@HImom, that’s incorrect. The whole $1M would be taxable. See IRS Publication 523.
Many seniors have pensions or combination of cash stream or retirement nest egg in addition to SS - so the total fees of under $3K/month with modest buy in is very workable for many. One gives up many expenses when one does that, but it also shrinks one’s world - which when you have physical/mental limitations, this is a good option for many as they see their health declining and want to be in a community w/o further disruptive moves away.
I just have a different plan that hopefully can work! Next July I will be cancer free for 10 years from very aggressive and very bad pathology breast cancer (I went from stage I to stage IIIa in 10 weeks due to misdiagnosis). The turn around came when after very aggressive chemo (and my Aunt making her 3rd and final pilgrimage to Lourdes to pray for me) - two weeks after I received her post card from Lourdes, I had a lumpectomy and they could find no cancer cells where the primary tumor was - which is expected in less than 10% - I still had more radiation and Herceptin treatments, but was on the road to survival. By the way, my first name is Bernadette (very fitting with Lourdes), and cousin (Aunt’s daughter) also survived breast cancer which occurred a few years earlier - my cousin had less treatments as her cancer was caught earlier.
I recently was threatened at work by a co-worker who made this statement to me “I need to go home and get my gun and shoot SOS”. Other employee was sent home and I am assuming he was fired, but nothing has been said to me by administration. The police took a report and called it a menacing threat - and told me to be hyper-vigilant of my surroundings. H and I are working toward the retirement goal line and hopefully will not have any road blocks like this disturbed individual.
@SOSConcern when DD got confirmed she chose Bernadette as her saint name and the Bishop commented that she’s his favorite saint. Glad you’re in remission so long! Take care 
We have a nice older home in a great family neighborhood in a very under-valued part of the USA. Although logically it makes the most sense to eventually move near our children, It would cost us nearly double for much less space because they all live in very expensive cities.
I know there’s a difference in opinion about downsizing for yourself, or for the sake of your heirs. I’m in the camp that it will be much easier for them to hire an auction type place, than it would be for us to unload memories bit by bit. Most mean nothing to them. Hire a company and walk away. So what if the auction value is miniscule. Or donate all of it. Every item has a story for me, and yes, “gives me joy” even when I’m dusting ?. I’m donating to friends’ children where I can, but have no family members that want the stuff, primarily because they all live 2400 miles away. They would happily share some items if they lived nearby.
Our taxes our high, but even so, are less than a very small apartment would cost us near our children. So we keep our house, and fly a lot.
For those struggling on what to do with their pianos: My parents’ piano is technically on loan, to a non-profit senior center. If a grandchild ever wants it, they have the right to reclaim (and move it). I highly doubt this will ever happen, but even if it does, the organization has been able to enjoy the piano for many years. If not, they gain a piano. The only thing we lost is the ability to claim it as a donation. Fair trade imho.
@HImom, You can still claim an exemption from capital gains tax on a “like-kind exchange” of real estate used in a business or held for investment purposes—but not for your personal residence.
OK, thanks. I haven’t been keeping up with all of this. We have never sold a personal residence but may do a 1031 like-kind exchange on some rental property. Will have to see how it goes and discuss with CPA, realtor and attorney.
“property taxes are laughable at $4K/year” - LOL, that is more than ours now in our big family house. (Funny side note - I was too lazy to look for the bil… checked it on zillow. The real estate world is soooo different than when we purchased in 1993). If we move someday, it probably won’t be due to the property taxes.
Hi, this is a slightly different subject in the retirement arena. I apologize if it’s been discussed but I couldn’t find it via the search function.
I have a question about Roth IRAs. We don’t have any, having mainly invested in 401Ks and some other types of IRAs. I feel pretty naive about investments but have been reading and trying to learn. My husband and I are both 62.
I have some money to invest, and my financial advisor wants me to put it with our other funds. But from the reading I’ve done, wouldn’t it make sense to max out our possible Roth IRA contribution first, then use other investment vehicles for what is left over? Is it ever too late to open a Roth, and are there reasons NOT to get one?
You can open a Roth IRA if you have earned income that year.
If you are already retired, then you can do partial Roth conversions of your regular IRA, depending on your tax situation.
Roth IRA is useful because distributions are tax free and can also be passed down to heirs tax free. It is better than taxable investment.
@calla1 – Adding on to @NCKris’s post above, Roth IRAs have an income threshold you cannot exceed. There is something called a Back Door Roth, but I could not begin to explain it.
$193K MAGI ss MFJ income limit for 2019. Phase out from $193K-$203K, and ineligible above $203K.
https://www.fidelity.com/retirement-ira/contribution-limits-deadlines
A BackDoor Roth works at any income level, but becomes disadvantageous (taxes) if you have a balance in traditional IRA. If you have a good 401k that will accept roll-ins, that works.
Can you explain in more detail, @IxnayBob? Thanks.
Sure, @doschicos , but for more information, readers should probably go to the Bogleheads wiki https://www.bogleheads.org/wiki/Backdoor_Roth.
Everyone with earned income can contribute the lesser of their earned income or (I forget, something like $6,500 depending on age) to a traditional IRA (tIRA). That can then be converted to a Roth IRA (rIRA). The conversion creates a tax event if there were other assets in the tIRA, called the pro rata rule. If you have no tIRA balances, it’s easy peasy.
But, if you have a 401k that will accept roll-ins and you have an existing tIRA balance, you roll your existing tIRA there and then do the contribute to rIRA followed a day later by converting to rIRA. You then file a form 8606 with your annual income tax return, documenting your basis in the rIRA.
There are slings and roundabouts, discussed on Bogleheads in mind numbing detail. It is actually very easy to do if you can get your tIRA balance to $0. I got DW’s balance to $0, so she’s been making backdoor Roth contributions for years. I couldn’t get my tIRA balance down, so no backdoor Roth for me.
Backdoor Roth sounds kind of dirty, but it is absolutely not: it is approved by the IRS.
It is kind of dirty but we do it anyway. One thing to consider, the tax you pay upfront. If you think you can do better investing that money, Roth may not be the best option.
If you aren’t at the income limit and are maxing out 401ks, I think maxing out Roths would be the obvious next step.
We aren’t eligible for IRAs upfront and for reasons I can’t really remember, my situation wasn’t great for backdoor IRAs, although it was likely doable at some significant expenditure of time (e.g., move custodians etc.).
Has this article been posted in here before? I find it interesting in that it actually addresses and tries to answer the original question of this thread, ie How much do YOU think YOU need to retire? They lay out all their assumptions (and don’t include Social Security). The number they come up with is a lot more than most of us - certainly more than I have (or had at age 54 when I stopped working) and reminds me how fortunate I am that the stock market averaged around 12.5% annual returns since 2009 which makes my positive outlook now a bit of an outlier in their monte carlo simulation. 
https://www.businessinsider.com/how-much-money-need-invested-retire-at-65
Sounds like a fairly accurate analysis to me, given the caveats mentioned in the article.
I found this interesting from the article:
“According to a recently published report from the congressional Joint Economic Committee, less than half of US workers have 401(k)s or IRAs, two types of retirement accounts highly recommended by financial planners, in part for their tax advantages. Among Americans aged 55 to 64 who do have retirement accounts, the median balance is just $88,000.”
Not a good place to be in for many.
Good find, @NJres. I wonder if Oracle still does a free trial of Crystal Ball (easy to use Monte Carlo spreadsheet simulator).
^^^ I see no reason to live entirely on investment income, as the article linked in post #15736 assumes. Once DW and I hit age 70 1/2, we’ll need to take required minimum distributions from our retirement accounts. These are predicated on the assumption that you’ll spend down your retirement savings over the course of your remaining expected actuarial life–i.e., gradually use up your invested capital as well as annual earnings on that capital. And why not? There’s no requirement that you actually spend your full RMD, of course, so if you want to save some for your kids to inherit, you can do that. But the question of how much you want to pass on to your kids is different from the question of how much you’ll need to be comfortable in retirement.
My top priority is to have enough that we can pay our bills while living at a standard we’re comfortable with, and not be a financial burden on our kids. If that means we’ll leave less for them to inherit, so be it. We’ve told them we’re planning to spend most of what we’ve acquired in a lifetime of earning, saving, and investing, and we’ll leave them anything left over. If all goes according to plan, they’ll inherit a non-trivial sum, but not nearly everything we’ve accumulated.
I also see no reason to assume away Social Security entirely, as the article does. I’ll start drawing SS benefits in 3 years at age 70, when the size of my benefit will be maximized. The $40K a year I’ll draw in SS benefits is $40K I won’t need to take from my own retirement savings or after-tax savings and investments; same for DW’s benefits which will be another $20K or so. The latest projection is that the SS trust fund will be exhausted by 2035, but they say they’ll be able to pay benefits in full on a timely basis until then. By then I’ll be 83, if I’m still around. They also project that from 2035 forward they’d need to reduce benefits by 13% to remain solvent, unless Congress steps in with some other fix, like raising taxes either on a percentage basis or by raising or eliminating the cap on how much earned income can be taxed, or both. There are also proposals to cut benefits for future retirees but not for people already retired or nearing full retirement, e.g., by raising the FRA and/or changing the benefits formula for people under 55 at the time the legislation takes effect. I’m extremely skeptical they’ll make up the entire shortfall by taking it out of the hides of people who are already retired by then; the political fallout would bury the politicians. But even if they cut my SS benefits by 13%, I’d still be drawing a benefit of nearly $35K per year in 2019 dollars. If they cut my benefits by 25%, I’ll still be drawing $30K. Even if they eliminate my benefits entirely under some means-testing formula, I’ll be most of the way to 90 before that cut is made. In any case, ignoring the SS income stream as part of my retirement planning seems downright foolish.