Housing percentage for ER's

[gwix98]

Just taking a little survey here:

I am curious as to approximately what percentage most
people here actually spend for their housing costs.

For those who actually have no mortgages ( I assume most
of you), this would be taxes ,insurance and maintenance
divided by annual incomeX100 to give percent.

For those in condos, you would have the homeowners
dues in lieu of the "maintainance". Of course some condo dues also include some "utility " items as well.

Just trying to get some ballpark figures.
While I am not retired, and do have a mortgage, in my
own case these costs run about 16 % of my gross income. Its my hope that I can get these costs under 10% in retirement.

gwix

 

[frayne]

About 4%, a better way to ask the question might be cost on a percent of home value basis.

 

[Helen]

Interesting question.

I just paid off my mortgage recently.  The house was only $100k purchase price.  Going high on estimating current costs with no mortgage to gross income is about 3.4%

-helen

 

[Cut-Throat]

Its my hope that I can get these costs under 10% in retirement.

I have No mortage. But I pay around $1,000 a month to live at my place. taxes, Insr, and Assoc. Fee. -

In retirement you usually don't have an income. But if I did, I would have to make over $110K per year to get my 'costs' under 10%

Are you talking Invest Income, pensions etc. And if you are, what do you plan on doing with the other 90% of your 'Income'? You do know that you can't 'Take it with you'

 

[gwix98]

Hi CT,

I am considering moving to a smaller home/condo to
reduce my overall costs. I can cut them about in half
by doing this by purchasing a residence outright, or
carrying a small mortgage which I could pay off in
5 years or less. My DW is strongly in favor of this,
she is at age 53 wanting to "downsize" in preparation
for "retirement", likely at a normal or slightly early age.

I expect our income from all sources to be about 70 percent
of what it is currently. Running the numbers for a condo in our area would get us to approx 10%..
Its my hope we can do this.

Numbers in the 4 percent range seem pretty amazing.

 

[gwix98]

And yes, I am talking all income:

pension, SS, investment income, immediate annuity, etc.

 

[retire@40]

Answers may vary wildly because people calculate housing costs differently.

Some people may just look at what they pay for things like real estate taxes, insurance, condo fees, etc.

Others may allocate other costs like the cost of a new roof and other expenses that may not necessarily happen annually.

 

[REWahoo]

Excluding any maintenance costs, my taxes & insurance are running in the 8-9% range. Since property taxes and homeowners insurance rates vary significantly by state and the value of your property (think bubble vs. oxygen deprived areas), you are going to get quite a variation in percentages I would think.

REW

 

[Ol_Rancher]

No mortgage, Agricultural tax exemption for acreage, no water or waste water, no gas, electricity runs about $60 - $75 per month,

Taxes = $1300/yr
Electric = $800/yr
Maintenance (home is new) = $400/yr maybe
Insurance = $700/yr

Last year's AGI = $58,000

Housing - 5.5%

If I stayed in Austin, Texas the percent would be more like 37% ...

 

[gwix98]

Yes, it probably would be a better comparison if I
just limited it t the area I live in ,which is the Seattle
area of the PNW.

Still, its interesting to see how the figure varies.

I remember when I purchased my first house the rule
of thumb was that your P&I, taxes, and in some cases
utlilities should not exceed 25% of your gross income.
And, you could afford a home 2.5X your gross.

In this area, and probably many accross the nation
we would sell very few homes if we still adhered to that
system. Makes you think!

 

[Mr._johngalt]

For those who actually have no mortgages ( I assume most
of you), this would be taxes ,insurance and maintenance
divided by annual incomeX100 to give percent.

For those in condos, you would have the homeowners
dues in lieu of the "maintainance". Of course some condo dues also include some "utility " items as well.

Just trying to get some ballpark figures.
While I am not retired, and do have a mortgage, in my
own case these costs run  about 16 % of my gross income. Its my hope that I can get these costs under 10% in retirement.

gwix

Okay, our gross annual combined pretax income is around 25K (actual income, no drawdown of assets).
Using your instructions, I get around 11%. Older house, no debt.

JG

 

[Alan]

2 years ago we were looking at the cost of living in our large house that we had lived in for 11 years.  I had kept records of all major maintenance and improvement projects and it averaged out at $7K/year or about 3% of the value which was in line with some articles I'd read which suggested 2-4% for maintenance.

Then factor in all the other costs you mentioned (and property taxes, flood insurance etc vary enormously by State and city) and it came to about $15K/year, which would be 25% of post ER pension (not counting SS or drawdown of PF).

In the event, we decided we didn't want a big house (3,500 sq ft with pool etc.) now that the kids were gone so we sold up and moved into an apartment (1600 sq ft) while we decided what to do.  The house money (~250K) has been sitting in a conservative Vanguard Wellesy fund for 2 years and has grown at over 9% /year, close to the long term average for this fund.  Where we live has very high property taxes (8%) and we love the idle life of no maintenace and lots of facilities.  Plus we plan to ER in 4 years and may well want to move on, so we are staying put for now.

 

[snowbird]

20% ($15.5K) of future ER costs. Doesn't include maintenance costs, only mortgage, condo fees, taxes & insurance). Home in FL and condo in CT.

What's the problem? Some people spend it on traveling the world. Done that. Would rather snowbird cause I can't stand the winters in CT.

Pete