That’s an excellent question. For now, I’ll assume the table will be about the same (approx 4% at age 75… though balance will be higher than if you started withdrawals at earlier age). Of course there would still continue be small annual adjustments based on life expectancy.
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Life expectancy dropped in the last couple years, I think. Has the table been adjusted as a result?
Isn’t that a function of COVID? I guestimate my life expectancy based on my parents’ and grandparents’ longevity and my current health and lifestyle. There are online estimators that use a variety of factors.
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It dropped for two years but went back up in the past year. Don’t know how/if that affected RMD tables.
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I’m not surprised. No state income tax, the money has to come from somewhere. Also, according to a close family member of mine the services there are not good either. Also, home prices in that area are very high due to wealthy folks from Boston/NYC etc. buying second homes there.
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Deleted.
The standard Iife expectancy number the press likes to talk about is not relevant to RMD’s. (a few more deaths in kids or young adults – drugs – can skew the data, not to mention covid.).
RMD tables are based on SS data for expected lives at each age. For example, at age 70, men are expected to live another 13.6 years, and women 15+. At age 80, its 7.7 and 9.1, respectively. (Not sure how the IRS converts those numbers into unisex.)
The actuarial tables are updated every 10 years or so. So, the next update will get covid numbers and more deaths of 60-somethings, so that 13.6/15 may decline, causing the RMD to rise?
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I don’t expect they will raise the RMD any more, or it may be a long time before they do. But for many people, having the RMD means they can ‘spend down’ some on these assets at that point in time - at least they have to pay the taxes to get them out of the tax deferred plan.
IDK if there are more ‘savers’ with 401k, IRA, Roth IRAs as the pension scene has altered some – where companies offered both retirement pension and 401k but have phased out of the retirement plan; companies that were quite generous with health plans supplementing after Medicare as well.
Some on this thread are years away from retiring, and even years away from reaching 59 1/2. Depending on having lower cost health insurance prior to Medicare can be a determining factor with retiring before age 65. I just was not willing to part so easily with our hard earned money, and hung in with my sunset career job until I turned 65 - I am 4 months younger than DH. He parted with his job 10 months earlier for his overall health - his boss made his life difficult and he wasn’t going to be ‘jacked around’ by him any longer – he worked over 35 years for essentially the same company (had the same phone extension, moved around a bit in the two buildings) - but ownership of the company changed with merger, then two outright division sales. The last ownership eliminated the pension (so DH got pension payouts twice, with the last two corporate owners). Those payouts went into IRAs which we then converted to Roth IRAs. His last 14 years of employment, the higher salaried years were w/o the gains that a pension would have provided. BUT, we fiscally managed his sizable 401k, and have spun that off with annuities, to lower our risk level. Those annuities are now giving us monthly cash flow. I had one annuity as well from my consolidated IRA (transferred from company 401k) - I had a six figure amount from 7 1/2 years of employment in the 1990’s before becoming SAHM, putting in the max with 401k and company matching, with an additional 3% of salary put in at end of year with ‘top heavy’ plan (physician group, they were willing to have this happen so they could put in the max amount for themselves). I was Administrator and CFO of the group, and got the 401k going as soon as I was hired in. It turns out that a month after DH retired, his dad declined and died, and he was needed at his mother’s while she was being readied for skilled care; she died less than 3 months after her husband died – they both died at age 92. So DH had the time and emotional resources to spend the last hours with his dad, and the last months with his mom (850 miles away from our home).
We have found that cash flow and consideration of taxes are important factors, once one’s investments are running well in retirement.
We are content with where we are overall. The kids are ‘alright’; the four grandkids are well cared for and happy. Working on better health - exercise plan and weight loss. Have our medical visits pretty much systematic. Finished with a few specialists too now that a few health issues have resolved.
Have to dive in a little more on estate planning, but dragging my feet a little, making sure we will remain in our same state as primary residence.
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Many on this thread are thinking “second home” - maybe beach/lake/cabin/condo…
We are awaiting DD1/SIL purchasing a home where they now live, probably in two years when SIL is sure about his career remaining in this city - and it may be that we help with a down payment at that time(which we would do the same for DD2). Either they would have a guest room, or we could see how we would have accommodations for visiting. It seems I may be visiting to help out with the grandkids for some periods while DH remains at our home with his hobbies and activities - that is what is happening now. But we can see what evolves.
We have lived in this state before (Texas). DH has no desire to live in DD2’s state (Florida), nor does he want to live FT in TX. We like our current home, and property and state taxes are reasonable - while the value of our home is going up due to location and best school zone, while the area is experiencing excellent growth. At the end of the year, we might be starting on some remodeling – adding a four-season room off of our family room; this will bump up the home in square footage (to the next level of homes with higher base pricing) and more generous living area. Have a wooded back yard with a lot of privacy. Getting the name of the architect used by a friend, and also want to add a carport on the two extra cars’ driveway area – already have side entry two car garage with the 3rd car area as workshop. Want a little architect design with the front of the car port to blend in with the look of the house, and with the sloping of the garage area roof and water run off handled well. Will also see about cost of getting some rough sketches on adding 2nd floor above garage area – we have a steel beam across the garage, and at the time we built we didn’t need the space, but we made a mistake on not having that whole area be unfinished space (we currently have pull downstairs for storage). It would give a buyer the flexibility of having that area be built out at some future time. That second floor area would need its own small HVAC unit; the electrical panel is in a storage room (part of the 3rd car garage space) - easy to run electrical and plumbing into that area too. A new owner could design that whole area to be a suite for guests, or adding more bedrooms and another full bath – home already is 4 BR, 3 full baths - master has oversized Jacuzzi brand (2 person) bath tub and oversized shower; downstairs full bath (next to guest bedroom) had a single Jacuzzi brand bathtub with shower. Custom home, energy efficient (6 inch walls). Great curb appeal in quiet neighborhood, well placed close to everything.
After this addition, it is onto some interior finish work. Refinish kitchen cherry cabinets (they had overstained them so you can’t see the wood grain - so stripped and refinished); refinish many ceilings eliminating popcorn ceilings (had started this on some rooms; wish I would have ‘paid attention’ to having them smooth finished at initial construction, but this detail was before it was something to not do); change out lighting in kitchen/update. Have new built in vanity/cabinet made for master bath (plumbed for two sinks, we used a sink and make up area; so having upscale cherry wood and quartz with two sinks).
I’m curious why you would do all these MAJOR changes to an already good sized home (4 br, 3 baths, 3 car garage, etc.) that is being occupied by 2 people??? It seems you are doing a lot of “supposing” that a prospective buyer is going to want all this space, upkeep and having to finish off space.
Maybe I’ve missed something.
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A little perspective here if you are worrying about RMDs and are miffed that you will have to pay taxes please remember to feel fortunate as the majority of people RMDs won’t ever come up because they really need to money they have saved to live and survive on. Many will spend through their savings pretty quickly.
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Our neighborhood is right next to/connecting to a neighborhood that began around 2005 (we purchased our lot for $60k less than those lots which are about the same size - we bought our lot about 5 years before building our home in 1992) - and those homes are the higher square footage and also higher finishes than many of the homes in our subdivision. Behind our two neighborhoods (a large hill, but they call it a ‘mountain’) is an elevated nature space with walking trails. Some homes on our street (the last area developed) are large and comparable to this other neighborhood - and one lot that was only built on 4 years ago which is a few houses down from us sold high and sold quickly to second owner. Our bathrooms are higher end/no finish work needed except for master vanity. The cherry cabinets in the kitchen bothered DH and me from day one (my dad had a construction business and full cabinet shop, and I should have required the cabinet guys to ‘hand finish’ the cabinets because they over-sprayed them in their cabinet shop spray booth). The money we put into the four-season room and carport will come back 100% and then some. When we replaced both HVAC units (our original units lasted about 23-25 years), we had the downstairs unit be able to accommodate the extra square footage for this addition. Lots that are ‘close in’ within our city have escalated prices as well.
We actually have 3 people in our home right now – DD2’s BF is a 10 month employee in sports management in our area - but it looks like he will move soon…interviewing with teams in two other cities/two other states. He is ‘paying his dues’ and hopefully will land a job soon in DD2’s area (which has a lot of sports teams and opportunities). At that point we will be gaining a SIL. They have been a committed couple for 4 years.
We have local people looking to ‘upscale’ as well as highly paid people moving into our area. We are looking to make our home very appealing, while continuing to enjoy it. The work we will put in will be over time and IMHO fairly pain free as far as inconvenience, as well as cost. Our home has higher end detail (vaulted ceilings, real wood panel doors, real shelves in the walk in closets, etc.) DH will do some more crown molding in his workshop as our work begins/moves on. Wood flooring in some areas, tile in bathrooms, most of the carpeting is the top Shaw carpeting - when we had a little water damage in family room (small corner damage from shared wall where water heater plumbing had a joint leak) the insurance company told me they had never seen carpet rated so high (when installed, were told it will not wear out - and it has such thick pile that it doesn’t show wear) – we ended up finishing that room with wood floor. At the time of construction, I also wish we would have had a few more rooms with wood flooring instead of carpeting, but we were concerned about the cost of having high end area rugs. Our first and only home constructed from scratch with custom plans. We did a lot right.
Totally agree. Having recently gone through a kitchen remodel that morphed into additional projects, it’s expensive and time consuming. We had people in our house for almost a year. Dust everywhere, though they tried to control it. We have 25-30 foot curtains that are very high and difficult to reach in our living room that used to be white, now they are grey, and tough to clean or replace. It cost so much more than expected. What a hassle, though we loved our contractor. We are happy with all of it, because this is our forever house.
If I thought I was going to sell my home, I would only do minor projects, as dealing with the expense and hassle is only worth it if I plan to stay. Adding a bunch of square footage to an already large house, only if it was for me. I’d talk to a realtor that I trusted, and ask, is it really worth the expense and hassle to do all this, or should I just do minor cosmetic fixes and sell it at a lower price?
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Agreeing consulting with a local realtor to get an accurate assessment of return on investment for various possible house projects can be helpful. It can (as noted) depend on the neighborhood and genetic standard advice online (e.g., it’s worth it to do X but not Y) doesn’t always apply.
We did that selling my parents’ house - although the real invaluable consultant was a local designer who staged homes for realtors. She gave us tips on everything from whether to structurally expand the kitchen (no) to what color of paint worked best with the lighting and floors in the homes like ours.
A bonus of getting advice from a local designer - had no vested interest other than what we paid her hourly.
Sometimes I think realtors either want you to dump money into the house prior to sale (to up value & increase their percentage) or (what we experienced) encourage you to sell in current form so they (it seems) get a quicker payment. I know that’s certainly not always true but those can be factors at times…
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Counterpoint to your explanation of your valued neighborhood and that most of the homes are much larger than your current home footprint.
We bought our current home in 2023, a "staycation"home. So avoiding a second property. We are probably among the smallest homes in our area. We wanted the neighborhood but waited 3 LONG YEARS for one to come available that was NOT the mega mansion. We have all the benefits of the neighborhood and area without having a home to get lost in and to be a slave to upkeep. Home two doors down is for sale right now - 4400 sq feet. House next to us is under a full renovation at 3800 sq feet. Ours is a “right sized” 2600, all useable space for us in our 60’s.
We all live our way but it is not the only way. Not everyone wants to keep up with the Joneses. And good luck with their being no intrusion on your daily living with all those plans even over time!
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I recall from all the bazillion real estate classes that I took, the mantra is to buy the smallest house in the nice neighborhood, best return on your money.
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I keep up with the real estate market pretty well, and have two realtors in my book club. Since we built this home, we do know what it takes. The room addition can have the area masked off pretty well. The car port will be outside. The kitchen is going to be the disruption (smooth ceiling, new ‘main’ light fixture, refinish cabinets). The master bath new vanity cabinet is a ‘must’ to have the double sinks.
Already know the contractor we will use - they charge a flat rate for their labor/management (percentage add on for profit) and we can purchase our own materials (which we have done before as we built this home with paying all the ongoing costs and had a site supervisor who hired and supervised the workers - told us what materials to buy and scheduling deliveries – site supervisor didn’t want to deal with the money). After we do the room addition and car port (but if estimates are really high for this work, we can evaluate), I believe we will do the master bath vanity next. At that point, we can evaluate what it will cost to finish out the kitchen.
Will see what the architect will charge for the work. It is straightforward on the room and the carport. Will see what the rough in sketches for 2nd story above garage will cost.
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That gives me pause, also. Say you throw an additional 200K adding square footage to the house, and the realtor is convinced you can get that back. So ignoring the hassle, potentially higher costs and the possibility of not getting that return, if you get that back, you’re paying realtor fees of 5-6% on that, along with any additional state/federal/excise/additional closing costs. And will a house that is as big and expensive as the others nearby sell quicker, or will the smaller, cheaper one sell faster? Is this how I would invest my money, uncertain return, guaranteed hassle?
There are minor fixes we’ve done to our properties that were worth it. Granite countertops, new appliances, flooring, paint, painting cabinets. Adding square footage would be worth it if we might stay there and wanted it anyways, otherwise, retired people generally wish they had a smaller house, not a larger one. Maybe if one lived in a ultra high cost area like Aspen, where people are paying several million for a house. Otherwise, I’d be curious (and suspect) of what a good realtor’s opinion is.
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I think that most of your project sounds very reasonable, the concern I have is with an addition. It’s remarkable how after a project is started, the costs and changes just seem to keep adding up.
It makes sense to do (or at least price) all the options to make the house nicer for selves, more appealing and practical for older age.
Per the new space over garage, you can probably get a lot of mileage at sale time just by saying “potential for extra room to be added above the garage” - let the buyer do it later, if they want. In desireable neighborhoods, there are usually plenty of young families wanting a lower price point that allows them to buy there.
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