may not be a great reason for leaving California.

 

[HawaiiShrimp]

I often see this recommendation to bail out of California to state avoid income tax. This is a much bigger issue during one's working years than in retirement. Even with a net worth as large as the OP's depending on how the assets are structured the state tax burden may not be all that high.

What a lot of people forget when condemning CA is property taxes. Particularly if one has lived in the state for a long time the property tax can be much lower than if one were to move to a comparable property out of state - even more so if one is contemplating a big expensive place out of state as is the OP. This can easily negate any advantage obtained through the elimination of state income tax.

The OP has certainly done well and should live wherever he wishes, but avoiding state income tax in and of itself may not be a great reason for leaving California.

I agree. I just like a cooler climate and want to visit Vancouver. I have friends there.

 

[Ready]

How did you build a retirement portfolio worth $7.2 Million by contributing $36,000 per year at 41 and 45 years old?

 

[HawaiiShrimp]

how did you build a retirement portfolio worth $7.2 million by contributing $36,000 per year at 41 and 45 years old?

By trying to invest in good companies (stocks) for the last 20 years.