[PatentGuy]

Greg,

Water, Safety, and Clean Air eh? Not Health Care? (are you planning to fly back to Canada for that?)

All of SoCal has more or less the same water (brought in from NorCal, the Sierras, or the Colorado river).

Many neighborhoods throughout SoCal are relatively safe. Many others are not. Local RE prices will reflect this.

SoCal is not exactly the best place for clean air. I lived in San Gabriel Valley for more than 25 years (from late 60s to mid 90s). Was like smoking a pack a day. You need to stay close to the coast for “cleaner” air. This means more $$$, but sounds like school district doesn’t matter, which will give you better selection. IMO, SoCal coastal prices are likely to drop significantly over the next three years, so I would stay in (Canadian) cash and rent for a season or two before you make any purchase decision. That way, you can try living in a few different areas before deciding if you really want to spend half your retirement in SoCal.

[PatentGuy]

Greg,

Water, Safety, and Clean Air eh? Not Health Care? (are you planning to fly back to Canada for that?)

All of SoCal has more or less the same water (brought in from NorCal, the Sierras, or the Colorado river).

Many neighborhoods throughout SoCal are relatively safe. Many others are not. Local RE prices will reflect this.

SoCal is not exactly the best place for clean air. I lived in San Gabriel Valley for more than 25 years (from late 60s to mid 90s). Was like smoking a pack a day. You need to stay close to the coast for “cleaner” air. This means more $$$, but sounds like school district doesn’t matter, which will give you better selection. IMO, SoCal coastal prices are likely to drop significantly over the next three years, so I would stay in (Canadian) cash and rent for a season or two before you make any purchase decision. That way, you can try living in a few different areas before deciding if you really want to spend half your retirement in SoCal.

[PatentGuy]

Greg,

Water, Safety, and Clean Air eh? Not Health Care? (are you planning to fly back to Canada for that?)

All of SoCal has more or less the same water (brought in from NorCal, the Sierras, or the Colorado river).

Many neighborhoods throughout SoCal are relatively safe. Many others are not. Local RE prices will reflect this.

SoCal is not exactly the best place for clean air. I lived in San Gabriel Valley for more than 25 years (from late 60s to mid 90s). Was like smoking a pack a day. You need to stay close to the coast for “cleaner” air. This means more $$$, but sounds like school district doesn’t matter, which will give you better selection. IMO, SoCal coastal prices are likely to drop significantly over the next three years, so I would stay in (Canadian) cash and rent for a season or two before you make any purchase decision. That way, you can try living in a few different areas before deciding if you really want to spend half your retirement in SoCal.

[PatentGuy]

Greg,

Water, Safety, and Clean Air eh? Not Health Care? (are you planning to fly back to Canada for that?)

All of SoCal has more or less the same water (brought in from NorCal, the Sierras, or the Colorado river).

Many neighborhoods throughout SoCal are relatively safe. Many others are not. Local RE prices will reflect this.

SoCal is not exactly the best place for clean air. I lived in San Gabriel Valley for more than 25 years (from late 60s to mid 90s). Was like smoking a pack a day. You need to stay close to the coast for “cleaner” air. This means more $$$, but sounds like school district doesn’t matter, which will give you better selection. IMO, SoCal coastal prices are likely to drop significantly over the next three years, so I would stay in (Canadian) cash and rent for a season or two before you make any purchase decision. That way, you can try living in a few different areas before deciding if you really want to spend half your retirement in SoCal.

[PatentGuy]

Greg,

Water, Safety, and Clean Air eh? Not Health Care? (are you planning to fly back to Canada for that?)

All of SoCal has more or less the same water (brought in from NorCal, the Sierras, or the Colorado river).

Many neighborhoods throughout SoCal are relatively safe. Many others are not. Local RE prices will reflect this.

SoCal is not exactly the best place for clean air. I lived in San Gabriel Valley for more than 25 years (from late 60s to mid 90s). Was like smoking a pack a day. You need to stay close to the coast for “cleaner” air. This means more $$$, but sounds like school district doesn’t matter, which will give you better selection. IMO, SoCal coastal prices are likely to drop significantly over the next three years, so I would stay in (Canadian) cash and rent for a season or two before you make any purchase decision. That way, you can try living in a few different areas before deciding if you really want to spend half your retirement in SoCal.

[PatentGuy]

BW – thanks for the further meth/math. You use 10% annual appreciation and 30% tax rate. More realistic is 4-6% annual appreciation, and 50% tax rate (currently we are at 42%, and it’s not going to get lower).

Regarding opportunity cost, what about the lower tax rate applied to long term capital gains? I believe your examples assumes the “alternative opportunity” gains are taxed at the same rate as our income rate. Right now, long term gains are taxed at half of income. I don’t know what the future holds.

As far as whether the government will say “just kidding” and tax the “tax free” gains in the future (because it can), I suppose they would equally be grabbing whatever gains we obtained from the alternative “opportunity,” so either way …

[PatentGuy]

BW – thanks for the further meth/math. You use 10% annual appreciation and 30% tax rate. More realistic is 4-6% annual appreciation, and 50% tax rate (currently we are at 42%, and it’s not going to get lower).

Regarding opportunity cost, what about the lower tax rate applied to long term capital gains? I believe your examples assumes the “alternative opportunity” gains are taxed at the same rate as our income rate. Right now, long term gains are taxed at half of income. I don’t know what the future holds.

As far as whether the government will say “just kidding” and tax the “tax free” gains in the future (because it can), I suppose they would equally be grabbing whatever gains we obtained from the alternative “opportunity,” so either way …

[PatentGuy]

BW – thanks for the further meth/math. You use 10% annual appreciation and 30% tax rate. More realistic is 4-6% annual appreciation, and 50% tax rate (currently we are at 42%, and it’s not going to get lower).

Regarding opportunity cost, what about the lower tax rate applied to long term capital gains? I believe your examples assumes the “alternative opportunity” gains are taxed at the same rate as our income rate. Right now, long term gains are taxed at half of income. I don’t know what the future holds.

As far as whether the government will say “just kidding” and tax the “tax free” gains in the future (because it can), I suppose they would equally be grabbing whatever gains we obtained from the alternative “opportunity,” so either way …

[PatentGuy]

BW – thanks for the further meth/math. You use 10% annual appreciation and 30% tax rate. More realistic is 4-6% annual appreciation, and 50% tax rate (currently we are at 42%, and it’s not going to get lower).

Regarding opportunity cost, what about the lower tax rate applied to long term capital gains? I believe your examples assumes the “alternative opportunity” gains are taxed at the same rate as our income rate. Right now, long term gains are taxed at half of income. I don’t know what the future holds.

As far as whether the government will say “just kidding” and tax the “tax free” gains in the future (because it can), I suppose they would equally be grabbing whatever gains we obtained from the alternative “opportunity,” so either way …

[PatentGuy]

BW – thanks for the further meth/math. You use 10% annual appreciation and 30% tax rate. More realistic is 4-6% annual appreciation, and 50% tax rate (currently we are at 42%, and it’s not going to get lower).

Regarding opportunity cost, what about the lower tax rate applied to long term capital gains? I believe your examples assumes the “alternative opportunity” gains are taxed at the same rate as our income rate. Right now, long term gains are taxed at half of income. I don’t know what the future holds.

As far as whether the government will say “just kidding” and tax the “tax free” gains in the future (because it can), I suppose they would equally be grabbing whatever gains we obtained from the alternative “opportunity,” so either way …

[PatentGuy]

sdrealtor – yes, you did. Ready to go to Vegas with me?

BW – Thanks for the additional insights. However, your observation: “Next, convert to Roth and pay the 30% or $3,000 tax from other funds that you might have spent on non-productive spending (entertainment, etc.)” begs the question. The tax is significant in our case. All of our “convertible” accounts are all funded entirely with before tax $$. The source of the IRA is rollovers of before tax 401ks from previous employers. The money we would use to pay the tax is not something we would otherwise piss away. For now, it is sitting in liquid accounts (e.g., money markets) collecting zip return, and it is money we would invest in something – for example, in equities once sdrealtor gives the green light, or – IF the waited for bottom ever happens, real estate! And, I would be paying these taxes OR investing with after-tax money left after paying a big chunk of tax payment. If my equity investments pay off by following sdrealtor’s lead, the cap gains tax – even under Obama – is a LOT lower than the income tax I have to pay to convert to Roth (under the “punish work, but reward stock market investing” system of our government).

Isn’t there a significant time-value of money loss if we pay tax now instead of paying it 20 years from now? I agree that “if” our tax rate goes up (not much “if” there), it might offset the time-value loss. But, this assumes they won’t end up taxing us on the “tax free” gains they are dangling as incentive for us to pay the tax now, which we both see as likely.

Same answer?

[PatentGuy]

sdrealtor – yes, you did. Ready to go to Vegas with me?

BW – Thanks for the additional insights. However, your observation: “Next, convert to Roth and pay the 30% or $3,000 tax from other funds that you might have spent on non-productive spending (entertainment, etc.)” begs the question. The tax is significant in our case. All of our “convertible” accounts are all funded entirely with before tax $$. The source of the IRA is rollovers of before tax 401ks from previous employers. The money we would use to pay the tax is not something we would otherwise piss away. For now, it is sitting in liquid accounts (e.g., money markets) collecting zip return, and it is money we would invest in something – for example, in equities once sdrealtor gives the green light, or – IF the waited for bottom ever happens, real estate! And, I would be paying these taxes OR investing with after-tax money left after paying a big chunk of tax payment. If my equity investments pay off by following sdrealtor’s lead, the cap gains tax – even under Obama – is a LOT lower than the income tax I have to pay to convert to Roth (under the “punish work, but reward stock market investing” system of our government).

Isn’t there a significant time-value of money loss if we pay tax now instead of paying it 20 years from now? I agree that “if” our tax rate goes up (not much “if” there), it might offset the time-value loss. But, this assumes they won’t end up taxing us on the “tax free” gains they are dangling as incentive for us to pay the tax now, which we both see as likely.

Same answer?

[PatentGuy]

sdrealtor – yes, you did. Ready to go to Vegas with me?

BW – Thanks for the additional insights. However, your observation: “Next, convert to Roth and pay the 30% or $3,000 tax from other funds that you might have spent on non-productive spending (entertainment, etc.)” begs the question. The tax is significant in our case. All of our “convertible” accounts are all funded entirely with before tax $$. The source of the IRA is rollovers of before tax 401ks from previous employers. The money we would use to pay the tax is not something we would otherwise piss away. For now, it is sitting in liquid accounts (e.g., money markets) collecting zip return, and it is money we would invest in something – for example, in equities once sdrealtor gives the green light, or – IF the waited for bottom ever happens, real estate! And, I would be paying these taxes OR investing with after-tax money left after paying a big chunk of tax payment. If my equity investments pay off by following sdrealtor’s lead, the cap gains tax – even under Obama – is a LOT lower than the income tax I have to pay to convert to Roth (under the “punish work, but reward stock market investing” system of our government).

Isn’t there a significant time-value of money loss if we pay tax now instead of paying it 20 years from now? I agree that “if” our tax rate goes up (not much “if” there), it might offset the time-value loss. But, this assumes they won’t end up taxing us on the “tax free” gains they are dangling as incentive for us to pay the tax now, which we both see as likely.

Same answer?

[PatentGuy]

sdrealtor – yes, you did. Ready to go to Vegas with me?

BW – Thanks for the additional insights. However, your observation: “Next, convert to Roth and pay the 30% or $3,000 tax from other funds that you might have spent on non-productive spending (entertainment, etc.)” begs the question. The tax is significant in our case. All of our “convertible” accounts are all funded entirely with before tax $$. The source of the IRA is rollovers of before tax 401ks from previous employers. The money we would use to pay the tax is not something we would otherwise piss away. For now, it is sitting in liquid accounts (e.g., money markets) collecting zip return, and it is money we would invest in something – for example, in equities once sdrealtor gives the green light, or – IF the waited for bottom ever happens, real estate! And, I would be paying these taxes OR investing with after-tax money left after paying a big chunk of tax payment. If my equity investments pay off by following sdrealtor’s lead, the cap gains tax – even under Obama – is a LOT lower than the income tax I have to pay to convert to Roth (under the “punish work, but reward stock market investing” system of our government).

Isn’t there a significant time-value of money loss if we pay tax now instead of paying it 20 years from now? I agree that “if” our tax rate goes up (not much “if” there), it might offset the time-value loss. But, this assumes they won’t end up taxing us on the “tax free” gains they are dangling as incentive for us to pay the tax now, which we both see as likely.

Same answer?

[PatentGuy]

sdrealtor – yes, you did. Ready to go to Vegas with me?

BW – Thanks for the additional insights. However, your observation: “Next, convert to Roth and pay the 30% or $3,000 tax from other funds that you might have spent on non-productive spending (entertainment, etc.)” begs the question. The tax is significant in our case. All of our “convertible” accounts are all funded entirely with before tax $$. The source of the IRA is rollovers of before tax 401ks from previous employers. The money we would use to pay the tax is not something we would otherwise piss away. For now, it is sitting in liquid accounts (e.g., money markets) collecting zip return, and it is money we would invest in something – for example, in equities once sdrealtor gives the green light, or – IF the waited for bottom ever happens, real estate! And, I would be paying these taxes OR investing with after-tax money left after paying a big chunk of tax payment. If my equity investments pay off by following sdrealtor’s lead, the cap gains tax – even under Obama – is a LOT lower than the income tax I have to pay to convert to Roth (under the “punish work, but reward stock market investing” system of our government).

Isn’t there a significant time-value of money loss if we pay tax now instead of paying it 20 years from now? I agree that “if” our tax rate goes up (not much “if” there), it might offset the time-value loss. But, this assumes they won’t end up taxing us on the “tax free” gains they are dangling as incentive for us to pay the tax now, which we both see as likely.

Same answer?

[Author]

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