Retiring now

Discussion in 'Hangar Talk' started by Ryanb, Aug 27, 2019.

  1. AU_James

    AU_James Pre-takeoff checklist

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    Always the lump sum, for the reasons Bell206 just said. You'll outperform the annuity easily if you're smart with it and can diversify immediately/set up additional passive income streams which will far outweigh the annuity.

    With that said, I think $20/week investment into the lottery is a fine retirement plan! ;)
     
  2. James_Dean

    James_Dean Pattern Altitude PoA Supporter

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    Nope. Extra payment goes directly to principle which reduces your interest cost for the next payment. Attached are three quick and dirty amortization tables. One is a base case, the second is a one time extra $100k payment, the third is $100/month.
     

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  3. Cooter

    Cooter Ejection Handle Pulled

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    That’s really helpful, thanks. I didn’t realize it was applied for the following month which obviously affects the benefit of early payment.
     
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  4. GeorgeC

    GeorgeC En-Route

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    I round up my automatic payments, glad to see it has a benefit other than making the numbers easier.
     
  5. MuseChaser

    MuseChaser Cleared for Takeoff

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    Some lenders do this automatically, some do it if you request it, and some make it extremely difficult. Before assuming that any extra payment goes to principal rather than just future payments (and you DEFINITELY want it going to principal!), take a good close look at your payment documentation ...coupon, webform, whatever.. and make sure it states where extra payment goes, or that there's a box for you to indicate that any additional payment should go to principal. Mortgage holders are generally pretty good about this. Auto loan corportations, especially Toyota Finance Corp, are so bad about this it borders on criminality. A few years ago Toyota offered me a 0.9% loan on a car which I accepted rather than use money that was earning much more than that. I specifically asked the loan officer if I could send additional to principal monthly and he replied that yes, any additional money would to go principal. 5 months later (my wife does the actual check-writing/physical bill paying), my wife shows me a statement from Toyota saying we didn't have to send in a payment because we were paid up for the entire year...they had been applying the payments to future payments, including future interest we hadn't even incurred yet. I called them, and was told that if we wanted to pay additional to principal, we needed to send a SECOND different check each month to a different address, and the only way to find that out was to call them. I was incredulous, and mad them repeat that. They confirmed it...that procedure is not listed anywhere, they were aware of that, and confirmed that it was intentional on their part. I paid off the entire loan immediately.
    Soooo... before ASSUMING additional payments go to principal, ENSURE that they do.
     
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  6. Cooter

    Cooter Ejection Handle Pulled

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    Good to know. The contract I had applied extra to future payments at the end of the loan, which was a bad deal for me and soured me on the practice. I haven’t had a mortgage since but have been considering it with the current rates.
     
  7. wsuffa

    wsuffa Touchdown! Greaser!

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    I had one lender that let you indicate on the payment form whether extra money went to principal or future payments. Good lender.

    Otoh, the only time I've financed a vehicle the dealer/finance company stuck an early payment fee on the note (similar deal as you - below market financing), it was hidden and you had to ask them the amount. I was livid. Payed it off and never took another car loan again.

    For a while the car deal was low/no interest (and negotiated price) OR $x cash back (from negotiated price). Made far more sense for folks to take the cash back, and if you needed to finance, do it with your bank or credit union. I never played that game, either.
     
  8. jordane93

    jordane93 Final Approach

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    So it’s a good time to invest in bitcoin?:)
     
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  9. wsuffa

    wsuffa Touchdown! Greaser!

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    And this thread proves, without a doubt, that the complexity of the tax code is so great that an ordinary citizen can't understand it. And that is the real problem here.
     
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  10. bnt83

    bnt83 Final Approach PoA Supporter

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    Seems like a great way to use law as a weapon.
     
  11. denverpilot

    denverpilot Tied Down

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    Good old car dealers and manufacturers. Buying from us already is the suckiest experience anyone has buying anything over five figures — buy anything else that expensive and the company will be fawning over you and not train staff to rip you off — let’s make it even suckier! Why not. We already sell the most expensive product that most people will buy that plummets in value the second you drive it away, and continues to destroy its value for the entire decade or more lifespan of the product. Want to light money on fire in the backyard? Why bother! Just buy our product from scummy salespeople trying to sell you the “undercoating package” and we’ll toss in a crappy loan for “free”!

    Rant off. Get your car loans from a credit union and pay the minimal interest until you pay it off way early, if you even bother with car loans... manufacturer’s loan divisions aren’t your friend. In fact nobody in that business is your friend except maybe the dealership owner. Everybody else is as likely to screw you over as help you spend five digits at their workplace.

    Now now, you’re a 121 guy now. You’re supposed to be pushing your MLM du jour on us. Hahahahaha.
     
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  12. Cooter

    Cooter Ejection Handle Pulled

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    Ayn Rand told us it would happen.
     
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  13. denverpilot

    denverpilot Tied Down

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    I’ve found that you can get tax pros in yelling arguments over it. LOL. Even they can’t figure it out. Hahaha

    As far as Presidential elections raising taxes, can’t happen. Requires a flip of the Senate which is unlikely mathematically. Mathematically/statistically/whatever word you want to use, there have only been three incumbent Presidents who’ve lost since WWII, also.

    Strictly a math comment, not a political one. Play the numbers, that’s all anyone can do without a crystal ball.
     
  14. denverpilot

    denverpilot Tied Down

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    That’s the trend. And again why the tax attorney is the only guy who can afford two WWII warbirds at my home airport.

    People think I’m joking when I say that. I’m deadly serious. But they have to think hard about what that really means.

    How many people have to hire your firm to defend themselves against their own government, that will cover the acquisition and operating cost of two warbirds? And you can STILL cover paying your partner attorneys, and the business expenses, and hand the customer back MOST of it?

    When you look at it that way, you see how badly out of control it already is. Let alone where it’s headed.

    Also proves I went into the wrong business. IT has been hot for decades, big business disruptor, lots of money thrown at it, but it’s nothing like tax law. Not even close.
     
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  15. bnt83

    bnt83 Final Approach PoA Supporter

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    Makes tax phishing a lot more profitable if you discourage people from protesting.
     
  16. PaulS

    PaulS Final Approach

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    It's the first question I ask if I am financing something, can I pay it off? The last couple cars I've bought have had 0.9% or less rate, they all allowed me to pay early, but in the end I just used their money. One car, the Acura I believe, gave a $1,500 rebate to take the 0.9% financing. Still can't figure that one out.
     
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  17. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Lump sum. Wasn't it Illinois that basically said "sorry, we had to use that money to pay for budget shortfalls, we're keeping the payout"
     
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  18. Matthew

    Matthew Touchdown! Greaser!

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    There's also the house - if it's yours or if you have positive equity, you can convert it to a smaller place and pocket the difference.

    Looking at our house, with just the 2 of us in it now, I keep thinking, "Hmmm, smaller, less maintenance, lower utility bills, lower taxes and insurance...maybe this isn't a bad idea."
     
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  19. denverpilot

    denverpilot Tied Down

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    Only if your local real estate market hasn’t gone insane.

    It would cost us more to go smaller now. Yay mini-California.
     
  20. bnt83

    bnt83 Final Approach PoA Supporter

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    Supposedly the future is full of many many more childless couples, might make sense to dump big houses quickly.
     
  21. bnt83

    bnt83 Final Approach PoA Supporter

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    A guy could always dump and rent a while.
     
  22. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Eh I have a friend couple that has no kids and they have the biggest house by far out of all of us in that circle. 5 bedrooms. One is his office one is her craft room and 2 guest bedrooms. Plus a full basement.
     
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  23. schmookeeg

    schmookeeg Pattern Altitude

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    I'm at risk of a windfall and would be curious what they proposed to do with such a lump sum. I'm assuming just basic and sensible asset allocation?
     
  24. kayoh190

    kayoh190 Super Moderator Management Council Member PoA Supporter

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    I do have a spouse, and she’s maxed out as well. Everything left over gets placed into an brokerage account or savings.

    The people prodding me to spend more money are doing so in a somewhat tongue and cheek manner, but it comes from what I was talking about in an earlier post - my wife’s job has us in a bit of a holding pattern, so we’re basically only spending what we need to be comfortable. No toys, no kids, no mortgage. We’re already saving all we can. I understand the importance of having money for retirement, but at the same time we’re not getting any younger. I don’t want to miss out on enjoying the present because I’m spooked about the future.
     
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  25. Pugs

    Pugs Pre-takeoff checklist

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    I sure don't want that when we move but I do want a 4 car garage with attached house. :D

    We're 3 1/2 years from retirement and our paid for 1470 square foot house may be replace after the move to NH with something bigger but I figure we will not be away at work 10 hours a day and will have more inside activities in winter. Still, I can't picture exceeding 2K square (not counting that garage!) yum, do I have to count the hangar too?
     
  26. Matthew

    Matthew Touchdown! Greaser!

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    My neighbors had that kind of house: 5 br, 5ba, 3 car garage, all the bells and whistles in case their kids came to visit. Then they found out they couldn't handle stairs any more and 3 levels of house wasn't going to work.

    We'll probably stay in ours as long as we can.
     
  27. Pugs

    Pugs Pre-takeoff checklist

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    Ours has stairs now - the next one won't. It will also have wheelchair accessible showers and doors and such. Ours is also in Maryland and the next one won't be!
     
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  28. Matthew

    Matthew Touchdown! Greaser!

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    We've been meaning to remodel our kitchen for several years. Next year might be the year we get started. I talked with a contractor who said he considers the ages of his clients when he does kitchen remodels. I may be good now, but in a few more years I might really appreciate a different height on the counter tops, or oven, or whatever.

    You can remodel and change just about anything, but there comes a point where it's easier, faster, and maybe even cheaper to move.
     
  29. denverpilot

    denverpilot Tied Down

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    Of course. We don’t need to move right now but if we did, a rental might be in order, even just as a temporary thing. Always options. Can live in a van down by the river too. Was just lamenting our silly housing market here.
     
  30. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    My final house is going to only probably be a 2br (no visiting kids) 1200ish square feet or so. But, plan on having a separate ~1000sf entertainment building (w kitchenette and toilet/sink) so no one has to actually come into the house if I have a party, and on the other side of the courtyard, ~1000sf workshop.
     
  31. IK04

    IK04 Pattern Altitude

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    Due to my recent shift from p1$$ing away any savings and getting serious about retiring, I have cut eight years off of my retirement age.

    I can now retire at age 106 and begin to enjoy life. :confused:
     
  32. Bell206

    Bell206 En-Route

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    FWIW: In trying to work out what I wanted to do after retiring I realized my last abode would need some upgrades. Unfortunately the neighborhood was in flux and I didn't have the option to expand my shop. After looking for existing setups, I elected to build a new "retirement" house with big shop. Also had all the ADA type structural requirements built into the walls so any grab bars, etc could be installed at later dates. No second floor or other mobility type restrictive designs were used and moved walls where needed to ensure there was a "flow" through out the house. Also included a large game room and designed my shop to handle my perceived future hobbies and projects.

    The house proved to be a good idea and works good. Where I failed was every hobby or project I thought I was going to pursue never materialized. So instead of tinkering with a set of Cessna wings or recovering some tail feathers for a Stearman... I have 2 tractors and a collection of small engine projects. My "custom built" reloading benches now have a weedeater and several Stihl blowers scattered on them. The reloading and support equipment are still boxed up in my attached office/man-cave. The pool table and dart board are set up but seldom used. I never finished the outdoor kitchen/tiki bar because I'm to busy doing other things I never thought I would be doing.

    I guess the moral to this is unless you are selling your existing house as part of your retirement maybe wait till afterwards and see how life changes. This was one the collective advices I got from other retirees that I didn't heed as much because I thought I knew what I was going to do when I retired. Boy, were they right and me mostly wrong. But don't get me wrong, starting off with a newer house has been a bonus but the game room/shop could have been done better (and a bit cheaper) had I waited.
     
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  33. Skyrys62

    Skyrys62 En-Route

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    Agreed...and downsizing needs to be kept in perspective somewhat. You'd have take some significant equity to make a real difference.
    Example: Sell house, downsize, get 50k equity. (hopefully no capital gains)
    At a 4% return, that's 2k per year, or 166 per month, minus income taxes. You can also add in lower utilities, if that would be much different. Other small variables include property taxes, insurance, and commute expenses, etc., if applicable.
    Likely somewhere around 200/month all in, but yeah, it'll help pay hangar fees or fund a vacation.

    I find that around here in good ol downhome KY, it would be quite a drop in size for me to get 100k equity, so it's really not worth it in regards to comfort...which seems to matter more as I get older.
    It's nice having the office, craft room, storage, and extra bedrooms (flight sim, visitors, etc)...all of which contribute to happiness to some degree. Also, there are possible income opportunities with the extra space, if so inclined.

    Sort of like owning a C150 instead of a C182 (I mean there are other comparisons, but who wants a low wing right?) :rolleyes:
     
    Last edited: Aug 29, 2019
  34. Matthew

    Matthew Touchdown! Greaser!

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    My folks downsized about a year ago from a 2 story 3BR house into a single story 2BR duplex. They did it because they were able to, and not because they had to. Good thing on the timing, too, because a few months after they made the change my dad wouldn't have been able to deal with the stairs. That's more of a "down the road" issue vs a "retirement" issue, but the lesson is there -- make changes on your own terms.
     
  35. Bell206

    Bell206 En-Route

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    Their main goal was to create an entity to manage the lottery asset and a tax plan for each person I would want to have access to this money and it's succession. The entity was to be a named trust of some sort, like a revocable trust. They explained several. From there they wanted a list of potential members or beneficiaries who would profit from said winnings. But being the greedy bast**d I am, I declared myself the sole trustee and beneficiary--everybody could fight over it when I dead.

    The main thing was the trust and if I ever did win something even as little as $50,000 my 1st call would be to the tax/estate attorney per their collective advice.
     
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  36. MIFlyer

    MIFlyer Cleared for Takeoff PoA Supporter

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    and by the way, you might even be able to have your attorney collect the prize for the trust to keep your name out of the vultures' hands.
     
  37. wsuffa

    wsuffa Touchdown! Greaser!

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    Renting a 2 BR apartment around here can be as expensive as a mortgage payment on a 2200 Sq. Ft. house. At least the house builds equity.
     
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  38. Bell206

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    Ha. That actually came up in discussion. But my shyster wanted to claim a 10% premium to go in front of the media. My accountant under cut him at 5% to be the trustee. But my buddy the wealth guy offered to do it for a case of beer since he would be making millions off his fees for years to come.:D
     
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  39. TCABM

    TCABM Cleared for Takeoff

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    Spend some, save & invest some, give some.

    So, if you’re investing 15% gross, have 6-12 months gross annual earnings in cash, are either managing your debt or debt free, and giving some back, then you should be spending some.

    Why work that hard to not enjoy it? Kinda like beer, drink (spend) responsibility.
     
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  40. bnt83

    bnt83 Final Approach PoA Supporter

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    Taxman won't tax the **** out an old van.

    I'm thinking more and more about minimalist approach to housing.
     
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