Retiring in a Million Dollar home or a Multi-million Dollar Home

[NC 57]

Built current house 16 years ago when employed as senior executive at megacorp. Paid cash for lot and construction. Today it has a tax value of $1 million and insurance replacement value of $1.4 million. Would likely sell for $900,000. Located in far suburban/rural area so taxes are low. Well built and energy efficient so utilities are low. Constructed of brick, vinyl and other low maintenance products so upkeep is low.

Stayed in the house when we retired even though it is way too large for 2 people. We would like to downsize but haven't found a house and place to move to so we stay in place as we like the house, the neighborhood, and the lake view. Our living expenses are below our income so the cost of living in too large a house is not a factor. We did sell our second home (condo in Florida) when we retired which allowed us to continue living below our means.

If I had it to do all over again I wouldn't have built a $1 million house. However, today it is a sunk cost, we like it, we can afford it, and we can't think of a better place to live. Five years from now, who knows?

 

[catii]

Anyone who has lived in Hawaii for any length of time is probably living in a home approaching $1M, because the median home value on Oahu is just over $800K.


We bought ours 28 years ago, for under $300K, & Zillow & Realtor have our house valued at $1.5M. Don't know how people new to the market can afford to live here. Wife & I owned our successful consulting company for 35 years, & we couldn't afford the house we're living in!

 

[Mailman87120]

My wife and I live in a modest 400,000.00 home in south Texas where the prices are very reasonable. It has over 4800sf an is in a nice Country Club area. It all depends on where you plan on living. Compared to Littleton colorado, the price of our house would have cost easy over a million dollars. I felt a little guilty about purchasing this house, If we would have purchased the house down the street for a million and a half, I would have felt even more guilty. It is strange, I can't explain whi had these feelings.

 

[Beachcomber]

Everything is relative - including homes. I read the millionaire next door years and years ago. We are downsizing to a $900k home from a $1.5mm home.
Myrtle Beach, waterfront as is our norm, and is a 55 + active senior community.

As a businessman who set up several income streams, not a whole lot is changing on the income end with retirement except for more conservative stock bias. I don't consider myself wealthy, there are people who are far wealthier than me and people who are not as wealthy - just like anything else.

I personally don't like the maintenance of a larger home - the one we are moving into is 3200 sf. The monthly HOA takes care of the exterior maintenance.

IMO, boating is expensive and and not smart if you are trying to conserve capital.

 

[CSdot]

I imagine a $300,000 house in 2000 equates to a $600,000 house in 2020. You dollar just doesn't go as far.

 

[horfield]

Just "downsized" to a $1M+ home in Sedona AZ with stupendous views for the next 10-15 years as I head into semi-retirement. It's a lot but a $1M+ home in a desirable tourist destination with a highly restricted supply is not going to lose anything over this time. Bought mainly cash with the proceeds of a house sale this year in the Bay area combined with a small mortgage, channeling the remaining sales proceeds into savings. Almost 60 now and still working but can foresee one more downsize past 75 when I can liberate that equity again. Until then going to enjoy the location, view and outdoors. Life is for living!

 

[67walkon]

We live part time in a $1.5+ million home in Florida and part time in a $500+ k home in the mountains. We've been in one for over 30 years and one for over 10 years. No mortgages.

Other than valuable real estate, we live modestly. We keep cars for at least 10 years, don't belong to clubs, etc. The key is not having a mortgage. If things ever get tight, we can sell the Florida house and live pretty well in the mountains in Social Security. And I'm proud to say I've been able to delay drawing on my SS account until I turn 70 in just over a month. If you can wait, it's a pretty good check!

 

[morriss003]

In the Millionaire Next Door book, the average millionaire's home is about $300K+.

You go to some places like upscale areas of Colorado or Northern Utah and you see $1.5 Million - $50 Million homes .. Do you know anyone who retired in a $1 million, $3 million, $5 million, or $10-$20 million home. What kind of retirement life do these people have ? country club type of life ? are they on 'Staycation for a long while?

You will find many people like this in Hawaii. I'll never forget meeting my DW's old aunt and uncle in 1979. They lived in a run down shack in Lahaina. The ceiling was caving in. Estimated value of the house was 1 mil. Location, location, location. Our little farmhouse, built in 1974, is built on land worth 1.5 mil. Of course we could never buy in Hawaii if we sold, unless we moved to a cheaper island.

 

[Bamaman]

As I said earlier, living in a $1 million home in our ultra LCOL place gets you a really, really substantial house.

But it's the other expenses associated with the lifestyle that get you. I'm talking expensive private schooling for the kids--including college and graduate school--that can cumulatively push $1.5 million before taxes for 2 kids.

Then you have the costs of keeping up two luxury cars and a couple of regular cars for the kids. A pair of Lexus' or BMW's will set you back $125K minimum. And they've got to be replaced every 4 years at a minimum.

And the country club membership comes with it--and the minimum monthly charges and often subsidies when the club loses money. And renewing the greens on the golf course comes with a big, special assessment too.

And don't forget about the money sunk into the condo on the Gulf Coast and the expenses since it always operates at a deficit when it's seldom rented by a management company.

Taking 3 major vacations a year is also a major expense as flying Business Class is a big bump up. Even a trip to the beach is expensive, but those living the Big Life also have to travel to exotic places outside North America. Have you noticed the price of hotel rooms skyrocketing even in off the beaten path places?

Those living in the big houses often seldom cook. They eat out all the time. Just ordering a pizza and the trimmings might set you back $40 a night. But the big house lifestyle is more like eating at Olive Garden or such places nightly at a whole lot more. Eating out nightly seriously gets into the personal working capital.

We live in a neighborhood of 5,000-10,000 square foot houses and we don't even know our neighbors. They're mostly self employed and essentially slaves to their jobs. They're seldom home to enjoy the fruits of their labor. Working so hard hardly seems worth the time and effort when you don't have time to enjoy life. If they're lucky, the kids carry on their businesses and they can semi-retire somewhat in their 70's.

Think of the retirement savings they're going to have to amass to maintain the lifestyle in retirement. I'd hate to be living the big life and having to fund retirement with net zero savings rates and today's roller coaster stock market. FIRE seems to be an impossible task if living BIG.

 

[dirtbiker]

I imagine a $300,000 house in 2000 equates to a $600,000 house in 2020. You dollar just doesn't go as far.

It actually equates to about $450,000 in today's dollars.

https://www.usinflationcalculator.com/

 

[timemoveson]

As I said earlier, living in a $1 million home in our ultra LCOL place gets you a really, really substantial house.

But it's the other expenses associated with the lifestyle that get you. I'm talking expensive private schooling for the kids--including college and graduate school--that can cumulatively push $1.5 million before taxes for 2 kids.

Then you have the costs of keeping up two luxury cars and a couple of regular cars for the kids. A pair of Lexus' or BMW's will set you back $125K minimum. And they've got to be replaced every 4 years at a minimum.

And the country club membership comes with it--and the minimum monthly charges and often subsidies when the club loses money. And renewing the greens on the golf course comes with a big, special assessment too.

And don't forget about the money sunk into the condo on the Gulf Coast and the expenses since it always operates at a deficit when it's seldom rented by a management company.

Taking 3 major vacations a year is also a major expense as flying Business Class is a big bump up. Even a trip to the beach is expensive, but those living the Big Life also have to travel to exotic places outside North America. Have you noticed the price of hotel rooms skyrocketing even in off the beaten path places?

Those living in the big houses often seldom cook. They eat out all the time. Just ordering a pizza and the trimmings might set you back $40 a night. But the big house lifestyle is more like eating at Olive Garden or such places nightly at a whole lot more. Eating out nightly seriously gets into the personal working capital.

We live in a neighborhood of 5,000-10,000 square foot houses and we don't even know our neighbors. They're mostly self employed and essentially slaves to their jobs. They're seldom home to enjoy the fruits of their labor. Working so hard hardly seems worth the time and effort when you don't have time to enjoy life. If they're lucky, the kids carry on their businesses and they can semi-retire somewhat in their 70's.

Think of the retirement savings they're going to have to amass to maintain the lifestyle in retirement. I'd hate to be living the big life and having to fund retirement with net zero savings rates and today's roller coaster stock market. FIRE seems to be an impossible task if living BIG.

That was a fun, well written and accurate post. The amount to amass by the end, to live the life you described above? Easy! $10mm net worth with the majority invested to produce spendable returns, not in dead assets or personal real estate.

And, to get there, you needed to have earned at a very high level for some period of time. (e.g., $500k-$1.5mm) on the way through depending on location/tax regime, etc.

To get off the treadmill, you’d have to buckle down and live with real discipline to make it all work. Success in this type of FATfire scenario isn’t a no brainer.

I know hundreds of such examples, both on the way there and arrived there - good or bad!

 

[Beachcomber]

That was a fun, well written and accurate post. The amount to amass by the end, to live the life you described above? Easy! $10mm net worth with the majority invested to produce spendable returns, not in dead assets or personal real estate.

And, to get there, you needed to have earned at a very high level for some period of time. (e.g., $500k-$1.5mm) on the way through depending on location/tax regime, etc.

To get off the treadmill, you’d have to buckle down and live with real discipline to make it all work. Success in this type of FATfire scenario isn’t a no brainer.

I know hundreds of such examples, both on the way there and arrived there - good or bad!

Yes - it was a fun read. Unfortunately, one should not get caught up in "keeping up with the Jonses". Some, however, find themselves in a house that is over 1 Million due to location.

I have observed that the wealthy who earn it, via hard work and sacrifice, are not so foolhardy with their money.

 

[Rianne]

Yes - it was a fun read. Unfortunately, one should not get caught up in "keeping up with the Jonses". Some, however, find themselves in a house that is over 1 Million due to location.

I have observed that the wealthy who earn it, via hard work and sacrifice, are not so foolhardy with their money.

Wealth is in the eye of the beholder. Looking wealthy and being wealthy are two different things. The idea of keeping up with the Jones' is a sad state IMHO. Many times the Jones' have lots of debt and just look wealthy. And there are those that look like yesterdays leftovers and are quite wealthy. Having a $M home has little to do with actual wealth. It's how comfortable you feel and if you truly can afford $M home.

No one can see our net worth. I like it that way.