Don’t worry we are doing GREAT!

[bearishgurl]

[quote=spdrun]What I don’t get is that you can still rent a small place near the beach for under a grand a month if you’re lucky. Drive a cheap, paid-off used car or even a motorbike. Food is cheaper than on the East Coast or in the inland West. No tolls on most freeways. Free beach access, no use fees in summer.

Really the 1000-lb gorilla in the room is health insurance, which is covered if you have a job that provides it, and will become a lot cheaper for freelancers under Obamacare.

Living in SD can be surprisingly cheap if you’re single or a couple w/o kids, especially given that the natural beauty of the area that isn’t replicated in a lot of parts of the US.[/quote]

Very insightful post, spdrun. All true. Kid expenses of every shape and form are the elephant in the room, here. Once kid expenses are over, a parent is finally back to focusing more on their own needs. I have mixed feelings on whether Obamacare will really work out as the PTB are saying it should. This great experiment is going to be interesting to watch, especially the first three years of it … that is, if it lasts that long.

[bearishgurl]

[quote=no_such_reality]Maybe down in SD, up in OC, a beach sh*thole is $2000/month and anything nice is pushing three.

Shoveler, how many of those boomers will consume their house in retirement? For today’s generation of home buyers to replicate what happened, those $800K homes in Irvine will need to be ten million in 30 years. Maybe Cali will keep growing that way.

Personally, I think the boomers have simply benefited by the pig in python effect coupled with a happy timing of a real estate bubble currently being redriven by historically low interest rates. The next 30 years will be interesting as the boomers become net sellers.

There’s a reason most wealth managers look at assets outside of a primary residence. It’s in what you cited, they won’t sell, or more maybe, can’t sell. Can’t sell without massively changing their life, relocating usually out of the area. In effect, their house is a sunk cost.[/quote]

It’s just as you said, NSR. In retirement, there’s nothing wrong with housing being a “sunk cost.” I don’t see longtime CA boomer owners becoming “net sellers” en masse. Perhaps in other states they might, but not in CA.

Let me ask you, NSR. If you owned a home valued at, say, $500-$600K today which had been your principal residence for decades, you were approaching retirement or already retired and your annual property tax bill was currently $832 (incl voter-approved bonds), would YOU sell now? How about later? At what age would you sell it (assuming at all times you could still take care of yourself and live independently in it)?

[no_such_reality]

BG, I think the house being paid off is crucial for a secure retirement. If it’s not paid off, or at least on the last legs of a very modest loan, retirement is simply tenuous if even at all possible.

I doubt many retirees are carrying payments on a $400K loan in retirement. By sunk cost, I meant it’s money, an asset you have, that you can’t really afford to leverage. Leveraging it, by taking money out essentially introduces more expenses.

It’s an asset that keeps giving. You’re still living there, but you’re not making a $2000 or $3000/month rent payment. That’s $30,000 or so of after tax income you don’t have to generate.

If your house is paid off, if you’ve got $30,000 from investments to spend each year, it’s actually like have $60,000 or more of ‘income’ since you’re not making house payments.

Outside of a good secure pension, you need a very large nest egg to generate the cash flow north of $50K/year. A few rental properties that are paid off or cash flowing strongly and a sizable portfolio. As individual, the sustainable withdrawal rate is surprisingly low over a long term. You can buy annuity today, if you’re 55, it’ll cost you an up front $500K for a $25,000/yr annuity, and that’s not index to inflation.

[flyer]

[quote=bearishgurl][quote=flyer]Per the trend of this thread. A stat that still amazes me, is how few people have a million+ in net worth–especially in CA–where the “appearance of wealth” is so highly prized.

As a native, that’s why, IMO, CA tends to be a somewhat of a revolving door–few can sustain it here (in the lifestyle to which they have become accustomed) through retirement.[/quote]

Well, flyer, that depends on the lifestyle to which one has been “accustomed to.” I see PLENTY of retirees who have been “sustaining themselves” in SD County in retirement for decades.

Prop 13 allowed them to stay in their homes (modest or not) and pay just a few hundred annually in property taxes. Defined benefit plans (often 3 or more per hshld), along with SS and savings, have enabled most of them to travel some and assist children or grandchildren with college expenses and buying homes.

Many of them have more than $1M in net worth or even in cash but they don’t need it and will likely never use it all … yes, these people live in ALL areas of SD County.

You must know that you can’t really judge a person by their house, neighborhood or vehicle they drive, especially a senior citizen :)[/quote]

I agree with you BG, many retirees, and those of us who have been here for many years really don’t have many, if any, financial concerns–regardless of where in the city we live–and I definitely wasn’t judging anyone.

Per your examples, my MIL pays less than a thousand a year in property taxes for an ocean view home in Sunset Cliffs, and I could cite many others, just in our family alone.

My point was that most financial professionals suggest that, going forward, a million+, or the equivalent in pensions, etc., as you mentioned, will, most likely be what many will need to comfortably retire in the future.

At this point in time, the stats reveal that only about 5% of the population fall into this category, so that does make one wonder about the “appearance of faux wealth” we see all around us.

[The-Shoveler]

I know quite a few who own their homes (mortgage free) getting by quite nicely on SS and no where near 1+ Million in savings (yea OK their not driving new BMW’s but they are doing quite well)

[flyer]

Agree TS. Guess many in our family just feel that’s our “comfort zone,” but it’s definitely not necessary for everyone.

[FlyerInHi]

[quote=flyer]I wonder if it’s really a question of “what we want,” versus, a confluence of events (some, beyond our control), that have irreversibly positioned us (as a country) in a situation where the financial “winners” in life will slowly, but surely diminish in number?

My wife is an exec in the film business, and we were having this very conversation with regard to a film she has worked on recently. “Elysium” presents a very thought-provoking scenario of what may or may not be in our future. (This is not an endorsement, merely a comment pertaining to the topic of this thread.)[/quote]

I just saw Elysium on DVD. Lots of inconsistencies and unanswered questions but good movie nonetheless. Recommended.
Interesting that it was filmed in good part in Mexico City – the ugly parts and beautiful parts.

I like the Jody foster character protecting her paradise

[Author]

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