Retirement, Downsizing, Maintaining Lifestyle

[BtmBearDad]

This post stems from a conversation I had flying to LA today with the gent next to me. 

How many of you gents have thought of and/or made plans for retirement in terms of downsizing to maintain current lifestyle? 

The gent shared with me he was planning to retire at the end of this year, sell his co-op in NYC, and move full time to his heretofore summer/weekend place up in the Hudson Valley. Fair enough. As he put it, by selling NYC, he’d still have the funds to maintain his lifestyle - traveling, and such. Whereas if he sold the weekend place, and stayed in NYC, it would really curtail his lifestyle in retirement. 

I have thought in the past that I’d probably need to downsize for the same reasons, but I also always thought “oh you have plenty of time yet!” - perhaps not as much time as I’d like to think! 

Have any of you gents thought about, are planning to, or have actually downsized? 
Just to be clear, the downsizing I’m speaking of isn’t necessarily size/space but more so monthly costs. 

Thoughts? 
 

Thanks, 
BBD 

[Kevin Slater]

When I first moved to NYC I expected to beat it like a piñata for maybe five years then move elsewhere.  But given that my rental properties are here, I think I'm in the fortunate position of being "stuck" here. 

Is the logic behind leaving the city to free up home equity or to reduce monthly expenses?  The latter doesn't make much sense to me; NYC isn't that much more expensive than elsewhere, especially considering that you'd likely need to get a car and adding in the cost of relocating.

Kevin Slater

[+ Vegas_Millennial]

I'm retiring in 6 years, and my plan is to actually "upsize" to a more expensive property and increase my standard of living and travel more.

I have been saving 30%-50% of my paycheck since I was 18, and invested aggressively in Roth IRAs/Roth 457/and other tax advantages accounts.  My financial forecast shows my take home pay will significantly increase in retirement compared to now, simply because I won't be contributing as much to investments and will be in a lower tax bracket thanks to the Roth tax-free withdrawals.

[BtmBearDad]

@Kevin Slater For the gent I was chatting with, it was definitely about reducing monthly expenses. Without him being specific dollars and cents wise, he offered that his monthlies in the Hudson Valley would be just about a third of what his maintenance is in NYC.

Just for some perspective, the maintenance on my co-op runs about $6K a month. Meeting that while working is one thing, but in retirement, that’s a hefty monthly nut. I was lucky to get my co-op over 20 years ago, in estate condition so it was very reasonable. It’s fully paid off, and based on comps in my building, were I selling now, I should be able to get 4-4.5x what I paid. But the question then is, where to? 🤔 

Obviously, I’d like to have a comfortable retirement, but I’d want to stay in NYC - plus I love my apartment. Growing up sucks lol 

 

BBD 

[+ purplekow]

I do not presume to know your lifestyle but 72000 a year for co op fees along with whatever you can net from the sale of the co op makes it seem that you could go almost anywhere, stay ostentatious free and still live quite a nice life in retirement.  While I am still working, albeit only for the next 6 months, I believe I could be very content with the funds you mentioned.  

[spider]

This is much on my mind recently. I'm way closer to retirement that it seems possible - time flies! We will have two good pensions and more money stashed away for retirement, Insurance will continue although at a somewhat higher rate. House is getting close to being paid off but there will be a residue left on the mortgage, small enough that we could dip into savings and pay it off.

We have nice buy not extravagant city living.

The one thing we really plan to do is to get anything medical related that we know of done - eye care, dental, etc.

But, still we worry about running out of money. The latest stock downturn is worrisome. We don't want to stop traveling since that's what retirement is all about!

[Kevin Slater]

1 hour ago, spider said:

 House is getting close to being paid off but there will be a residue left on the mortgage, small enough that we could dip into savings and pay it off.

Sounds like the mortgage has been around for a while, and I'm guessing at a pretty favorable rate compared to today's climate.  If so, perhaps don't rush to pay it off?  Those dollars may be better invested elsewhere, while being subsidized by preferential mortgage interest.  (OTOH, I do understand the temptation to be free & clear.)

Kevin Slater

[+ The Big Guy]

This is a good discussion and steps in retirement will obviously depend on one’s personal finances.  Since retiring I have focused on simplifying my life and targeting cost savings from what I termed “low hanging fruit”.  To simplify, I sold my house and moved into a mid-rise.  The cost savings were not that much, but I take great peace of mind in being able to lock and leave in a secure building.  On cost savings I was surprised by how many items I had on auto pilot that could be reduced.  I realized very nice savings by (1)re-bidding all property, casualty and liability insurance (2) getting rid of cable and satellite subscriptions at my primary and secondary residences and using much cheaper options (3) protesting my property tax valuations (4) got rid of several club memberships I was under utilizing and  (5) consolidated broker accounts to reduce advisor fees. These were relatively painless to accomplish but I never took the time while I was still working. Best of luck to retirees!  

Edited July 13, 2022 by The Big Guy

[+ Charlie]

When my spouse and I retired, we downsized to upsize. We sold our Center City townhouse in Philadelphia, and used the money to buy a ranch house with a two car garage, on a large lot  of land with fruit trees and a swimming pool, in Palm Springs. We also bought a second car, something we never needed in the city. And we had money left over for our new lifestyle.

However, after thirteen years, we were ready to downsize again, but this time for real: we sold our desert oasis and moved into a smaller house on a tiny piece of land, in a 55-plus community. Once again, we sold our house for more than we paid for our new residence. But the next downsize will probably be to a unit in an assisted living facility. We are already preparing to go back to only one car when the lease on our second car runs out at the end of this year.

Depending on how old you are and what condition you are in, there is no one right way to adjust your lifestyle when you retire. The important point is to know what your options really are, and plan accordingly, recognizing that what you want and what you can do may change--retirement can last a long time, and you need to remain flexible.

[+ augustus]

There are 2 big curveballs in retirement:  1:  sickness  2:  inflation eroding the value of your assets.

Edited July 13, 2022 by augustus

[BtmBearDad]

17 hours ago, purplekow said:

you could go almost anywhere, stay ostentatious free and still live quite a nice life in retirement.

I recognize that I’m fortunate in terms of the career I pretty much stumbled into that has allowed me to live well enough, and enjoy this hobby among other things. I have savings, investments, 401K, IRAs put aside for retirement, but of course my income will take a hit once I leave the workforce. So is it really “smart” to stay where I am given the monthlies? I agree, should I opt to sell, I could relocate, and live well enough - my issue is, do I want to relocate out of NYC? Were I to stay here, and looking to downsize my monthlies, I’d be looking at a much smaller place in Manhattan, or something of comparable size in parts of Brooklyn or Queens. This random airplane chat has stuck with me, and I think it’s something I need to do some research on when I’m back home. 

 

9 hours ago, spider said:

But, still we worry about running out of money.

I understand that fear. I’m on my own - whether that will remain the case, who knows - so my POA’s and medical proxies are friends all near the same age - what happens God forbid should I outlive them? I told my financial planner several years ago, I don’t care if there’s no money left when I’m gathered to my forebears, I just don’t want it to run out before that. Longevity runs in my family - my grandmother’s aunt passed just shy of her 109th birthday in reasonable health, ambulatory, and with her full wits. Unfortunately on the other side of the family, there’s dementia. That’s scary to me. If I average out all the ones who made it past 90 and into the 100’s that’s still over 40 years to go - and finance. 

 

2 hours ago, augustus said:

There are 2 big curveballs in retirement:  1:  sickness  2:  inflation eroding the value of your assets.

Yes indeed - that which cannot be predicted. 

[Guest]

22 hours ago, Vegas_nw1982 said:

I'm retiring in 6 years, and my plan is to actually "upsize" to a more expensive property and increase my standard of living and travel more.

I have been saving 30%-50% of my paycheck since I was 18, and invested aggressively in Roth IRAs/Roth 457/and other tax advantages accounts.  My financial forecast shows my take home pay will significantly increase in retirement compared to now, simply because I won't be contributing as much to investments and will be in a lower tax bracket thanks to the Roth tax-free withdrawals.

Slow

standing

applause!

well done!

[spider]

23 hours ago, Kevin Slater said:

Sounds like the mortgage has been around for a while, and I'm guessing at a pretty favorable rate compared to today's climate.  If so, perhaps don't rush to pay it off?  Those dollars may be better invested elsewhere, while being subsidized by preferential mortgage interest.  (OTOH, I do understand the temptation to be free & clear.)

Kevin Slater

Spot on. I go back and forth between wanting to get that monkey off my back and thinking that it would be better to keep the cash in the accounts.