<p>BC- in an earlier post you mentioned car prices. In 1994 I purchased a brand new 1994 Geo Prism that car was the 2nd in line after the Metro. I just donated the car in October 2010 and purchased a brand new 2010 Hyundai Elantra. The vehicle is second in line after the Accent. The window sticker on the 1994 Geo was higher than the window sticker on the 2010 Hyundai. Both vehicles had the same basic package. Except the GEO did not have power windows or door locks while the Hyundai does.</p>
<p>While downsizing the actual dwelling would be somewhat nice (somewhat in that it would be a chore to get rid of all of the accumulated “stuff”…and the 11 rooms of furniture.</p>
<p>BUT downsizing the dwelling would not downsize the costs…at least where I am, unless we moved into a one bedroom or studio apartment without off street parking. Costs of rents around here are almost double what we pay for our mortgage. Even adding utilities, taxes and insurance to the equation…doesn’t bring it up to our expenses for living in and owning our house…which for now we actually like…both the house and the location.</p>
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<p>That’s where we are…could we make money on our home, maybe. We have about 50% equity in it at the moment. Hope to get it paid off by the time we’re 60. But we have no desire to move. We made the decision in the last few years that this is where we will live until we are not longer able to take care of the house. We recently renovated to make it more livable and will eventually put in a circular drive so we don’t have to climb stairs to get into the house. We like our neighborhood and the location and, quite frankly, just don’t want to move again. Too much of a hassle.</p>
<p>Our experience is every time we’ve moved, we’ve had to do a lot to the new house to get it to where it’s acceptable to us, not to mention the fact that current furniture often doesn’t fit into the new house.</p>
<p>So, no. We don’t think of our house as an investment. We see it as a place to live. If it decreases in value, oh well. If we had been renting all those years, we would have been out of pocket for the amount of the mortgage anyway.</p>
<p>emmi, maybe I’m not getting the math right, but I don’t see how selling the house and renting would put us in a better financial position. Right now we pay taxes + utililties +insurance. If we sold, we’d pay utilities + rent to a landlord which would cover the same taxes + landlord profit + one-time costs of selling/moving. And we take the chance of increase in rents. In return we’d invest the money in cash with microscopic ROI, or volatile stocks. How does that put us in a position that would be enough of a improvement that the cost would be worth it?</p>
<p>We have been relatv\ively lucky in our current situation.
We recently moved to a new city for my H’s employment. We were able to sell our old house fairly quickly and for a good price. We downsized a little when we moved, but wanted to still have space for our children and future grandchildren to stay with us.</p>
<p>Because we rented for about 20 months before we bought our current home, we were one of the lucky ones to benefit from the lower housing prices. Even with the the low mortgage rates, we chose to pay cash for our home to make it easier to pay college costs out of cash flow and for future peace of mind. Our taxes are reasonable because we chose to live in a township area (city taxes in Ohio can drive you crazy) and my H’s employment also is in a township area. </p>
<p>Like everyone, our 401k has taken a huge hit in recent years. But we continue to stash as we can, and plan to increase our stashing as our children hit independence. And we plan to keep working as long as we can, so as to ultimately collect as much social security as we can, and to delay and minimize hitting the 401ks for as long as we can. Having minimal monthly expenses is part of our plan.</p>
<p>Can someone explain to me a social security strategy that a friend mentioned? She and her H are each 55. She said that she plans to retire at 62 and to take her reduced social security, while continuing to work part time, up to only the point that her benefits will not be reduced. Her H will then work until he can collect full social security. Then, once he has filed for his benefits, she will then convert her filing to collect a spousal benefit instead of her own, because the monthly amount will be larger.
Really?</p>
<p>“Right now we pay taxes + utililties +insurance. If we sold, we’d pay utilities + rent to a landlord which would cover the same taxes + landlord profit + one-time costs of selling/moving. And we take the chance of increase in rents. In return we’d invest the money in cash with microscopic ROI, or volatile stocks. How does that put us in a position that would be enough of a improvement that the cost would be worth it?”</p>
<p>You are not including upkeep in your current expenses. Nonetheless, you may very well be right; if the opportunity cost of holding cash (the value of your house) is zero, you might be better off, assuming that housing prices are not going to continue to fall–an assumption that also may be right, but also depends on a variety of factors and may vary based on your view of the future of the economy, the particular area in which you live, and the specific nature of your house.</p>
<p>As to the amount of return that you could expect to earn with relative safety, it would depend on your time frame and age. Obviously, if you are talking about money market funds or fixed rate CDs, the rate is effectively zero (thank you, Helicopter Ben). If you are talking 10 years and will be 59 1/2, you could earn significantly more with some annuity products–particularly if you are willing to annuitize the proceeds at the end of the 10 year period. (I’m not advocating the purchase of any particular product; I know that many of these annuities come with strings. I’m just making an observation).</p>
<p>boysx3 - I believe the deal on Social Security is:
(A) while both parties are alive, each claims SS based on their own earnings.
(B) when one spouse dies, the surviving spouse can choose either SS based on their own earnings, or SS based on the deceased spouse’s earnings.</p>
<p>Since male spouses tend to have higher earnings and shorter life expectancies, a case can SOMETIMES be made for the wife to begin collecting at an early age, and the husband to delay collecting. The objective is for the wife to collect smaller monthly amount for a long time before taking over the husbands higher amount (when he dies).</p>
<p>Sometimes this works out well … but there are many possible “gotchas” along the way.</p>
<p>My understanding is that boysx3 is right, but I can’t cite you to a source.</p>
<p>Here is a source</p>
<p>[How</a> to Use Social Security Spousal Benefits - Yahoo! News](<a href=“How to Use Social Security Spousal Benefits”>How to Use Social Security Spousal Benefits)</p>
<p>boysx3- yes she can earn approximately $14,000 and not reduce her SS. The longer her husband works the more his ss will be and she is entitled to 1/2 of what he receives as his spouse. So say at 62 her benefit based on her earnings is $1200. Her husband continues to work to say age 70 when he collects say his benefit has increased to $3200. She now becomes entitled to ss of $1600. That is my understanding but it is always best to see the ss counselors down at a social security office.</p>
<p><a href=“B”>quote</a> when one spouse dies, the surviving spouse can choose either SS based on their own earnings, or SS based on the deceased spouse’s earnings.
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<p>Unless you are a teacher in CT…I can never collect on my husband’s earnings even after he dies. And even though I contributed to SS myself, I get a very significantly reduced benefit.</p>
<p>And NO I don’t have health insurance for life for free as a retired teacher.</p>
<p>Regardless…the inflation thing and retirement will only affect me for COLA increases which only come IF the inflation threshold is above a certain amount. It hasn’t been for several years here.</p>
<p>RE: our house…we’ve run the numbers for staying here and selling…staying here with no mortgage is cheaper.</p>
<p>Definitely something to think about…thanks for the info.
Yet not something to count on…I’m sure the rules will change (and not to our benefit!) by the time we are ready to retire.</p>
<p>“And NO I don’t have health insurance for life for free as a retired teacher.”</p>
<p>It depends on where in CT and when you retired.</p>
<p>DocT…I was speaking for myself only…yes I do believe there are districts that do pay for health insurance for retirees…but remember too that many teachers in CT are NOT eligible for Medicare…if teaching was their only job, they would be ineligible because they never contributed to SS/Medicare while working. I feel fortunate that I worked in a couple of states, and had second jobs where SS was taken out of my pay…if for no other reason…Medicare.</p>
<p>My biggest concern over the next few years is inflation. The only reason we are not experiencing double digit inflation is that unemployment is so high and capacity utilization is so low. If those circumstances change and I believe they will in the next few years if government actually starts to show fiscal restraint, we will start seeing inflation. The best way to play inflation is borrow today at low interest rates and repay later with more worthless dollars. </p>
<p>I know a lot of people are investing in gold, but the reality is that it has run up so much it has anticipated many years of inflation. I’m not sure how wise of a move gold is at this point. </p>
<p>ECRI is predicting a recession as a certainty. If that happens that may be a disaster for borrowing. All bets are off if we have another recession.</p>
<p>“DocT…I was speaking for myself only…yes I do believe there are districts that do pay for health insurance for retirees…but remember too that many teachers in CT are NOT eligible for Medicare…if teaching was their only job, they would be ineligible because they never contributed to SS/Medicare while working.”</p>
<p>I’d rather not have to pay for health insurance than to be eligible for medicare.</p>
<p>"ECRI is predicting a recession as a certainty. If that happens that may be a disaster for borrowing. </p>
<p>Count on it - they’re going to be right as usual.</p>
<p>“that unemployment is so high and capacity utilization is so low. If those circumstances change and I believe they will in the next few years if government actually starts to show fiscal restraint, we will start seeing inflation”…</p>
<p>I just have to :).</p>
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You are assuming that nothing will change.</p>
<p>Medicare will most likely continue to exist in some form. Free health insurance in retirement? Millions of pensioners can tell you about the broken promises of the parties responsible for their retirement plans.</p>
<p>"Millions of pensioners can tell you about the broken promises of the parties responsible for their retirement plans. "</p>
<p>not with teachers pensions and medical benefits by law.</p>