Do you include the sale of your home as part of your retirement planning?

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travellight
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Re: Do you include the sale of your home as part of your retirement planning?

Post by travellight » Sat Nov 18, 2017 9:33 pm

I had always factored it in but recently am inclined to keep it. My heir would inherit it at its new basis and I am loathe to pay the tax on the gains.

quantAndHold
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Re: Do you include the sale of your home as part of your retirement planning?

Post by quantAndHold » Sat Nov 18, 2017 11:20 pm

Of course I include my house in my planning. I have a fully paid off house in a VHCOL location. It’s 1/3 of my net worth. I don’t include it when I’m figuring out my withdrawal rate, but it’s there as my disaster plan/long term care insurance. The house is what takes me from 95% confidence in my plan to 99.5% confidence.

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wander
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Re: Do you include the sale of your home as part of your retirement planning?

Post by wander » Sat Nov 18, 2017 11:57 pm

TheTimeLord wrote:
Sat Nov 18, 2017 8:36 pm
wander wrote:
Sat Nov 18, 2017 4:37 pm
Selling our house is the last option if our retirement money is running out. It is nice to have a safety net, but when planning for retirement we exclude the house.
Sounds like you plan for it, you just plan for it off book and don't reflect it in your formal plan.
Not likely. If that is the case, then we will be really in trouble since our house is less than 10% of my net worth.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by SGM » Sun Nov 19, 2017 5:35 am

If I were planning on moving to a continuous care retirement community I would likely use the proceeds of a home sale to move in. I don't think I would want the burden of renting out the home at age 80. Projecting the value of the home at age 80 and the future cost of a move would only be estimates.

We are planning to stay in place and not move so we don't include the value of the home in any of our calculations.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by trueblueky » Sun Nov 19, 2017 7:35 am

TheTimeLord wrote:
Sat Nov 18, 2017 9:29 am
Ron wrote:
Sat Nov 18, 2017 9:18 am
No I do not.

However, I do account on the expense side what projected upgrades/maintenance may be required over the years that I remain here.

If I had to plan to use my home as a source for retirement income, I would further refine my plan to remove it from the equation. Additionally, I've moved enough times over the years that I would not want to face another move. Of course, if I/we have to leave our home for health purposes, that's another story. That's a forced requirement, not an optional move to satisfy future income.

FWIW,

- Ron
I make the assumption that in my 80s I will either be required to or desire to move to an Independent/Assisted Living facility. Since that is the case I would no longer have a reason to continue owning a residence and feel by selling the house I could help fund my care. From what I have witnessed a house and its upkeep seems to become quite the burden/risk for people starting in their mid/upper 70s. Not to mention just taking care of themselves or a spouse. It also serves to socially isolate people. Now I am sure there are exceptions (probably several here, older BH are active and engaged on an internet forum) but I have seen this pattern repeat many times with relatives.
Our golf community of about fifty homes has many couples or widows in their 80s. Many were among the original owners twenty years ago; however, the last two years have seen turnover. The age when that happens seems to be in the eighties, often after 85. One partner will die, and the other will move closer to the chikdren. Or they will move together into a facility that has a smooth transition of independent living to assisted living. The experience here is that the 70s isn't the time when that happens.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by bertilak » Sun Nov 19, 2017 8:37 am

TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
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TheTimeLord
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Re: Do you include the sale of your home as part of your retirement planning?

Post by TheTimeLord » Sun Nov 19, 2017 10:38 am

bertilak wrote:
Sun Nov 19, 2017 8:37 am
TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
Why would a spouse not move into assisted living with their spouse? I can see not moving into classic LTC/nursing home but I don't think assisted living presents the same issue.
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TheTimeLord
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Re: Do you include the sale of your home as part of your retirement planning?

Post by TheTimeLord » Sun Nov 19, 2017 10:48 am

trueblueky wrote:
Sun Nov 19, 2017 7:35 am
TheTimeLord wrote:
Sat Nov 18, 2017 9:29 am
Ron wrote:
Sat Nov 18, 2017 9:18 am
No I do not.

However, I do account on the expense side what projected upgrades/maintenance may be required over the years that I remain here.

If I had to plan to use my home as a source for retirement income, I would further refine my plan to remove it from the equation. Additionally, I've moved enough times over the years that I would not want to face another move. Of course, if I/we have to leave our home for health purposes, that's another story. That's a forced requirement, not an optional move to satisfy future income.

FWIW,

- Ron
I make the assumption that in my 80s I will either be required to or desire to move to an Independent/Assisted Living facility. Since that is the case I would no longer have a reason to continue owning a residence and feel by selling the house I could help fund my care. From what I have witnessed a house and its upkeep seems to become quite the burden/risk for people starting in their mid/upper 70s. Not to mention just taking care of themselves or a spouse. It also serves to socially isolate people. Now I am sure there are exceptions (probably several here, older BH are active and engaged on an internet forum) but I have seen this pattern repeat many times with relatives.
Our golf community of about fifty homes has many couples or widows in their 80s. Many were among the original owners twenty years ago; however, the last two years have seen turnover. The age when that happens seems to be in the eighties, often after 85. One partner will die, and the other will move closer to the chikdren. Or they will move together into a facility that has a smooth transition of independent living to assisted living. The experience here is that the 70s isn't the time when that happens.
My observation is the 70s is really when the age related disease start to manifest. Driving becomes a bigger issue, climbing a ladder to change a light bulb might present increased risk because of osteoporosis and memory issue become move obvious. That said living in a golf course community with in community shopping where people can drive golf carts instead of cars would help. Especially since they usually have very active community centers and restaurant and entertainment options. On the other hand from what I have been told it is difficult and disorienting for someone with memory issues to be moved so it is best to find a facility that allows you to start in independent living, then move to assisted living then finally classic skilled nursing care if needed. That way much of your surrounding remain constant. But this kind of decision is obviously very personal and up to each individual and couple to make on their own.
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TN_Boy
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Re: Do you include the sale of your home as part of your retirement planning?

Post by TN_Boy » Sun Nov 19, 2017 11:04 am

bertilak wrote:
Sun Nov 19, 2017 8:37 am
TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
That obviously complicates the situation. This is the worst case in some ways. One spouse does NOT need assisted living, the other does. One option would be to use the equity in the house without a sale -- a reverse mortgage for example. The other would be to spend down other assets, knowing the home equity/sale of home can be used later if the OTHER spouse needs assisted living.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by TN_Boy » Sun Nov 19, 2017 11:11 am

TheTimeLord wrote:
Sun Nov 19, 2017 10:38 am
bertilak wrote:
Sun Nov 19, 2017 8:37 am
TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
Why would a spouse not move into assisted living with their spouse? I can see not moving into classic LTC/nursing home but I don't think assisted living presents the same issue.
Well, I think only one spouse moving happens. For example, a spouse with dementia might move to a memory care unit (which in cost and services is generally between assisted living and skilled nursing) and the healthy other spouse might not. These situations can get complex in several ways.

Incidentally, I think most people -- at least I do -- consider assisted living as "LTC." LTC insurance will pay for assisted living, if the person cannot handle a certain number of "activities of daily living." At least that is the case in the policies I've seen.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by dbr » Sun Nov 19, 2017 11:15 am

TN_Boy wrote:
Sun Nov 19, 2017 11:11 am
TheTimeLord wrote:
Sun Nov 19, 2017 10:38 am
bertilak wrote:
Sun Nov 19, 2017 8:37 am
TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
Why would a spouse not move into assisted living with their spouse? I can see not moving into classic LTC/nursing home but I don't think assisted living presents the same issue.
Well, I think only one spouse moving happens. For example, a spouse with dementia might move to a memory care unit (which in cost and services is generally between assisted living and skilled nursing) and the healthy other spouse might not. These situations can get complex in several ways.

Incidentally, I think most people -- at least I do -- consider assisted living as "LTC." LTC insurance will pay for assisted living, if the person cannot handle a certain number of "activities of daily living." At least that is the case in the policies I've seen.
It is a pretty narrow range where a spouse with an able companion would need to move to a facility but not at a level beyond assisted living. It would probably imply that the able spouse is very nearly not able and would be well off moving to assisted living along with the spouse. The case is entirely different when the less abled person has more severe needs.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by TheTimeLord » Sun Nov 19, 2017 11:22 am

TN_Boy wrote:
Sun Nov 19, 2017 11:11 am
TheTimeLord wrote:
Sun Nov 19, 2017 10:38 am
bertilak wrote:
Sun Nov 19, 2017 8:37 am
TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
Why would a spouse not move into assisted living with their spouse? I can see not moving into classic LTC/nursing home but I don't think assisted living presents the same issue.
Well, I think only one spouse moving happens. For example, a spouse with dementia might move to a memory care unit (which in cost and services is generally between assisted living and skilled nursing) and the healthy other spouse might not. These situations can get complex in several ways.

Incidentally, I think most people -- at least I do -- consider assisted living as "LTC." LTC insurance will pay for assisted living, if the person cannot handle a certain number of "activities of daily living." At least that is the case in the policies I've seen.
I thought LTC insurance only paid for the medical treatment aspects of assisted living (could be wrong). From experience the range of services and costs associated with assisted living varies greatly and usually progress with length of stay. It just doesn't seem logical to me that an insurance policy would pay your room rent and meal plan in an assisted living facility because your need assistance taking your medications on time and in the correct dosage. But I am definitely not an expert on LTC insurance.
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Re: Do you include the sale of your home as part of your retirement planning?

Post by Artsdoctor » Sun Nov 19, 2017 11:32 am

TheTimeLord wrote:
Sat Nov 18, 2017 9:12 am
Do you include the sale of your home as part of your retirement planning? As part of my retirement plan I include the sale of my home in my 80s. I show it being converted to cash at its inflation adjusted purchase price. In Firecalc, I show the sale as a one time event. I include the value of my home in Net Worth calculations but not in the calculations to determine how many times expenses I have saved. Including it makes a meaningful difference in the amount I will available to spend each year and without it I would need to be more cautious with my spending in the early years of retirement. I was wondering how many others included the proceeds from the sale of their home in their retirement plan?
I'm aware of the equity although I don't count it as part of my portfolio for investment purposes. It is a part of my planning although in a vague way; I'll always have to live somewhere so I tend to view it as an asset which can be used for future living modalities.

All of that said, I'm carefully watching how the evolution of tapping your equity efficiency is playing out. I suspect that 10-15 years from now, market forces will have made tapping equity easier for homeowners simply because of the sheer quantity of baby boomers demanding it (and because of the shortfall of retirement savings in general).

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Re: Do you include the sale of your home as part of your retirement planning?

Post by DrGoogle2017 » Sun Nov 19, 2017 1:26 pm

Sell your home, you will incur tax on capital gain. You can’t deduct HELOC anymore when the “cut” goes through. Renting the house makes sense for me because by the time I need LTC, the house will be paid off, I can also leave my house to my heirs. Plus I can get very high rent in my area if I need to move into nursing home. That and other income should cover indefinite nursing home. No need to sell assets.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by neilpilot » Sun Nov 19, 2017 2:01 pm

TheTimeLord wrote:
Sun Nov 19, 2017 11:22 am

I thought LTC insurance only paid for the medical treatment aspects of assisted living (could be wrong). From experience the range of services and costs associated with assisted living varies greatly and usually progress with length of stay. It just doesn't seem logical to me that an insurance policy would pay your room rent and meal plan in an assisted living facility because your need assistance taking your medications on time and in the correct dosage. But I am definitely not an expert on LTC insurance.
My policy pays for assisted living, including room and board, up to the policy daily and lifetime limit so long as I qualify, i.e. cannot live without assistance to meet basic needs as defined in the policy. I assume that most policies are similar.

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TheTimeLord
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Re: Do you include the sale of your home as part of your retirement planning?

Post by TheTimeLord » Sun Nov 19, 2017 2:21 pm

neilpilot wrote:
Sun Nov 19, 2017 2:01 pm
TheTimeLord wrote:
Sun Nov 19, 2017 11:22 am

I thought LTC insurance only paid for the medical treatment aspects of assisted living (could be wrong). From experience the range of services and costs associated with assisted living varies greatly and usually progress with length of stay. It just doesn't seem logical to me that an insurance policy would pay your room rent and meal plan in an assisted living facility because your need assistance taking your medications on time and in the correct dosage. But I am definitely not an expert on LTC insurance.
My policy pays for assisted living, including room and board, up to the policy daily and lifetime limit so long as I qualify, i.e. cannot live without assistance to meet basic needs as defined in the policy. I assume that most policies are similar.
That makes sense because it would be cheaper than skilled nursing. I believe many people would benefit from or appreciate Assisted Living prior to reaching that threshold though. We certainly plan to transition before that point. Having been through the Independent/Assisted Living thing with several older relatives the term Assisted Living seems to cover a very wide range of possible care.
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Re: Do you include the sale of your home as part of your retirement planning?

Post by jebmke » Sun Nov 19, 2017 2:26 pm

TheTimeLord wrote:
Sun Nov 19, 2017 2:21 pm
We certainly plan to transition before that point.
This makes it sound like you are going to off yourself. :P
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Re: Do you include the sale of your home as part of your retirement planning?

Post by TheTimeLord » Sun Nov 19, 2017 2:28 pm

jebmke wrote:
Sun Nov 19, 2017 2:26 pm
TheTimeLord wrote:
Sun Nov 19, 2017 2:21 pm
We certainly plan to transition before that point.
This makes it sound like you are going to off yourself. :P
LOL, transition from a stand alone home to Independent/Assisted Living.
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TN_Boy
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Re: Do you include the sale of your home as part of your retirement planning?

Post by TN_Boy » Sun Nov 19, 2017 3:43 pm

dbr wrote:
Sun Nov 19, 2017 11:15 am
TN_Boy wrote:
Sun Nov 19, 2017 11:11 am
TheTimeLord wrote:
Sun Nov 19, 2017 10:38 am
bertilak wrote:
Sun Nov 19, 2017 8:37 am
TN_Boy wrote:
Sat Nov 18, 2017 8:21 pm
But I absolutely view the home equity as part of the solution for long term care; e.g. I move to something like assisted living, and use sale proceeds of house to fund it. So, do I have LTC insurance? Sort of -- equity in the house would pay for about four years of assisted living in my area. Depending on portfolio returns, home sale proceeds might not be needed to fund LTC, but the option exists. And logically, implies that is money in the portfolio I would not reserve for LTC, and thus might (might) allow greater spending.
Are you married? What if only one of you requires assisted living or LTC?
Why would a spouse not move into assisted living with their spouse? I can see not moving into classic LTC/nursing home but I don't think assisted living presents the same issue.
Well, I think only one spouse moving happens. For example, a spouse with dementia might move to a memory care unit (which in cost and services is generally between assisted living and skilled nursing) and the healthy other spouse might not. These situations can get complex in several ways.

Incidentally, I think most people -- at least I do -- consider assisted living as "LTC." LTC insurance will pay for assisted living, if the person cannot handle a certain number of "activities of daily living." At least that is the case in the policies I've seen.
It is a pretty narrow range where a spouse with an able companion would need to move to a facility but not at a level beyond assisted living. It would probably imply that the able spouse is very nearly not able and would be well off moving to assisted living along with the spouse. The case is entirely different when the less abled person has more severe needs.
If I understand your comment, I think i agree. In the situation where one spouse needs "just" assisted living, and the other is basically fine, the better-off spouse would probably engage home health part-time rather than just move the spouse. Home help, because taking care of someone with high needs 24x7 becomes exhausting quickly. I could see a few situations where it might not play out that way. The example I gave, a spouse needing memory care where the other is fine, I suspect it is actually common for the one spouse only to move.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by TN_Boy » Sun Nov 19, 2017 4:17 pm

TheTimeLord wrote:
Sun Nov 19, 2017 2:21 pm
neilpilot wrote:
Sun Nov 19, 2017 2:01 pm
TheTimeLord wrote:
Sun Nov 19, 2017 11:22 am

I thought LTC insurance only paid for the medical treatment aspects of assisted living (could be wrong). From experience the range of services and costs associated with assisted living varies greatly and usually progress with length of stay. It just doesn't seem logical to me that an insurance policy would pay your room rent and meal plan in an assisted living facility because your need assistance taking your medications on time and in the correct dosage. But I am definitely not an expert on LTC insurance.
My policy pays for assisted living, including room and board, up to the policy daily and lifetime limit so long as I qualify, i.e. cannot live without assistance to meet basic needs as defined in the policy. I assume that most policies are similar.
That makes sense because it would be cheaper than skilled nursing. I believe many people would benefit from or appreciate Assisted Living prior to reaching that threshold though. We certainly plan to transition before that point. Having been through the Independent/Assisted Living thing with several older relatives the term Assisted Living seems to cover a very wide range of possible care.
The way a lot of people transition is that they move to an Independent living facility which offers, through paying extra, some services to help with daily activities. At some point, that isn't good enough, or becomes too expensive, and they move to assisted living. The independent living facility itself is easier to live in than a typical house in the suburbs because of the onsite dining, onsite social activities, some free transportation, etc.

Once in true assisted living, some facilities are all-inclusive -- no matter how much help you need (up to skilled nursing or memory care) you pay the same amount. Other facilities are ala carte -- for the base rate a month you get help with 2 or 3 things, for $X extra you get help with up to 5 things, etc. By things I mean help with dressing, help with the restroom, etc.

I believe neilpilots explanation of assisted living/LTC policies is correct. The other factor there is the exclusion period -- how long do you self-pay before the insurance kicks in.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by TN_Boy » Sun Nov 19, 2017 4:34 pm

DrGoogle2017 wrote:
Sun Nov 19, 2017 1:26 pm
Sell your home, you will incur tax on capital gain. You can’t deduct HELOC anymore when the “cut” goes through. Renting the house makes sense for me because by the time I need LTC, the house will be paid off, I can also leave my house to my heirs. Plus I can get very high rent in my area if I need to move into nursing home. That and other income should cover indefinite nursing home. No need to sell assets.
The capital gains exclusion makes taxes on sale of a primary resident a moot point for the vast majority of people. I know there are exceptions, but it's a non-issue for most of us.

Most people would use the house last to pay for assisted living, memory care, or skilled nursing. But the equity in the house is there if needed.

It's a bit of a tangent, but I think when older folks sell the house rather than leaving it in an estate is often a blessing to the executor and heirs, since usually what happens when someone dies is that the house has to be cleaned out, made ready for sale, and sold. There will be family situations where a primary residence might be passed on to heirs, but I believe that is relatively uncommon, or at least less common than the family/executor has to sell it.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by DrGoogle2017 » Sun Nov 19, 2017 4:44 pm

It depends on the location. We’re in California. Gains already exceeded capital gain exclusion, even for house just bought recently, let alone 30 years from now. My sister found out as a pleasant surprise, she bought it about 2 years ago, a small starter home, she picked the absolute cheapest she could afford, pricetag was $720k, it’s now sold $950k. When we had a housing burst, price only dropped 20% at most. Real estate is all about location.

Heirs still have to clean them out when parents go to nursing home, if not somebody has too, no way around it. If they don’t want to clean, they can hire somebody or throw stuff away. It’s not a huge problem IMO.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by TN_Boy » Sun Nov 19, 2017 4:53 pm

DrGoogle2017 wrote:
Sun Nov 19, 2017 4:44 pm
It depends on the location. We’re in California. Gains already exceeded capital gain exclusion, even for house just bought recently, let alone 30 years from now. Heirs still have to clean them out when parents go to nursing home, if not somebody has too, no way around it. If they don’t want to clean, they can hire somebody or throw stuff away. It’s not a huge problem IMO.
I don't live in CA, so maybe lots of single folks there (or in other really hot markets) hit the 250k exclusion, or couples hit the 500k exclusion.

I'm just saying, in the rest of the US, that's not a problem for most people.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by itstoomuch » Sun Nov 19, 2017 5:01 pm

Ambivalent.
We have LTCi. We will be moving from moderate cost housing area to high cost housing area. Son will inherit stepup properties. Our fixed income sources (deferred GLWB annuities, SS, small pension) is enough. Worse case is to tap home equity.
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Re: Do you include the sale of your home as part of your retirement planning?

Post by randomizer » Sun Nov 19, 2017 5:32 pm

Nope. Plan on living in it until I die, and even if I can't do that, leaving it for my spouse and then children.

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Re: Do you include the sale of your home as part of your retirement planning?

Post by bhsince87 » Sun Nov 19, 2017 5:46 pm

With the recent changes to reverse mortgage laws, I think it's something worth considering, IMO. Even some fairly conservative analysts such as Wade Pfau seem to agree.

I don't consider it in my withdraw percentage calculations. But I do consider it as sort of an insurance policy for LTC and as a possible damper to sequence of return risks. If the market tanks soon after I retire, I will consider a heloc or a reverse mortgage (if I'm over 62).

We love where we live, even though it's HUGE for two folks, so no plans to downsize and take some cash. But if maintenance, upkeep, and related taxes become too big of a burden, then I look at downsizing as another sort of insurance.
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Re: Do you include the sale of your home as part of your retirement planning?

Post by halfnine » Thu Nov 23, 2017 5:27 pm

My philosophy is to look at a 3.5% WR based on net worth instead of investments. And while a home would be included in net worth the imputed rent would also be included in expenses.

itstoomuch
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Joined: Mon Dec 15, 2014 12:17 pm
Location: midValley OR

Re: Do you include the sale of your home as part of your retirement planning?

Post by itstoomuch » Thu Nov 23, 2017 6:03 pm

Only as a last bastion.
Our defenses are very strong.
Rev90517; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax 25%. Early SS. FundRatio (FR) >1.1 67/70yo

bmdack
Posts: 2
Joined: Sun Apr 14, 2013 10:04 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by bmdack » Thu Nov 23, 2017 6:05 pm

I do not!
The way I see it is that I will need a place to hang my hat until the end anyway....
Just me!

flyingaway
Posts: 1528
Joined: Fri Jan 17, 2014 10:19 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by flyingaway » Thu Nov 23, 2017 8:00 pm

bhsince87 wrote:
Sun Nov 19, 2017 5:46 pm
With the recent changes to reverse mortgage laws, I think it's something worth considering, IMO. Even some fairly conservative analysts such as Wade Pfau seem to agree.

I don't consider it in my withdraw percentage calculations. But I do consider it as sort of an insurance policy for LTC and as a possible damper to sequence of return risks. If the market tanks soon after I retire, I will consider a heloc or a reverse mortgage (if I'm over 62).

We love where we live, even though it's HUGE for two folks, so no plans to downsize and take some cash. But if maintenance, upkeep, and related taxes become too big of a burden, then I look at downsizing as another sort of insurance.
Reverse mortatge to put money in the market when it is down?

bhsince87
Posts: 1411
Joined: Thu Oct 03, 2013 1:08 pm

Re: Do you include the sale of your home as part of your retirement planning?

Post by bhsince87 » Thu Nov 23, 2017 9:35 pm

flyingaway wrote:
Thu Nov 23, 2017 8:00 pm
bhsince87 wrote:
Sun Nov 19, 2017 5:46 pm
With the recent changes to reverse mortgage laws, I think it's something worth considering, IMO. Even some fairly conservative analysts such as Wade Pfau seem to agree.

I don't consider it in my withdraw percentage calculations. But I do consider it as sort of an insurance policy for LTC and as a possible damper to sequence of return risks. If the market tanks soon after I retire, I will consider a heloc or a reverse mortgage (if I'm over 62).

We love where we live, even though it's HUGE for two folks, so no plans to downsize and take some cash. But if maintenance, upkeep, and related taxes become too big of a burden, then I look at downsizing as another sort of insurance.
Reverse mortatge to put money in the market when it is down?
No. To avoid withdrawing from the market when it is down. That's the killer that causes the sequence of returns problem.
BH87

J295
Posts: 1226
Joined: Sun Jan 01, 2012 11:40 pm

Re: Do you include the sale of your home as part of your retirement planning?

Post by J295 » Thu Nov 23, 2017 9:53 pm

No. We plan to leave an inheritance, and the home and its proceeds are just part of that anticipated inheritance. In our case, our home is less than 20% of net worth.

Bungo
Posts: 848
Joined: Wed Sep 28, 2011 11:28 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by Bungo » Thu Nov 23, 2017 11:08 pm

Selling my overpriced Silicon Valley house and buying a replacement in another state for 25% of the price is absolutely part of my retirement plan. :D

MathWizard
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Joined: Tue Jul 26, 2011 1:35 pm

Re: Do you include the sale of your home as part of your retirement planning?

Post by MathWizard » Thu Nov 23, 2017 11:34 pm

wander wrote:
Sat Nov 18, 2017 4:37 pm
Selling our house is the last option if our retirement money is running out. It is nice to have a safety net, but when planning for retirement we exclude the house.
+1

Last resort. House value will be in the 10 to 15% of networth when we retire, big enough to be important if we need the money in a catastrophe, but not so much that we would get rid of it if we didn't have to.

dbr
Posts: 24136
Joined: Sun Mar 04, 2007 9:50 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by dbr » Fri Nov 24, 2017 9:17 am

MathWizard wrote:
Thu Nov 23, 2017 11:34 pm
wander wrote:
Sat Nov 18, 2017 4:37 pm
Selling our house is the last option if our retirement money is running out. It is nice to have a safety net, but when planning for retirement we exclude the house.
+1

Last resort. House value will be in the 10 to 15% of networth when we retire, big enough to be important if we need the money in a catastrophe, but not so much that we would get rid of it if we didn't have to.
Downsizing to a condo, apartment, senior living, etc. would be logical for a lot of people. Moving to a different area either for economic or family reasons is common as well. It just makes sense to look at these scenarios as possibilities. People close to us have made out like bandits moving from high real estate values to low real estate value and it is not an insignificant happenstance.

Da5id
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Joined: Fri Feb 26, 2016 8:20 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by Da5id » Fri Nov 24, 2017 9:27 am

I don't really, but I could very reasonably do so. My current house is fully paid off and is in a HCOL town with excellent schools. I don't need the schools any more, and moreover the house is too big and not (in the very long term) retirement friendly. It has steps, it has a yard to take care of, etc. So certainly in a pinch I could count the large amount of home equity as a retirement asset, as downsizing looks like a very likely option at some point for strictly practical rather than financial reasons anyway.

And for those in a crunch, certainly home equity is an asset to consider. There are some indirect ways to use it as well, e.g. my town lets elders defer some or all property tax until the house is sold, though there are income/asset restrictions on that ability. There are reverse mortgages (though those have caveats and may or may not be wise). There is downsizing as well.

SGM
Posts: 2413
Joined: Wed Mar 23, 2011 4:46 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by SGM » Fri Nov 24, 2017 10:51 am

I am managing the assets of an elderly relative in an assisted living facility. SS and pension cover about 2/3 of total expenses. The sale of the family home will ensure that the additional 1/3 of expenses will be paid without requiring either family payments or Medicaid/VA money. I don't know if there was ever an extended retirement plan as the pension and SS funded a nice retirement. After the early stages of dementia occurred I found out that a lot of money was wasted on useless magazines, car repairs and some questionable charities. I put the kibosh on this waste, but I am still getting mail from the magazines and charities. The magazine renewal requests come in envelopes that state this is "official" business. :annoyed

However, in the unlikely event a nursing home is required there is a possibility that funds won't last. The assisted living facility will continue to allow the relative to live there as long as a feeding tube or IV (skilled nursing) is not required.

flyingaway
Posts: 1528
Joined: Fri Jan 17, 2014 10:19 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by flyingaway » Fri Nov 24, 2017 11:52 am

SGM wrote:
Fri Nov 24, 2017 10:51 am
I am managing the assets of an elderly relative in an assisted living facility. SS and pension cover about 2/3 of total expenses. The sale of the family home will ensure that the additional 1/3 of expenses will be paid without requiring either family payments or Medicaid/VA money. I don't know if there was ever an extended retirement plan as the pension and SS funded a nice retirement. After the early stages of dementia occurred I found out that a lot of money was wasted on useless magazines, car repairs and some questionable charities. I put the kibosh on this waste, but I am still getting mail from the magazines and charities. The magazine renewal requests come in envelopes that state this is "official" business. :annoyed

However, in the unlikely event a nursing home is required there is a possibility that funds won't last. The assisted living facility will continue to allow the relative to live there as long as a feeding tube or IV (skilled nursing) is not required.
I think this is a problem for many seniors. They are just easy targets for many questionable businesses. My mother spends almost all her money on "nutritional" products "healthy" medicines, and has toilet papers in her house that are enough for 10 years.

flyingaway
Posts: 1528
Joined: Fri Jan 17, 2014 10:19 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by flyingaway » Fri Nov 24, 2017 11:54 am

Da5id wrote:
Fri Nov 24, 2017 9:27 am
I don't really, but I could very reasonably do so. My current house is fully paid off and is in a HCOL town with excellent schools. I don't need the schools any more, and moreover the house is too big and not (in the very long term) retirement friendly. It has steps, it has a yard to take care of, etc. So certainly in a pinch I could count the large amount of home equity as a retirement asset, as downsizing looks like a very likely option at some point for strictly practical rather than financial reasons anyway.

And for those in a crunch, certainly home equity is an asset to consider. There are some indirect ways to use it as well, e.g. my town lets elders defer some or all property tax until the house is sold, though there are income/asset restrictions on that ability. There are reverse mortgages (though those have caveats and may or may not be wise). There is downsizing as well.
So when are you going to downsize? before retirement, at retirement, or after retirement?

flyingaway
Posts: 1528
Joined: Fri Jan 17, 2014 10:19 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by flyingaway » Fri Nov 24, 2017 11:55 am

dbr wrote:
Fri Nov 24, 2017 9:17 am
MathWizard wrote:
Thu Nov 23, 2017 11:34 pm
wander wrote:
Sat Nov 18, 2017 4:37 pm
Selling our house is the last option if our retirement money is running out. It is nice to have a safety net, but when planning for retirement we exclude the house.
+1

Last resort. House value will be in the 10 to 15% of networth when we retire, big enough to be important if we need the money in a catastrophe, but not so much that we would get rid of it if we didn't have to.
Downsizing to a condo, apartment, senior living, etc. would be logical for a lot of people. Moving to a different area either for economic or family reasons is common as well. It just makes sense to look at these scenarios as possibilities. People close to us have made out like bandits moving from high real estate values to low real estate value and it is not an insignificant happenstance.
We are considering to move to be close to one of our sons, but they do not like that idea.

hoops777
Posts: 1995
Joined: Sun Apr 10, 2011 12:23 pm

Re: Do you include the sale of your home as part of your retirement planning?

Post by hoops777 » Fri Nov 24, 2017 12:35 pm

I have no plans to ever sell it,but it does give me comfort as an insurance policy if we need money late in life.I ignore it in our calculations and can see no need to ever sell it or do a rev mortgage,but it is nice to have about 800,000 in today’s dollars as an insurance policy.
K.I.S.S........so easy to say so difficult to do.

Da5id
Posts: 1632
Joined: Fri Feb 26, 2016 8:20 am

Re: Do you include the sale of your home as part of your retirement planning?

Post by Da5id » Fri Nov 24, 2017 1:23 pm

flyingaway wrote:
Fri Nov 24, 2017 11:54 am
Da5id wrote:
Fri Nov 24, 2017 9:27 am
I don't really, but I could very reasonably do so. My current house is fully paid off and is in a HCOL town with excellent schools. I don't need the schools any more, and moreover the house is too big and not (in the very long term) retirement friendly. It has steps, it has a yard to take care of, etc. So certainly in a pinch I could count the large amount of home equity as a retirement asset, as downsizing looks like a very likely option at some point for strictly practical rather than financial reasons anyway.

And for those in a crunch, certainly home equity is an asset to consider. There are some indirect ways to use it as well, e.g. my town lets elders defer some or all property tax until the house is sold, though there are income/asset restrictions on that ability. There are reverse mortgages (though those have caveats and may or may not be wise). There is downsizing as well.
So when are you going to downsize? before retirement, at retirement, or after retirement?
After. Mind you I may retire next year at 51, so no rush on the house. As I said, I don't actually need the money, just feel like if I did I could reasonably count some of the home equity as part of my retirement plans.

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