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I WROTE MY ESSAY for My Money Journey 14 months ago. Since then, our family’s journey has continued apace—including rethinking where we live.
The highlight of the past 14 months was the addition of another grandchild. We now have four grandsons, ranging in age from five months to 10 years old. Last summer, our younger son and his wife purchased a home in Monmouth County, New Jersey, roughly an 80-minute drive north of us. Our oldest son and his family live in New York City. After some pandemic-related dislocations, our two children and their families seem solidly located in the greater New York City area.
Lots have also happened on the financial planning front. Last year was the first full year of retirement for my wife and me. I had minimal consulting income—about $850. Without significant earned income, 2022 was the year we kicked off our retirement-income plan.
I officially joined the ranks of America’s seniors and enrolled in Medicare last September. My wife followed in March. After some careful analysis and a lot of discussion, we opted to start my wife’s Social Security at the beginning of 2023, while delaying mine. Many of the articles and comments posted on HumbleDollar were helpful in making that decision.
We also completed most of the large home improvement projects we had planned, so we should have a better grasp on our budget going forward. As part of our tax return preparation, I reviewed our 2022 spending. The impact of inflation on food, gas and dining out was noticeable. I used the spending data to update our projected budget for 2023 and beyond.
We now have two fixed income sources: my pension and my wife’s Social Security. These cover our needs, but not all our wants. We’d like to pick up our travel game. We have an Alaska trip booked at the end of the summer, and we’re discussing where else we want to visit. In addition to some big trips, we’d like to take more smaller trips to see new places and to visit family and friends.
To make sure we have sufficient income for all this, I simplified our retirement portfolio and put about five years of “discretionary” expenses in a couple of Vanguard Group short-term bond funds. I was able to set up a recurring withdrawal that’ll be deposited in our money market fund on the 15th of each month.
Part of my retirement-income planning includes projecting our future tax bills, including Medicare’s Part B IRMAA costs. New Jersey has a retirement-income exclusion provision, but that benefit disappears if your income is too high. I try to keep track of our income and tax burden as the year progresses. There are two “levers” I can use to reduce our taxable income if we get close to a scary tax cliff.
First, we saved in health savings accounts for a number of years, which give us a bucket of tax-free income we can use for medical expenses, including Medicare premiums and dental or vision expenses. Second, we started Roth IRAs a number of years ago, and have done several Roth conversions, and these accounts give us another pot of potential tax-free income. On top of that, my wife’s Social Security retirement benefit is somewhat tax-preferred. At most, 85% of her benefit will be subject to federal income taxes, and New Jersey doesn’t tax Social Security benefits.
It’s now been two years since we moved permanently to our New Jersey beach home. When we made the decision to move, we acknowledged that the timing was a bit premature, and we weren’t sure if living fulltime in a resort community was right for us. We left behind family and friends in Pennsylvania, and we knew we wanted to be more involved in our grandchildren’s lives and activities.
The upshot: We’ve spent the past year seriously discussing how and where we want to spend our retirement years. Many of these discussions occurred in the car while traversing the Garden State Parkway to visit the kids and grandkids. We decided to explore either moving closer to them or purchasing a second home near them.
We connected with an excellent realtor in Monmouth County, New Jersey. She was knowledgeable, professional and patient. She showed us dozens of homes, from $300,000 condos to $1.5 million single-family homes. I ran a variety of analyses looking at our monthly cash flow and the impact on our retirement savings. We considered converting our beach home to a rental property that we might occupy part of the year.
In addition to financial considerations, my wife and I spent a fair amount of time discussing how we wanted to spend our days in the near and long term. We thought about what our days and weeks would look like. While we wanted to spend more time with our children and grandchildren, we also acknowledged that they had their own busy lives that are taken up with work, school and friends.
Meanwhile, we have friends and activities in our town. Since this is a resort town, many of our friends are “weekend” friends who we see several weekends a month. We decided we weren’t ready to give that up. Our children also enjoy visiting our beach town when they have time. This is getting more difficult for the older grandkids, who are now more involved in sports and other activities.
The more we thought about all the considerations, the more we realized we weren’t ready to make a move. I had an “aha” moment late last year as I was reviewing our budget, and estimating what the purchase of a second home would mean. I realized that the line item I assumed for travel was similar to what a second home would cost us. That begged the question: If we plan to travel pretty extensively over the next five years, why do we want a second home?
We realized what we needed was a bedroom near the kids. We can accomplish that with hotels, Vrbos and, on occasion, staying with the kids. It probably means driving more miles than we would if we bought a second home, but that’s a tradeoff we’re willing to make at this point. In five years, our thinking may change.
Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.
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Interesting update and discussion in the comments! We downsized from our family home in 2019 and moved to a new construction condo, thinking this would be our place until we were too old to live on our own. But we’re having some second thoughts about the condo, though there are many things we like about it.
What we DON’T like: (1) the HOA fees, which have risen to just over $700 a month. That’s a lot. (2) I would really like to get a dog at some point—our last one died in 2018. We’re allowed to have pets, of course, but taking care of a dog in a condo sounds like a hassle. A small house with a small yard would be better for this. And (3) I was on the HOA board for a couple of years, and now I know a bit too much about “how the sausage is made,” specifically construction issues that may be increasingly problematic 5-10 years from now. We feel like there might be a sweet spot to get out and sell at a good price sometime in the next five years or so.
We’ll see. We’re certainly not selling and buying right now with the way mortgage rates have risen (ours is very low since we bought in 2019 and refinanced in 2020). We like our condo and our neighbors. We may stay put and just figure it out at some point about a dog.
Having been born and raised in Monmouth County, I can attest that it is a great place to live – the longer you live there, the more you like it. Unfortunately, I don’t live there now because of job-related moves. The big downside for the Garden State is high taxes that threaten to go even higher, but I understand that the state has at least phased out its estate tax.
Rick, good safe decision that you can decide to change if you want to pretty easily. I know very little about your financial situation but would wager you can afford a second home.
Rick, good for you doing that math and being open to the results. We need to do some similar, though probably more complex, math around maybe moving to Italy (where we are now) for a while on an extended residence visa. In the big picture, almost no question that it would be more expensive to have a place and live here than just travel back and forth a lot. The question is how much more, and whether it would be worth it to us to do anyway.
Michael, thanks for reading and commenting. I look forward to reading about you analysis and decision on moving to Italy. It sounds great, but i’m sure there are challenges. I’ve been thinking about getting an EU passport – actually my wife is eligible through both here grandparents through Italy or Ireland. Have you looked at that?
Yes, along with several other ways of approaching it. There’s lots of fine print to go through before getting your hopes too high. Great if you can do it!
Rick, I always enjoy your careful analyses. A second home can be a real joy but also a real burden—especially if and when you later decide to sell, given how “illiquid” real estate can be during certain cycles.
We had and thoroughly enjoyed a weekend home for a number of years. Later, when the burdens began to outweigh the joys, we listed it. Then came a multi-year wait as we tried to sell. We finally did and I’ve felt considerably lighter ever since.
Andrew, thanks for reading and commenting. We had two homes for a decade, until we sold our PA home and moved to our shore home. We were lucky that the shore home was close, easy to rent, and new enough to not need lots of maintenance. It also sold in a day, even before the housing craze of a few years ago. We got lucky!
A first home can become a burden as you get older, not just a second! It was a great relief when I sold mine last year.
Ditto!
I know I sound like a broken record, but might I suggest that you also consider how you will want to live in ten or fifteen years? At 75 or 80? When you are no longer in the “go-go” years? CCRCs in my area have very long wait lists, cottages at my choice are over twelve years and older two-bedroom apartments over ten. If that is the case where you live, and deposits are only $1,000, as they mostly are here, it might be prudent to sign up for one sooner rather than later. Aging in place may work well for couples, but much less so for a surviving spouse.
Hi Kathy, I know you’re in NC, and for some reason seem to think you’re in the Raleigh-Durham area. Do I have that right? Also, did you look in the west end of the state as well? I know from your article on the subject that your research was very thorough, so would be interested in what turned out to be your short list. We’re going to be looking when next in the US due to the long waits you describe.
Hi Michael, if you post a comment here: https://mytimetotravel.wordpress.com/ I’ll see it and can email you, but it won’t be published since you’ll be a new commenter. I prefer not to be more specific here as I once picked up a stalker on the internet.
Done, and had an interesting read on your Sicily travels while there! Thanks
Answered. Glad you enjoyed my blog posts – Sicily is high on my “should revisit” list.
Thanks for reading and commenting. You make a valid point. We have experience researching and finding the right place for my mother-in-law. I think we will consider a CCRC in the future, most likely closer to our children. Our current house isn’t really set up for aging in place if either of us develops severe mobility issues. We hope that is still a decade or more away.
A good friend who is single, 12 years older, and has no children, He did as you suggest, and put down a deposit on a quality CCRC near his sister and nieces. He hopes to stay in his home as long as possible, but he is planning for the time when he can’t.
At least in my area you usually need to be able to start in Independent Living. There is a financial and medical check when you first sign up and again before you move in. Sometimes you may be able to move directly to Assisted Living, but it’s not clear what would happen if you became able to live independently again. Some CCRCs operate on a rental basis so they may be less restrictive.
You have a valid point for a single person. On the other hand, I live in an over 55 condo community I would estimate the average age close to 75 with many single people, mostly women. There are several who have live in caregivers which seems to be an alternative perhaps until full time care is required similar to a nursing home. But I have relatives who just moved to a CCRC and they both say they love it. I guess there are many variables.
One reason I like the CCRC concept is that you can move to Assisted Living and Skilled Nursing (and back again) on the same site. You keep your friends and support group, and you don’t have to find a new home when your health fails and you are in no shape to do so. CCRCs aren’t cheap, but live-in caregivers wouldn’t be either, and you would have all the problems of being an employer.
Couples like the concept too. I have met couples who have moved to a one-bedroom because the wait for a two-bedroom was so long.
Congratulations on your newest grandson! And your decision was wise to not buy. Children move, too, despite all plans to stay put. It would have been a horrible surprise if either (or both!) uprooted to the other coast after you purchased an additional Love Nest.
Enjoy your travels, hotels, and Airbnbs!
Stacey, thanks for reading and commenting. The children seem pretty settled, but You are absolutely correct – you never know.
Rick, your situation reminds me of a friend from work near Atlanta whose only child lived in Orlando. When a grandchild was born, my friend and his wife made plans to move. But, they did it in phases. They first did overnight lodging, then rented a garage apartment, before eventually buying a home. His needs were a little different, as he was slowly retiring from work, but he also wanted to avoid the cost of two homes.
I chuckled when I read about the car conferences that lead to your decision. Some of the best conversations with my wife come during driving time.
Edmund, thanks for reading and commenting.A friend and I were discussing the amazing pull of grandchildren. We will continue to evaluate the situation and may eventually make a move.