How far will $1 Million go in retirement in your state?

Data point of 1 here but back in October/November of 2024, we bought and sold respectively. Got rid of the mortgage in the process. Had rates been in the 3% range like our mortgage I gladly would have signed back up, couldn't justify it at prevailing rates.

I was curious how I would feel in my carefree no mortgage world... I don't feel any different. Can't say "I want a mortgage" but I'd rather have one and the cash invested.
 
GON said:
I struggle with this simple math problem. Others on BITOG will not- but I do.

Eight months ago, Wife and I purchased a home. The home had an assumable solar loan, original balance of $50k USD, we assumed the balance of $48k USD, 1.99 percent interest, for 30 years ($212 monthly payment). The original purchaser of the solar likely overpaid, and the solar parts and labor should have been in the $15-20k USD. It appears the purchaser of the solar received a check from U.S. taxpayers for $15k USD, solar rebate. The original purchaser of the solar likely went for the deal, as their electric bills were about $200 USD monthly. So, install solar, reduce your electric bill from $200 to $12 per month, and get a check in the mail courtesy of U.S. taxpayers for $15k.

So, here is my dilemma. Pay off a $48k loan, on a solar system that new should have cost no more than $20k USD? I have the money set aside to pay off the loan at any time (currently earning four percent at a NCUA insured financial institution). I am very tempted to pay the loan off. Or keep making payments, for 28 more years, where the total interest over 28 years will likely be in the high five figures.

I know the expert/ savvy/ smart money method is to keep the money in the bank, make four percent interest, and keep making the payment. But I am not so smart and hate paying potentially a high five figures in interest.

Caveman GON here.
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Curious @GON , have you calculated what your interest is over the life of the loan? I don't think it will change your mind of what you want to do but I noticed you cited it as potentially high five figures in interest.
 
John105 said:
My coworker showed me his brothers house in CA on Zillow, 3.4 mil and it was a 1950’s 1500 sq ft ranch. Why not move to Boston you can get a 2800 sq ft home for that 😂

Besides impressing people in conversation it’s not impressive in reality, still a below average way of life
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Where in CA? Maybe Palo Alto or Atherton? That's pretty extreme.
 
GON said:
I struggle with this simple math problem. Others on BITOG will not- but I do.

Eight months ago, Wife and I purchased a home. The home had an assumable solar loan, original balance of $50k USD, we assumed the balance of $48k USD, 1.99 percent interest, for 30 years ($212 monthly payment). The original purchaser of the solar likely overpaid, and the solar parts and labor should have been in the $15-20k USD. It appears the purchaser of the solar received a check from U.S. taxpayers for $15k USD, solar rebate. The original purchaser of the solar likely went for the deal, as their electric bills were about $200 USD monthly. So, install solar, reduce your electric bill from $200 to $12 per month, and get a check in the mail courtesy of U.S. taxpayers for $15k.

So, here is my dilemma. Pay off a $48k loan, on a solar system that new should have cost no more than $20k USD? I have the money set aside to pay off the loan at any time (currently earning four percent at a NCUA insured financial institution). I am very tempted to pay the loan off. Or keep making payments, for 28 more years, where the total interest over 28 years will likely be in the high five figures.

I know the expert/ savvy/ smart money method is to keep the money in the bank, make four percent interest, and keep making the payment. But I am not so smart and hate paying potentially a high five figures in interest.

Caveman GON here.
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Gon, will all that solar stuff outlive the loan they took out to pay for it? 30 years is a long time.
 
JHZR2 said:
It’s a great news story, for sure. But you do realize for every one person that has this opportunity and luck, there’s a hundred who don’t, right? And that includes in CA.

That’s not to disparage your success. It’s just that it’s not even a “work really hard and you’ll get this”, instead it’s the practical reality that most, effectively all in any random population sample, won’t. Through no fault of their own; or lack of smarts and effort.

I haven’t run the numbers, but I suspect that long term investment that most folks will do at 10% or whatever best case S&P/nasdaq returns will never return the windfall that you achieved.
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Let's take the options out of the calculation. Invest in yourself. Get that degree, invest your money, go for a property in an appreciating neighborhood and don't buy that fancy car until you can afford it. I am still talking millions without options, and low housing cost.

There is opportunity, but you gotta pick it up and run with it. I'm sure you will agree. What people are missing, IMO, is you gotta be where the opportunity is. I see people talking about CA. Well, I got my 1st degree at the age of 40, mostly paid by my employers, and now let's just say money is not an issue for me. How many places offer such opportunity?

That's my experience.
 
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JeffKeryk said:
Apologies if you thought I was putting down retirees with mortgages; that was not my intent. And certainly my case is different than others. I mentioned that region plays a big part...

Your take on multiple income streams is spot on. I am retired on dividends, and pay plenty of taxes...

Here is my main Silicon Valley employeer stock; I started when the company was a few years old, I recall. They had just brought up building 2.

View attachment 268217
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I did not mean you are thinking or saying mortgages in retirement are a bad thing. It’s the mantra of the press and very often mentioned in retirement advice articles without nuance.
 
SC Maintenance said:
I very occasionally go to Gary Indiana for work. I know you lived in Chicago, so perhaps you have been. I used to go to Detroit, luckily not in a very long time.

I look at the empty streets and places that people used to live, which are now worthless.
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Indeed. If history has taught us anything, towns and cities that is majorly based off one industry come and go. The death of the US cattle and steel industries and cyclic corporation bankruptcy has turned one of many thriving neighborhoods into poverty stricken places.
 
I hit over $1M in retirement savings / investments.

That’s really not a lot of money in 2025 (and beyond) when you get taxed on that money.

I might be collecting shopping carts at Walmart when I’m 70 years old if inflation keeps going up and up.

🛒 :( <— Me
 
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Its not accurate to make a blanket statement that a low interest rate mortgage is not worth paying off.
It you a young person, taking out a 30 year mortgage you are paying double the price for the home by the time you pay it off.
For the first tens years alone all you are paying is pretty much all upfront interest and after ten years of house payments you still almost owe the full cost of the house you just bought.

No one should take out a full 30 year mortgage. 15 is best and if you have to pay off a 30 year mortgage in 20 or less years.
It just makes no sense to do otherwise.
 
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In my area, it's a moot point if we're talking about young people and houses. The vast majority of them are stretching to make it happen in the first place and they're dealing with PMI too! The 30 makes the payments affordable and most couldn't do a 15 even if they wanted.
 
tbm5690 said:
I don't think I've ever met someone retired that didn't own their home...for real. This is surprising to me. I guess personally I see owning my house as a highly desirable pre-req for retirement.
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I'm getting close to retirement my properties are paid off but most of my friends still have a mortgage they kept pulling out equity to fund a certain lifestyle.
 
Dave Hess said:
I hit over $1M in retirement savings / investments.

That’s really not a lot of money in 2025 (and beyond) when you get taxed on that money.

I might be collecting shopping carts at Walmart when I’m 70 years old if inflation keeps going up and up.

🛒 :( <— Me
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Depends on how you play your carts. I means cards....
Well done on your cool mil... The 1st million is the hardest.
 
The home ownership mortgage calcs can make assumptions and make ownership look bad, as many have shown.
But there is much more to life and money, than the numbers...

If you rent, you are at the mercy of landlords and likely rent increases. You may get priced out and forced to downgrade...
Where ya gonna live? I live in a pretty nice place in a small 3/2 home for next to nothing.
Do I wanna rent an apartment or whatever? Heck no. And one day someone will inherit a pretty nice asset.

I am a long term planner. If you kick early, nothing matters. If you live long, you had better be ready or you might end up in deep yogurt.

Good luck!
 
alarmguy said:
No one should take out a full 30 year mortgage. 15 is best and if you have to pay off a 30 year mortgage in 20 or less years.
It just makes no sense to do otherwise.
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Makes sense but you gotta have a payment you can live with. I always had 30 year terms, 5/30, and all kinds of others. And I refried like crazy. I have a great mortgage broker! The goal was to minimize interest expense but to be able to invest in securities as well.

Pay an extra hundred, $500, your tax return, company bonus, whatever into your mortgage. As time goes by, you just might find yourself in a pretty good place, especially if you bought in a good area.
 
Dave Hess said:
I hit over $1M in retirement savings / investments.

That’s really not a lot of money in 2025 (and beyond) when you get taxed on that money.

I might be collecting shopping carts at Walmart when I’m 70 years old if inflation keeps going up and up.

🛒 :( <— Me
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Same. I have >20 years to go, and do not consider a million to be anywhere near sufficient to live at any reasonable level.
 
I'm pretty sure I'll never see social security, my goal is much higher than $1M. It needs to be higher since I'll die with my mortgage, unless the tax code changes :)

All of my "need" numbers are based on a 4% withdrawl rate.
 
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JeffKeryk said:
If you rent, you are at the mercy of landlords and likely rent increases. You may get priced out and forced to downgrade...
Where ya gonna live?
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We had friends who had to move as the landlord kicked them out--wanted to renovate and then charge more. Took months to find a similar place to live in the area (3 bedroom? something like that, all but a house; I think now they live in a duplex or rent a floor of a house, something like that).

My 30yr mortgage is below median 3 bedroom rent for the state I live in. Arguably, once the kids move out, I could move to some place cheaper but rent could still go above my mortgage. And yes, it's a risk with owning a home. But I have a nice yard...

Coworker rents in MA and his landlord likes to raise the rent each year. And it's a yearly lease, no month to month, so it'll be a pain to get out of. He figures he needs six figures for a down payment--oddly enough, that's what he's paid over the last 3 years in rent.

rijndael said:
I'm pretty sure I'll never see social security, my goal is much higher than $1M. It needs to be higher since I'll die with my mortgage, unless the tax code changes
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I'm assuming I'll see my social security, or I was until recently. Still, I know I have to be careful as it won't be 40% as advertised, so instead of 10x saved I need more like 12x to fit into a generic rule of thumb of 80% income (40% from SS, 40% from portfolio--4% of 10x is 40%). Now if I had to hit 20x... too late, I might as well plan to work at Walmart too.
 
JHZR2 said:
Same. I have >20 years to go, and do not consider a million to be anywhere near sufficient to live at any reasonable level.
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$1M is not much if you want to be able to work with (aka help) others. And given that there are a lot more people that need a little than can give a little, you will want to have way more. I can tell you helping friends, families, etc with the gift of education, a work car, a place to live, is the best feeling I have ever had.
 
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