Go Curry Cracker Forum
Go Curry Cracker => Early Retirement => Topic started by: Paul1011 on December 29, 2020, 02:28:22 PM
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I have not seen the below as a strategy and I am hoping for feedback and advice please.
54 now. Sell house in 3 years; net about $400K to live off of and slow travel for a couple years until I’m 59 ½. Figure expenses to be about $60K/yr including travel health insurance and/or subsidized ACA since income will be very low…probably just roth conversions. At 59 ½ will have 25X annual expenses plus around $350K cash.
Does this sound like a sound strategy? I have searched, but haven’t found “selling your home to fund your early retirement” as a strategy. Barely early I guess at 57 lol.
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Hi Paul
I think the best way to think about this is as 2 separate but important questions -
1 - do I want to live in this house?
2 - what about the money?
If the answer to 1 is definitely no, then sell. If not, then see if it makes financial sense to keep it.
For 2, you don't need to wait until age 59.5 to access retirement funds -
- it's only 2 years, can you save enough cash to fund 2 years (combined with renting out primary home?)
- google "rule of 55" - you can possibly access your 401k funds at age 55 with no penalty
- google "SEPP" - you can setup a small separate IRA to withdraw funds from without penalty, it just requires a small bit of math and planning
- pay the 10% penalty for 2 years - costs $1k to get $10k out of the IRA, but maybe cheaper than the tax you avoid now
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Thank you for the advice. Definitely plan to sell and move out of San Diego...and California!
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San Diego is really nice.
What is your thinking for moving elsewhere? We have actually considered moving to California but still trying to figure it all out. Thanks!
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I have read conflicting articles on whether California is a good state to retire in regard to taxes. As we will be traveling a lot and for at least two years full time, I thought setting up residency in say Nevada while I have no income and am doing Roth conversions would be a good idea...?
Also, Carlsbad (just north of San Diego) is very expensive. I love it here and the fact I can walk to the beach in a few minutes. But, I've downsized about as much as I can and we are now in a 2 bed condo that was $600K. I guess we could sell and travel for awhile and then come back and rent, but housing would always be a huge percentage of our budget.
I have a lot to think through.
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Here is my analysis of taxes for Cali if we were to move in that direction...
https://www.gocurrycracker.com/going-back-to-cali/
tldr: maybe we pay $1,000 in state taxes on $60k annual income (less with tax credits.)
I would be OK with a $1k tax bill.
For Nevada, I see a lot of people moving to Reno these days (nice weather, close to skiing and Tahoe, low income taxes.)