Reader Case Study: Grandparents In Michigan Contemplate Moving

Debbie and her husband Dan have been married for 32 years and are planning for retirement. At this point, they’re trying to decide if they should sell their current home. The pros and cons look equally matched, so let’s help them out with this choice today!

Case Studies are financial (and life) dilemmas that a reader of Frugalwoods sends to me requesting that Frugalwoods nation weigh in. Then, Frugalwoods nation (that’s you!), reads through their situation and provides advice, encouragement, insight, and feedback in the comments section. For an example, check out last month’s case study.

Case Studies are updated by participants (at the end of the post) several months after the Case is featured. You all requested an easier way to track Case Study updates and I have heard your pleas :)! I’ve created this page, which lists and links to all of the updated Case Studies.

I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but, please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not to condemn.

And a disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises. I encourage everyone to do their own research to determine the best course of action for their finances.

With that I’ll let Debbie, this month’s Case Study subject, take it from here!

Debbie’s Story

Debbie & Dan’s grandkids visit the horses

Hello Frugalwoods & Readers: My name is Debbie, I’m 54, and my husband Dan is 56. We’ve been married for 32 wonderful years and have two daughters, ages 31 and 27, and four grandchildren with another on the way! Dan and I live in Pure Michigan in the northern part of southeast Michigan. Our home backs up to an Equestrian Center so we get an amazing view of these beautiful animals. I LOVE it when the horses run!

Dan and I both work about 35 miles away from home… imagine that! Twice a week we carpool to work to save money and wear and tear on our vehicles. Dan is a Software Development Manager for an insurance company and enjoys his job. I work part-time for a national hospital chain in the radiology department doing office/clerical work. Working part-time allows me to spend time with my four grandchildren and help my daughters out from time to time.

Dan & Debbie’s Hobbies

Dan has a lot of hobbies, including: golf, biking, photography and music. He has also spent a LOT of time doing DIY projects around the house, which has saved us a ton of money. His most recent project was building a deck and we love it!

I enjoy reading, sewing, cooking, and bargain hunting (I love resale shopping!). I’ve come into the arena of DIY make-up, soaps, lotions, and more. I find it very fun to make my own and love saving money on these things. Physical hobbies have been challenging for me since I’ve had four back surgeries with some nerve damage. Due to this, we have had lots of medical bills over the years.

Together, Dan and I love to travel. Our most recent trip was going up north with some great friends on a “paddle for pints” kayaking tour which took 5 hours. We loved it and it was my first time in a kayak! We’ve also been on several cruises, and recently visited Sedona, AZ and the Grand Canyon. It was amazing!!! We typically use Air B&B for our lodging so that we can prepare some meals there, rather than eat all meals at restaurants.

Dan & Debbie’s Early Years Together

Dan building their deck

Dan and I met at our church and were married in 1987. About 10 months later, our first daughter was born. These early years were tough financially. Dan and I were both working and paying for daycare was a challenge. We were fortunate to get a down payment together, with help from Dan’s father, and purchased our first home.

As our salaries increased, we were able to work on the house to make improvements. We moved to another home after making a nice profit from all the work we put into our first home. During that time, our second daughter was born. We made several moves over the years, each time doing many renovations, selling for a profit and moving up. This is how we got to where we are today with very little left on our mortgage.

Over all these years, we were never overly focused on saving everything we could for retirement. Daily living seemed to always get in the way and helping to pay for college and weddings for our kids took a toll. Over the last 10 years, we’ve become much more focused on saving for retirement and trying to change our lifestyle. This is due a lot to following the Frugalwoods, Mr. Money Mustache, and others. We wish we could go back to the beginning with the knowledge we have today as we would have done it much differently.

Looking To The Future

We would love to retire in 8-10 years (or maybe even 6-7 years). Our dream is to have the ability to live in Michigan in the summer/fall, and somewhere warmer in the winter months. We DO NOT LIKE the snow! Dan is currently maxing out his 401K ($19k/year), which comes to around $35K a year including his employer’s contributions.

Should We Move?

Debbie and Dan’s home

Since both of our jobs are 35 miles from our home (and only about 1.5 miles apart), we’re considering purchasing a home closer to our jobs. Most of our family lives in the area around our jobs as well (except for one of our daughters) and so, proximity to them would be wonderful as well. The major downside of our current lifestyle is the distance to everything from where we currently live. Most of our family lives about an hour away and so we feel like we have to travel a long distance to go to any family function. It wouldn’t be such a problem if we didn’t drive to work every day as well. It’s a lot of driving!

However, the cost of homes has gone up tremendously in this area and it seems to be a seller’s market right now. There aren’t that many homes to choose from and we are picky, picky, picky! We did come across a home last year that we both loved that had just about everything we’re looking for. But the house was on the market for a total of two days. We bid on the house, along with dozens of others and offered $20K OVER the asking price and… we didn’t even come close. It was the only time I’ve ever seen a line of cars down the street waiting to walk through a house, it was wild!

At this point in the game, with retirement edging closer, we’re unsure if we want to buy a home in our work area which will cost more money than our current home (which is $34K away from being paid off). We’ve revisited this subject over and over… and over… and we still don’t have a clear sense of what to do. We don’t want to have a mortgage when we’re retired.

We do have money in a savings account that we’d planned on using for a down payment on a house if we were to take the leap! We would very much enjoy having a short commute to work and there would be a great time savings, but at the same time we very much enjoy living in our current area. We do spend quite a bit of money grabbing food on the way home due to our long commute. Given this, we eat out more than we should!

Dan & Debbie’s Current Home

The view from Debbie & Dan’s back deck

There are some things about our current house that we don’t like and that aren’t (easily) fixable. Our driveway is steep, which makes for a challenge in the winter time with snow shoveling. The layout of our house isn’t ideal for entertaining as there’s not a large gathering area near the kitchen… which sometimes makes us want to move! Outside of entertaining family and friends, the house works fine for us. We’ve looked at making the structural changes to our house that we would like, but it’s cost prohibitive. At the same time, we have the house completely redone the way we like and we’ve replaced just about everything, which makes it hard to move because we don’t want to do all that again!!

When we bought our current house, we bought it far, far below market value and it was a blessing financially. At that time, Dan took a new job that was only 15 miles away. Since then, that company went bankrupt and was bought out. Thus, we find ourselves living much farther from work than we’d intended.

If we were to sell it, we think we could realistically get $290K – $300K. However given the demand on homes at the present time it might fetch more. We owe approximately $34,700 on our mortgage.

Where Debbie and Dan Want to Be In Ten Years

In ten years, we’d like to be retired and living in a warmer climate during the winter months. We don’t need a fancy house, just something clean, neat and comfortable. I do enjoy hosting family and friends at my home, so the house would have to accommodate those needs for entertaining. We would also like to do some traveling in our retirement years.

Debbie and Dan’s Finances

Income

Item Amount Notes
Dan’s net income $6,239 Dan’s net salary after taxes, healthcare, dental, FSA, and 401K contributions
Debbie’s net income $952 Debbie’s net salary after taxes, dental, and 401K contributions
Dan’s yearly bonus $333 Yearly bonus broken out per month. Net after taxes and 401k
Monthly subtotal: $7,524
Annual total: $90,288

Expenses

Item Amount Notes
Groceries and household supplies $790 Lots of organic, includes beverages, toilet paper, cleaning supplies, etc.
Mortgage Payment $536 15-year, fixed rate of 3.5%. We have $34,700 left to pay on it.
Travel / Vacations $415
Cash Allowance $400 Cash on hand for personal expenses
Car Payment $384 For our 2018 Subaru Outback. This is a 4 year loan and we have 3 years left. 0% interest rate.
Car Lease $316 For a 2017 Buick Encore. 19 months remaining on this lease. We will NOT be leasing a car ever again. The plan is to buy a used Subaru Forrester when this lease ends.
Charitable Giving $300
General Merchandise $290 Everyday expenses that are not food-related, kind of a catch all
Restaurants $270
Car expenses $266
Property Taxes $250
Clothing $250
Home Maintenance / Improvements $210
Hobbies $200
Utilities $177 Gas & Electric. This is the average amount per month as it varies throughout the year.
Auto Insurance $176
Medical / Healthcare $125
Home Insurance $73
Subscription services $68 Netflix, Hulu Live, Amazon Prime
Internet $66
Personal Care $56
Entertainment $50 Shows, sporting events
Homeowners Association Dues $34
Cell phones $10 Through T-Mobile. The total cost is $60 for the two of us, but Dan’s employer reimburses him  $50 per month.
Costco Membership $9
Monthly subtotal: $5,722
Annual total: $68,664.00

Debts

Item Amount Notes
Car loan for our 2018 Subaru Outback $14,214 Monthly payment of $384.16. This is a 4 year loan and we have 3 years left. 0% interest rate.
Car lease for a 2017 Buick Encore $6,010 Monthly payment of $316.33 with 19 months remaining on this lease. We will NOT be leasing a car ever again. The plan is to buy a used Subaru Forrester when this lease ends.
Total: $20,224

Assets

Item Amount Notes
Dan’s roll-over IRA $253,360 Through Vanguard
Dan’s 401K $98,389 Through Vanguard
Savings accounts $94,670 Through our credit union. Interest rate of .05%
Checking accounts $21,081 Through our credit union. Interest rate of .15%
Debbie’s 401K $8,305 Through Transamerica
Total: $475,805

Debbie’s Questions For You:

  1. Should we move or should we stay?
    • If we move, we’re most likely looking at $50K – $75K more for a house comparable to ours and in the same excellent condition. Dan is done remodeling homes.
    • The area we work in is more expensive and the homes are in higher demand.
    • If we were to sell our current home, we think we could realistically get $290K – $300K. However given the demand on homes at present, it might fetch more.
  2. Are we being unrealistic to want to retire in approximately 8 years with our current financial situation?
  3. What should we do with the sizable amount of money sitting in our bank account? We could pay off our mortgage with it, but we’re hanging onto this cash in case we move and need it for our downpayment, etc.

Mrs. Frugalwoods’ Recommendations

I have a lot of admiration for Debbie and Dan. They’ve done an excellent job of righting their financial ship in the last ten years. Their hard work to stay (mostly) out of debt, their aggressive uptick in retirement savings, as well as their nearly paid-off house are all perfect examples of how it’s possible to put yourself on solid financial footing at almost any stage of life. Many congratulations to Debbie and Dan! Let’s dive right into the most pressing question today: to move or not to move.

Debbie’s Question #1: Should we move or should we stay?

While there’s a lot to consider here, I think it can be boiled down to a simple calculation: If Debbie and Dan can move closer to work/family and DECREASE their housing expenses, then I think they should do it. However, if moving would entail increasing their housing costs, I don’t see much upside. Beyond this calculation, here are the factors I encourage them to explore:

1) How important is being mortgage free?

Debbie & Dan on a kayak trip

Debbie said they’d like to be mortgage-free in retirement and the best way to accomplish that would be to stay where they are. With only $34K remaining on their mortgage, they could afford to pay it off today (we’ll discuss this further in a moment).

2) Where in Michigan do Debbie and Dan want to live after they’re retired?

Proximity to work won’t matter anymore, but proximity to family might. On the other hand, they love their current home and have updated it to their specifications. However, if it will wear on them to drive so far to visit family as they age, then making a move now might be wise. Additionally, I recommend they consider if their current home is well-suited for aging in place. For example, is there a main floor bedroom? Are there lots of steps up to the house? Is there a lot of outdoor maintenance required?

3) Are they willing to work for a few more years in order to afford a home closer to work/family? I

f the main drawback of work is the commute and, if they eliminated the commute, would it be worth it to them to extend their retirement horizon in order to work a few more years (and save that money)?

4) What is the plan for this property during the winter months once they’re retired?

Since Debbie and Dan ultimately want to spend only the summer months in Michigan, what’s their plan for making that dream financially tenable? If they pay off their current home, that would make the carrying costs much lower (they’d only be paying taxes, insurance, home owner’s association dues, and maintenance/upkeep). However, even with a paid-off mortgage, it’s still a bit tough financially to have a home sitting empty for long periods of time–costing you money, but not making you any money–especially in a climate as harsh as Michigan’s with all the attendant wintertime travails of freezing pipes, etc.

This makes me wonder if a small condo near work/family would be a better option for their long-term retirement plans.

Here’s my thinking:

  • A condo usually has less of everything: less space, less upkeep, less hassle, and less expense.
  • Debbie mentioned an interest in entertaining family, but, if all of their family members live nearby and aren’t spending the night, I wonder if Dan and Debbie could manage with an inexpensive one-bedroom that has an open floor plan conducive to hosting family gatherings?
  • Plus, if they live close to family, I imagine it would be easier to ask them to pop over and check on the property periodically during the winter months when Dan and Debbie are away.
  • A condo could be logistically easier to leave sitting empty for long periods of time during the winter since there’s no outdoor maintenance required.
  • Assuming it’s a small, one-story condo, the absence of stairs could make it ideal for aging in place (less to clean, less to fix, less walking required).
  • If the area near their work/family is in high demand, I wonder if there’d be an opportunity to rent the condo out during the winter months when they’re away (either through AirBnB or with a short-term lease). This, however, is a major maybe and I wouldn’t bank on rental income in order to make the finances work. In other words, don’t overspend in the hopes that rental income will rectify the balance sheet. Better to underspend and be pleasantly surprised by rental income.

If there are cheaper condos/townhouses available, and if Debbie and Dan are interested in seriously downsizing, and/or if it would be a worthwhile trade-off to work a few extra years in order to offset the costs of moving, then I think it could potentially be a great idea. I think the bottom line of what not to do at this stage in their lives is to increase their housing costs (without a plan to work longer in order to afford it).

Debbie’s Question #2: Are we being unrealistic to want to retire in approximately 8 years with our current financial situation?

My answer to this question depends on:

  1. Whether or not Debbie and Dan decide to move and, if they do move, what their new housing costs are (minus any money they make selling their current home).
  2. What Debbie and Dan are envisioning for their future winters in the south.
  3. What they can expect to receive from Social Security.
  4. How much they plan to save into their 401Ks during their remaining working years.

Winters In The South

Debbie & Dan traveling

We addressed the moving question in the above section, so let’s move onto the second consideration regarding winters in the south. I’m not sure if Debbie and Dan are thinking of renting or buying a second home, but either way, they’ll need cash flow, which again supports the idea of either reducing or maintaining their Michigan housing expenses. Finding a way to rent out their homes when they’re not living in them could be one way to make the carrying costs more tenable, but finding renters and managing a property isn’t easy and isn’t always profitable.

That idea would depend on the market, the area, and the demand for short-term rentals. Since there are too many unknown variables here, I won’t offer concrete advice, I’ll just reiterate that the way to make this happen will be to keep their Michigan housing costs as minimal as possible.

Social Security

Since Debbie and Dan are nearing retirement, it’s a good idea for them to determine what they can expect to receive from Social Security. To figure this out, Debbie and Dan can follow these instructions on how to retrieve their earnings tables from ssa.gov (the government Social Security website).

Debbie and Dan’s 401Ks and IRA

Debbie & Dan’s town

Congratulations to Debbie and Dan for prioritizing saving into their 401Ks during the last ten years! They’ve made great strides and put away a large chuck of change. Kudos!!!!

401Ks (employer sponsored retirement accounts):

  • Dan’s 401k is currently at $98,389 and Debbie’s is at $8,305, for a combined total of $106,694.
  • If Dan and Debbie both max out contributions to their 401Ks (the 2019 annual max, per the IRS, is $19,000) for the next eight years, they’d have an additional $304,000 in these accounts (not counting employer contributions and assuming the annual allowable max doesn’t increase).
  • That’d be a total of $410,694 (which, again, would be higher due to employer contributions and a potential increase in the max amount allowed by the IRS).
  • At present, Dan is maxing out his 401k ($19K per year), but Debbie is not. If she’s able to contribute more to her 401k, that’ll set them on very secure footing in eight years. At the very least, Debbie should contribute enough to her 401K to qualify for her employer’s match.
  • More about 401Ks here.
  • Edited to add: many astute readers pointed out that since Dan and Debbie are over age 50, they’re eligible for the IRS catch-up contribution limit to their 401ks, which I totally neglected to mention! Whoops. This is an additional $6,000 per person per year, which means they’re each eligible to contribute $25K to their 401ks.

Dan’s IRA:

  • Debbie and Dan also have an IRA of $253,360.
  • An IRA is a retirement account that’s pre-tax. This means you don’t pay taxes on money you put into an IRA, but you do pay taxes when you withdraw the money in retirement. In general, an IRA is a good idea if you’re trying to reduce your current tax bill (and if you think your future tax rate will be lower). This logic should play out well for Debbie and Dan because, once they’re retired, their income will be much lower than it is right now and thus, they’ll pay less in taxes on their IRA disbursements.
  • More about traditional IRAs here.

Debbie & Dan’s town

For both IRAs and 401ks, you need to be age 59.5 before you can withdraw money penalty-free (although there are exceptions). Dan is currently 56 and Debbie is 54. Given this, they’ll both be over the age 59.5 requirement before they retire and begin pulling money from their 401ks and IRA.

If they let their IRA sit tight, and both max out their 401ks for the next eight years, they’d be conservatively looking at a retirement nest egg of $664,054 ($410,694 + $253,360). This is not a precise number as it doesn’t account for: employer contributions to their 401Ks, market fluctuations, inflation, and potential changes in the IRS maximum allowable 401K contributions. Despite the imperfection of this number, it still gives Dan and Debbie a general sense of what they could have if they upped their 401K contributions for the next 8 years.

Once Debbie and Dan determine their expected Social Security payments (following the above steps), they can add those totals to their IRA + 401k total. I don’t know what their employer matches are for their 401ks, but they should add those figures in as well. With their Social Security totals–and a decision on how much they’ll each contribute to their 401ks for the next eight years–they should have a fairly realistic picture of what they can expect to have in retirement.

Debbie’s Question #3: What should we do with the sizable amount of money sitting in our bank account? We could pay off our mortgage with it, but we’re hanging onto this cash in case we move and need it for our downpayment, etc.

As Debbie and Dan already know, the answer to this question is predicated on their decision about whether or not to move. They have $115,751 in their checking and savings accounts and Debbie is right, that’s a lot of cash to keep liquid (and not invested).

The deck that Dan built

Debbie’s correct that, if they want to move, this money could all get sucked up into their downpayment, closing costs, and moving expenses. However, as we discussed above, if they’re able to find a much smaller and much, much less expensive condo, they could use a smaller portion of this cash in service of their downpayment, or, potentially even buy a home outright without a mortgage.

If they decide not to move, they could go ahead and pay off their mortgage of $34,700, which would leave them with $81,051 ($115,751 – $34,700). They should then keep around $34,332 in their savings account as their emergency fund (that’s six months worth of their current monthly spending of $5,722). Then, they’d have $46,719 ($81,051 – $34,332) remaining. A great problem to have!!!

I recommend they consider doing the following with this money:

  1. Earmark some of it to purchase the used Subaru Forrester they plan to buy when their car lease ends. I’m thrilled to hear they don’t plan to buy another new car or lease another car (more here on why I encourage buying used cars). Let’s ballpark $15k for this car.
  2. Now we’re down to $31,719 ($46,719 – $15,000) and Dan and Debbie have a paid-off house, a paid-off car, and a healthy emergency fund! What to do next?
  3. If they want to, they could pay off their 2018 Subaru Outback loan but, since it’s at 0%, there’s no imperative to do so UNLESS that interest rate changes at some point. If the interest rate stays flat at 0%, there’s no financial reason to pay it off early unless they want to. If they did pay it off, they’d be left with $17,505 ($31,719 – $14,214).
  4. Then, since they’re already contributing to their 401ks, I’d say that $17,505 looks like the start of saving for their plan to winter in the south. Whether they keep this amount in cash or invest it depends on their risk tolerance. Since I’m guessing they’d envision using this money in 8 years (their projected retirement date), it’s kind of a toss-up on time horizon. Some folks would invest this money in the stock market, others would keep it in cash. It’s really depends on their risk tolerance and what they’re comfortable with.
  5. If Dan and Debbie decide to invest this money, they should likely consider more conservative options, since their time horizon for investing is relatively short. For more information on investing, I recommend the book The Simple Path to Wealth: Your Road Map to Financial Independence And a Rich, Free Life, by: JL Collins (affiliate link).
  6. At the very least, if they do nothing else, Debbie and Dan should move their cash into a savings/checking account with a higher interest rate. Ally Bank, for example, offers a 2.1% interest rate on their savings accounts. 2.1% might not sound like a lot, but Dan and Debbie could earn $2,430.71 in interest every year (2.1% of $115,751 = $2,430.71). Yay for free money!

Debbie and Dan’s Expenses

Debbie & Dan’s town

In Frugalwoods Case Study tradition, it’s time to take a look at Dan and Debbie’s monthly spending. In every Case Study, I point out that what you choose to save is a very personal decision. Cutting every last expense is NOT the right answer for everyone and I am NOT an advocate for making yourself miserable in the process of achieving financial stability. I am an advocate for values-based, goal-oriented spending. I think it’s important to assess whether all of your expenses bring you fulfillment and a good return on your investment.

I think it’s also important to question if your savings rate will help you to achieve your long-term goals. My job is to identify areas where you might be able to save, but only you can decide what level of savings is right for you. If you’re struggling with where to save more and how to map out a long-term financial plan, I encourage you to take my free 31-day Uber Frugal Month Challenge.

Whether or not Dan and Debbie choose to reduce their spending depends on:

  1. If they want to move closer to work/family and want to be mortgage-free when they retire.
  2. If they want to retire in eight years.
  3. If they hope to purchase a second home in the south.

If Dan and Debbie want to do all three of these things, reducing their monthly spending will help and may very well be mandatory. At present, they don’t have the cash on hand to do all three. The great news is that they’re high earners and could stash away a significant amount of money in the next eight years.

In the spreadsheet below, I’ve identified areas of discretionary spending in order to illustrate how much they could save:

Item Current Amount Mrs. FW’s Notes Proposed New Amount Amount Saved
Groceries and household supplies $790 This could likely be reduced although, if they decrease their other food spending, they might find that this category remains static. $700 $90
Mortgage Payment $536 Fixed expense; no change $536 $0
Travel / Vacations $415 Dan and Debbie will need to decide if this expense is more important to them at this point OR if they want to prioritize their ability to retire in eight years, move, and/or buy a house in the south for the winters. This is the time for them to make these tough choices and decide how they want their future to look. $0 $415
Cash Allowance $400 Coupled with the “household supplies,” “general merchandise,” and “personal care” line items, there’s a good amount of money being spent in these related categories.

I suggest they examine what they’re buying in each of these areas and find opportunities for efficiencies and savings.

$0 $400
Car Payment $384 Fixed expense; no change $384 $0
Car Lease $316 Fixed expense; no change $316 $0
Charitable Giving $300 Fixed expense; no change $300 $0
General Merchandise $290 Coupled with the “household supplies,” “cash allowance,” and “personal care” line items, there’s a good amount of money being spent in these related categories.

I suggest they examine what they’re buying in each of these areas and find opportunities for efficiencies and savings.

$200 $90
Restaurants $270 Dan and Debbie will need to decide if this expense is more important to them at this point OR if they want to prioritize their ability to retire in eight years, move, and/or buy a house in the south for the winters. This is the time for them to make these tough choices and decide how they want their future to look. $0 $270
Car expenses $266 Fixed expense; no change $266 $0
Property Taxes $250 Fixed expense; no change
Clothing $250 Dan and Debbie will need to decide if this expense is more important to them at this point OR if they want to prioritize their ability to retire in eight years, move, and/or buy a house in the south for the winters. This is the time for them to make these tough choices and decide how they want their future to look. $0 $250
Home Maintenance / Improvements $210 Seems a bit high if they’re finished improving their current home; but then again, there are always expenses when you’re a homeowner. $210 $0
Hobbies $200 Dan and Debbie will need to decide if this expense is more important to them at this point OR if they want to prioritize their ability to retire in eight years, move, and/or buy a house in the south for the winters. This is the time for them to make these tough choices and decide how they want their future to look. $0 $200
Utilities $177 Fixed expense; no change $177 $0
Auto Insurance $176 I recommend they shop this around and see if they can find a lower rate. $100 $76
Medical / Healthcare $125 Fixed expense; no change $125 $0
Home Insurance $73 Fixed expense; no change $73 $0
Subscription services $68 Dan and Debbie will need to decide if this expense is more important to them at this point OR if they want to prioritize their ability to retire in eight years, move, and/or buy a house in the south for the winters. This is the time for them to make these tough choices and decide how they want their future to look. $0 $68
Internet $66 Fixed expense; no change $66 $0
Personal Care $56 Coupled with the “household supplies,” “cash allowance,” and “general merchandise” line items, there’s a good amount of money being spent in these related categories.

I suggest they examine what they’re buying in each of these areas and find opportunities for efficiencies and savings.

$46 $10
Entertainment $50 Dan and Debbie will need to decide if this expense is more important to them at this point OR if they want to prioritize their ability to retire in eight years, move, and/or buy a house in the south for the winters. This is the time for them to make these tough choices and decide how they want their future to look. $0 $50
Homeowners Association Dues $34 Fixed expense; no change $34 $0
Cell phones $10 This is super duper low right now since Dan’s employer is paying for $50 of their bill. Once he retires, I suggest they look into changing over to a cheap MVNO. $10 $0
Costco Membership $9 No change $9 $0
Current monthly subtotal: $5,722 Proposed new monthly subtotal: $3,553 $1,919
Current annual total: $68,664.00 Proposed new annual total: $42,636 $23,028

Debbie & Dan’s town

I will send Debbie this spreadsheet so that she and Dan can tinker with the “proposed new amount” column to determine what different rates of savings in each category would net. If they decide to go super frugal and make all of the above cuts, they’ll be on track to save an additional $23,028 each year. At present, Dan and Debbie save $1,802 per month ($21,624 per year). If they enacted these additional savings, they’d put away $44,652 a year.

Then, if they decide to pay off their mortgage, pay off their cars–and buy a used car in cash–they’d reduce their monthly spending by another $1,237, which would yield an additional $14,844 in annual savings.

Combined, my proposed savings, their current savings, and the elimination of their mortgage and car payments would enable Dan and Debbie to save $59,496 per year. Multiplied by the eight years they plan to work until retirement equals a staggering $475,968! Just in cash savings!!!

This doesn’t even account for their retirement savings or their other saved cash. At this level of savings, it seems Dan and Debbie could afford to: retire in eight years and purchase a second home in the south for their wintertime enjoyment. Note that this plan depends on them being mortgage-free on their Michigan home, but they can adjust the figures to account for a Michigan mortgage if they’d like.

Making Transformational Financial Changes At Any Age

Debbie & Dan’s beautiful home

I often hear from readers in their 50’s and 60’s who think they don’t have the time to make significant changes to their finances. But often, that’s not the case. I think Dan and Debbie are a great example of the phenomenal changes that are possible as you near retirement. It reminds of me of the proverb, “The best time to plant a tree was 20 years ago. The second best time is now.”

When you calculate your potential savings on an annual basis, you begin to understand the root of frugality: The less you spend and the more you save, the earlier and the easier it is to do what you want with your time.

So, sure, saving $10 here and $50 there might not seem transformational until you couple those savings with other savings and multiply by months and years. And while 20 years ago might’ve been the best time to start, there’s so much opportunity in whatever your present moment is. One of the reasons I love to highlight reducing spending is that you’re not dependent on the stock market or other investments or other people in order to see dividends. You can start saving more money right now and see the benefits almost immediately. Particularly for folks who aren’t yet retired–treat your final working years as your chance to bank as much of your salary as possible in order to create the retirement you’ve dreamed of. Don’t dwell on what you did or didn’t do in the past, focus on what you can do right now and going forward.

Credit Card Strategy

Debbie didn’t mention if she and Dan use credit cards, but, if they’re confident in their ability to pay them off in full every month, it could be an excellent way to accrue rewards points, especially travel rewards (affiliate link). Since Debbie noted that traveling more is a goal for them, I recommend they start researching travel rewards cards now and figure out a strategy for building up points and rewards to allow them to travel for less when they’re retired. More on how to create a credit card strategy here.

Summary:

Congrats again to Debbie and Dan for being in such great financial shape as they near retirement. It’s wonderful that they’re able to consider their options and aren’t tied down by debt or limited by an absence of savings. In summary, here are the next steps I suggest they consider taking:

  1. Determine if they want to move:
    • Where do they want their Michigan home to be during their retirement?
    • Is there a smaller, less expensive condo option in their desired location that would allow them to reduce their housing expenses and potentially reduce the logistical and financial challenges of leaving a property empty during the winter months?
  2. Decide what they want their future “winters in the south” to look like:
    • Does this entail buying a second property? If so, how much will that cost and what are the logistics of leaving it empty during the summer months?
    • Calculate how to afford the carrying costs of two homes (mortgage, home owner’s association dues, taxes, insurance, maintenance, and upkeep).
  3. Calculate their retirement totals:
    • Calculate what they can each expect to receive from Social Security.
    • Determine how much they can contribute to their 401ks for their remaining working years.
    • Add these numbers together and decide if this total will make it feasible for them to retire in eight years, based on the financial conclusions regarding their Michigan home and their prospective southern winter home.
  4. Regarding their cash:
    • Move the cash into a high-yield savings account ASAP.
    • Either pay off their mortgage or use the money for a downpayment.
    • Earmark some of this money as their emergency fund.
    • Earmark some of the money to buy a used car.
    • Potentially pay off their current car loans ahead of schedule.
    • Save the rest (and add to it) for their “winters in the south” plan.
  5. Regarding their expenses:
    • Based on all of the above decisions, determine if they need to increase their savings rate in order to enable all of their retirement dreams (this includes increasing Debbie’s 401k contributions).

Ok Frugalwoods nation, what advice would you give to Debbie? She and I will both reply to comments, so please feel free to ask any clarifying questions!

Would you like your own case study to appear here on Frugalwoods? Email me (mrs@frugalwoods.com) your brief story and we’ll talk.

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148 Responses

  1. Debbie says:

    Good Morning! Thank you for featuring us in a case study! A few more things to add: I (Debbie) am getting employer match on my 401K, but I can increase my contributions to max. I will be doing this! Also, we have considered a condo but we are always hung up on those condo fees of about $300 a month.

    • Kara says:

      My aunt and uncle summer in northern Minnesota where they grew up, and naturally they want to winter somewhere else. A second house would be a bad fit financially, so they own an RV they leave parked at the Arizona/Mexico border. They adore their RV community and enjoy socializing with the same folks year after year, and it puts the snowbird lifestyle within their reach. Just a thought.

  2. KN says:

    Debbie, what do the condo association fees cover in your area?

    I admit as I read the case study I thought the same as Ms. FW– this couple sounds like perfect candidates for a condo.

    • Dan says:

      Hi KN,
      The HOA fees are kind of all over the place in what they cover, from basics like snow removal and lawn maintenance to roof replacement, full landscaping, a club house with a pool, etc. Most cover the basics though.

      • KN says:

        I went from living in a condo that was managed by the residents (it was only a 3 unit building, and I headed it for the final 2 of the 8 years I lived there) to an apartment managed by a management company. I know it’s not apples to apples when we’re talking house to condo, but it did mean I went from playing a very active role in maintenance and repairs on my home to playing a mostly passive role.

        I cannot express to you how much easier my life is because of this change and not having to worry about these types of things. It’s honestly shocking how much happier I am not having to think about yard maintenance, roof leaks, etc.

        I don’t know if I would pay the high end of condo assoc. fees with all the bells and whistles, but if you’re netting income overall because your mortgage and car expenses are gone….. if I were in my 50s and I had that capacity to pay condo fees that covered basic maintenance on a home I only lived in half the year I would absolutely jump on that. More time with the kids and grandkids.

      • Kevin says:

        One thing that I would recomend checking out is whether the HOA covers pest control inside the units. (many just do common areas). This is important, not because of saving expenses for you, but prevents your neighbors from developing a pest problem that bleeds over into your unit but that you can’t do anything about.

  3. Caroline Bowman says:

    Hello

    it’s a huge conceptual leap to consider leaving a large, well-loved, worked-on home, particularly while you are both (and will be for many years to come!) perfectly fine and well, but it is far, far better to do it and get really settled and happy and bedded-in than to wait, as so many do, till their once-lovely home is in dire need of maintenance that you are now not so able to do, a long way from anywhere useful and is suddenly a burden and a millstone. I know this sounds all very negative, but it can happen quite suddenly.

    My mum made the very, very emotionally hard decision to sell our family home in the (inconvenient, dearly-loved) neighbourhood she’d lived in all her married life, to move to a much smaller place in a complex, to buy an apartment. It was a very nice apartment, 3 bedrooms, nice entertainment balcony / outdoor area, great view, good local amenities, friends close by, but it was a huge mental wrench. What it did do was realise her assets to allow her to travel, to live comfortably and stress-free, and that is priceless. Several of her friends did something similar, where they bought a modest / moderate place and then moved seasonally, had 2 small places rather than 1 big one and none of them ever regretted it. It opened up their lives and saved them a considerable amount in living expenses.

    If it were me, I’d go for a 2 bed / decent size place near your family as soon as is feasible.

  4. Robin says:

    Dear Debbie and Dan– You all are doing so well! My husband and I are similar in age to you all (he’s 55, I’m 53), and we are looking at the same timeline. Just another thing you might consider– since you are both over 50, you are permitted the “catch-up” amount in your 401(k) of $6000 (for a total of $25,000/year). I know that’s a lot! We’re not quite there ourselves, but are striving for it (love Mrs. Frugalwoods’ planting a tree analogy). Paying off the mortgage is what is weighing most heavily on our minds, and we have a little more ($41,000) on ours than you have remaining on yours. I’m just “allergic” to debt and always have been, so this will give me great peace of mind. I hope you all find a wonderful place in the South (I’m in Virginia, so our winters aren’t as bad as yours). Thank you for choosing to be a case study, and wishing you all the best on your financial journey!

    • Dan says:

      Hi Robin,
      Thank you for your comments. I’m currently maxing out my catch-up contributions as well, but my understanding has been that the max is $6K per year, not per month. If I have that wrong that’s a game changer for me as I’d gladly dump much more into that.

  5. MisFIRE says:

    Have you considered selling your house and renting something closer to where you work until you retire, or until the market goes down and you could buy something for less? It has to go down eventually… but having a rental would also allow you to be nimble as you figure out where you want to live when you retire. It would also save you money on the commute and on the restaurant food…

    • Dan says:

      Oh gosh, that has come up in just about every conversation Debbie and I have had when we talk about this decision. Rent isn’t cheap in this area either, far far more than what we are currently paying on our home even taking into account the extra cost on our daily commute. The big unknown in this plan is when will the downturn happen. We’ve been hearing about it for years and it’s not happening. So while in theory a great plan, it comes with a risk.

    • Mk says:

      This would trigger significant capital gains and a big tax bill, fyi.

      • Dan says:

        My understanding is since we’ve been in our house for over 5 years and it’s our primary residence that we wouldn’t pay capital gains on the sale. Is that correct, or what am I missing?

        • Debbie says:

          I think MK is referring to owning two properties and the big property tax bill that would accompany that scenario. Am I correct, Mk?

          • Lisa says:

            No, if you sell your home and don’t immediately parlay the money into another one, you can be subject to taxes on the amount you earn from the sale. I believe that’s what Mk is referring to.

        • Mk says:

          My mistake! It looks like the house is worth only $300k so you are below the exclusion ($500k for married couples). I’m in an area with MUCH higher real estate prices that have experience big gains over the last couple of decades, so capital gains are often an issue. If you start owning more than one house, this could become an issue as well.

      • Leeann says:

        actually that’s not correct. as long as they’ve lived in their house for at least 2 of the last 5 years, a married couple can exclude up to $500k of gains.

    • Cindy says:

      I love the idea of renting for a while! Sell the house now while you think the market is up is what I would say-minimize all your driving and pay No tax, mortgage+assoc fees, like a condo at least until you find the perfect home!

    • Glad that someone mentioned renting, as I was thinking that too! I think a lot of us get hung up on the idea of owning as “better”, but depending on the rental and housing markets, sometimes renting makes more sense.

      Another thing to think about is that some condos/apartments have common space that they might be able to use for entertaining larger groups.

  6. Ginny says:

    Liz, you were spot on with the condo suggestion! Any move, any change can be difficult and involves adjustment but that said, downsizing while you are young enough and energetic enough to do it is a huge plus. Debbie, your entertaining style would perhaps alter a bit but I have found that it is the love and bonds of family and friends that make the fellowship not the room size. God bless you!

  7. Megan Doyle says:

    I wonder what this couple could do with all the TIME they would save with a reduced daily commute over the next 5-10 years. Once I found a job I loved, I moved across the city to turn my 45-minute, congested one-way commute into a 20-minute one-way easy drive, and it has brought about such a change. I actually have energy (and patience!) to cook dinner at home, call my family, run my side business, and volunteer in my neighborhood. Before I would just crash on the couch and veg out to decompress from battling home. Maybe they can spend a few nights at their children’s homes near work to experiment with the possibilities of all this freed up time!

    • Dan says:

      We wonder what we’d do with all that time as well 🙂 I’m sure we would figure that out fairly quickly. I’ve tried to figure out how to place a dollar amount on our time as I’ve done some cost analysis of moving vs. staying. Our time has always been the X-factor.

  8. Tara says:

    Great job everyone is doing! I also would second the condo suggestion. While condos do have HOAs, they cover things like snow removal and tree/grounds maintenance plus pool or other activities so it’s a great thing for retirees! While MMM types may frown upon not doing yardwork, as you all get older (my 68-year-old father has made clear), time is your most valuable resource and spending it mowing a lawn and/or shoveling snow are not a great use of a retirees’ time! So while you may now the lawn now, having to depend on busy family to help with yardwork and/or pay for service is a likely scenario down the line.

    Plus, if you can get a first floor, 2/2 one story condo with an in-unit washer/dryer and (a major plus if available) covered parking (so no shoveling snow off your car), for less overall than your current house, your ability to pay off the condo could keep the HOA fees/property taxes lower than your current mortgage/taxes. And as stated above, it’s easier/cheaper to winterize a condo than a house.

    And if the condos are in closer walking/biking proximity to even things like a drug store or convenience store, that aids the “aging in place” lifestyle more.

    Lastly, a huge square foot house is more money to hear/cool and requires much more time/effort to clean, so downsizing to a small condo saves time and possibly money down the line (smaller place reduces need for cleaning service). Plus, I’ve learned through my job that if you do end up needing a cleaning service, using the same person others are using in a condo complex can result in lower rates since it easier for the cleaner.

    Having older parents, plus working for a religious order with all women over 65 has taught me a lot about planning ahead for our golden years and ensuring your living space fits your lifestyle for years to come.

  9. Lauren Nguyen says:

    Congratulations for being on track for retirement and the fun adventures you’re contemplating. My husband and I have been making big moves the last couple years and our experience may help guide your thinking. We live in Texas (but I am from Minnesota) and had 2 houses for over 20 years-one in Houston and a lake front house 2 hours north, both paid off for many years. Now husband is 69, I’m 59, and husband is tired of upkeep. We sold our Houston house in 2018 and are living at our lake house until 2020 to avoid paying capital gains tax, then will sell it. We just bought a one story second home in Pearland TX close to family, which will be our last house. We bought it now because it’s a beautiful house in the perfect location at a great price. Although Debbie and Dan are younger, they will face the same situations. My advice: buy a 1 story closer to your family. Be patient and hop on that deal when it appears. Keep your cash in a high yield account as Mrs. Frugalwoods suggested and make a big down payment. Rent when you go down south. No maintenance, no having to live there 2 years so you can sell without capital gains tax. Enjoy your retirement!

    • Katie Camel says:

      Great advice! I was going to suggest renting down south too, or buying a mobile home in a snowbird community, which is what my grandparents did. They loved spending the winter around other retirees! At one point they considered buying a home instead of staying in the tiny mobile home all winter, but they said having a home there would have ruined their winter months — too much upkeep for a home they used 6 months of the year and it would have placed them outside their community. Despite living in a large home the rest of the year, they found they spent little time in the mobile home, since everyone used the public areas around the campus for sewing, card games, computers, gyms, pools, etc. Everyone lived in mobile homes or RVs all winter, so no one had much space to entertain. As a result, they held potluck parties in their driveways all the time. They were a lot of fun! Anyway, maybe this would be an option for you.

      I also second the idea of downsizing to a condo if you want to be closer to work and your family. A larger home won’t be necessary if you’re not going to have many overnight guests, nor will it be easy to care for if you’re away for the winter. Yes, condos have fees, but I live in a condo and it’s such a relief to not worry about snow removal, roof repairs, etc. Condo fees vary according to the association, so it’s possible to find cheaper fees. Look around. But also keep in mind they can have assessment fees, so make sure the financials are strong and check out their assessment fee history.

      Lastly, some of your spending could be cut, so that you can maximize your retirement contributions. I would either increase the 401k contributions (they’re higher over 50) or contribute more to the IRA. If possible, contribute more to both. If you pay off your house, you could immediately redirect that money into one or both of these. And if you cut your restaurant visits (or reduce them), you could redirect that money as well. Not to be rude, but if you know you’re going to be tired on those nights you’re both commuting, why not plan ahead to reduce the temptation to eat out or get takeout? Use a crockpot. Bring something with you. Whatever. My guess is that five years from now you’d rather have that money for winters away than wondering about all that restaurant food you ate that probably wasn’t all that great anyway. And it’s not like it’s good for you either.

      Okay, one more thing. That grocery bill seems high, especially for two people. What can you do to reduce it?

      Thank you for sharing your story and good luck!!

      • Kate says:

        Yes to renting! My parents rent a condo near family in South Carolina for 2-3 months in the winter. It’s I think around $600-800 per month for a small 2BR, because it’s off season for the beach community they go to but much warmer than the winters in MA (usually in the 60’s). They are still able to drive down so their costs are really minimal. They road trip on the way, stop at civil war battlefields and other interesting places and stay in budget motels near the highway.

  10. AW says:

    Since Debbie and Dan are both over 50, they may be able to save an additional $6k in catch-up contributions in their 401ks as well.

  11. amk says:

    “Don’t dwell on what you did or didn’t do in the past, focus on what you can do right now and going forward.” This is my favorite quote and my current mantra – not only in finances but so many aspects of life.

  12. Ken K says:

    I cannot disagree with cutting expenses and getting rid debt however being over 50 myself I have some slightly different opinions.

    In regards to their 401K’s they are not maxing out their contributions. They are over 50 they qualify for the catch-up rule (per the IRS) and can contribute an additional $6,000 per year for a total of $25K/year. Since this is pre-tax money, and assuming they are in the 25% tax bracket, the minimum cost cutting target should be $4500 (the after tax equivalent of $6K)

    In regards to the mortgage couple of thoughts here. Under the new tax code do they still itemize or take the standard deduction? If they take the standard deduction then there is no benefit to the mortgage interest and paying off the mortgage is a good option. However, their mortgage interest rate is 3.5%. If you can get a better return through investing why pay the mortgage off? You could invest in a preferred stock ETF like PFF which currently has a yield of 5.18% and after taxes the real yield is 3.89% which still beats the mortgage interest.

    For an emergency fund I would be tempted to reduce it to only 3 months expenses and ask the question what risks are you trying mitigate. If it is unemployment then I would plan to use my 401K as the safety net. Under current IRS rules they can withdraw penalty free starting at age 55 under the hardship rules which unemployment qualifies.

    The one other aspect I did not hear is a strategy to reduce their tax burden when they retire. After determining how much of their leftover cash on hand they want to invest I would recommend each open a Roth IRA and fund with the max $7K for each ($6k + 1K catchup) so they can withdraw tax free in retirement. Also does Dan’s employer offer a Roth 401K option? If so he may want to start performing a Roth conversion of some funds (assuming there is some cash available to pay the taxes on the conversion). If he converts over the next 3 years the funds will meet the 5 year rule of a Roth when they retire 8 years from now.

    As far as a second home this is a tough call. I agree at this stage of the game it is all about the kids and grandkids. A condo located near the kids is not a bad call, just remember to factor in monthly condo fees. If you do choose to buy a place out of state try to consider state & local tax implications, if your new destination does not tax SS, pension or 401K distributions you may want to declare that as your primary residence. Another thing to consider if you move is travel as you may find yourself going back home a lot more than you planned. My wife and I are struggling with the same decision and we keep flip-flopping. One alternative we are considering is selling the house and buying a condo locally and then renting a place further south to see how it works out as it is easier to get out of a rental agreement than to try and resell a home. If we like it we buy a place if not we return home.

    Best of luck to Dan & Debbie and thank you for taking the time & effort to extend a helping hand.

    ‘Regards ,
    Ken

    • KN says:

      This is all excellent, excellent advice

    • Dan says:

      Wow Ken, lots of information there. Thank you.

      I believe you’re the second person to mention the catch-up amount is $6K per year with a total of $25K per year, how do you get to the $25K part? What am I missing here? (And I am contributing $6K in my catch-up fund each year)

      On the ETF, is the PFF the Preferred Stock Index Fund?

      I was waiting to hear what people had to say about Roth IRA’s this late in our career. We currently don’t have any setup at the moment. I do have that option through my employer but it would be with the limited funds they offer. I’d probably set one up directly through our Vanguard accounts and have access to all the funds they offer.

      • Mrs. Frugalwoods says:

        So for the 401k catch-up, that’s in addition to the IRS’s max contribution limit of $19k. So it’s $19k + the $6k catch-up for a total annual contribution of $25K per year.

        • Dan says:

          Okay, thanks for clarifying. I was starting to think I was missing out on a lot of contributions 🙂

          And I am maxing both of those out currently so my only play at this point would be post-tax investments like a Roth-IRA.

      • Anne says:

        The big benefit I know of for Roth IRAs is having flexibility in your pre- and post-tax income in retirement. So if you’re close to being in a lower tax bracket you can pull part of your income from the Roth to reduce your tax burden.

      • Ken K says:

        Good Morning Dan,

        Sorry about the late reply, I’m on vacation so I’m only online in the morning, Yes PFF is based on an index but it is just one example.of an investment vehicle with a decent yield.. There are also real estate funds, long term corporate bonds, emerging market bonds, and of course individual stocks. At some point you might want to sit with a fee only adviser to determine the best strategy and what you are comfortable with

        In regards to a Roth, Anne pointed out one advantage where withdrawals do not count towards your income and another benefit is it has no RMDs like an IRA or 401K, This is helpful if you do not need the money in the first 10 -15 years of retirement as it can continue to grow tax free. Think of it as insurance money in case expenses or inflation rise later into retirement.

  13. Mary says:

    Hi Debbie – my husband and I just moved into a condo a year ago, and I can tell you that the fees were all over the place – some included a rec center, internet, etc etc. We chose a place that covered the basics (lawn care, snow removal, trash/recycling pickup) and it’s just $200/month (as opposed to $400 and above!). So you can definitely shop around on that cost. Best of luck to you!

  14. Trish says:

    Before you buy a used Subaru I suggest you read about Subaru’s excessive oil consumption issues. We recently had to sell our2015 Subaru at a loss due to mechanical issues. This is a very common issue with Subaru’s that has not been addressed by the company. After lots of research, reading consumer reports etc. a Honda CR-V was a better more affordable and reliable choice. Just be cautious there will be a lot of used outbacks and foresters with excessive oil consumption which can lead to all sorts of other mechanical issues. The company has hid this and if you have a Subaru with this issue be prepared to get the run around from Subaru and to shell out a lot of money for repairs.

    • Marie Grenier says:

      Depends on which Subaru. Outback v-6 is great, used are hard to find for sale but worth the look. Mine is 2011, bought used in 2015. Mechanic always commenting, every oil change, how wicked clean
      She is.

    • Debbie says:

      Oh wow! I’ll check that out! Thank you.

    • Luisa says:

      I have to chime in and agree with Trish. My 2012 Forester has had terrible problems with excessive oil consumption, which has led to my car needing a new shortblock motor, at just 121,000 miles! It’s an expensive fix that will cost far more than the car is worth (and I’m due with my first baby in less than a month, so the timing is not ideal.) I’ve been a loyal Subaru driver for over 15 years, but I’m strongly considering switching to a CR-V because I’ve since learned that these problems are not uncommon with Subarus.

    • Dan says:

      Hi Trish,
      My understanding is that Subaru has addressed those issues with their 2017/18 models, at least on the Outback. We still have lots of time to figure out the replacement vehicle. If we go with the Forester it wouldn’t be older than the 2019 model year as that one was a model change. Hopefully if the oil issue is still there it will become evident before we buy.

      • LongTime Frugal says:

        We just purchased an Outback. Late model used prices were almost as much as new. If you plan on keeping the vehicle for a long time (previous vehicle was 15 years old w/250K miles), I’d consider new.

        Issue I always have is a place that is nice/meets requirements today may not be so come the time you are ready to move. So perhaps having a list of potentials and taking a more in-depth look when you are closer to actually retiring/moving. There is no telling what the economy will do between now and then.

        At one time, we considered purchasing a vacation home. Glad we didn’t for more than one reason (area is not the same these days). In our opinion, we’d feel compelled to vacation there more often than not. By not purchasing, we are free to travel to other places guilt free.

        We too do not want a mortgage in retirement. Ours will be paid off before I turn 62. Plan today is to age in place – we renovated the house to do just that.

  15. Diane says:

    Since both are over 50, they are eligible for the catch up contributions of $5000 each in their workplace 401k plans. This is an extra $10000 in annual savings PLUS the additional tax benefits to their annual income from this sheltering.

  16. NT says:

    My husband is 59 and I am 58. We both retired at age 56 as we were unhappy with our employment. My husband’s employer was changing the retirement rules so he had to go. About a year before he retired we sold our big home to buy a smaller home closer to relatives. That cut our expenses quite a bit as we lived in a high tax area. However, we moved to be closer to parents and now both of their situations have changed. We hate the snow too so the first winter we rented 3 places in different areas of FL for three months. At the end we bought a small condo in a city we had not rented in. We feel we hit the jackpot! The HOA fees are low and it has a management plan where someone checks it while we are gone. Condo living is easy to get used to and now when we are up north we feel that our house requires a lot of upkeep. Our biggest hurdle in all this is that we retired before 59 1/2 so are still waiting to access our retirement savings. We both have pensions coming in but living on 1/3 of our previous income has not always been fun. We feel fortunate to be able to not deal with the stress our work generated and to be able to spend our time how we want to. Good luck in your decisions!

  17. Marie Grenier says:

    Thanks for a great case study and thoughtful comments. I’m persuaded! Am going to sell this farmhouse and acreage and start living before it’s too late! Let the young ‘uns enjoy this particular way of life!

    • Debbie says:

      Marie, my wheels are turning too! I didn’t think our story would nudge others in this direction. This is great!

  18. Kat Smith says:

    I live in Michigan and we have unlimited no fault lifetime medical if you are involved in a car accident. It makes us the most expensive car insurance in the country. I am in my 30’s, my husband and I have 3 older vehicles (long story) and we pay just a little more then Debbie per month. Keep shopping around but the best deal I can ever find is bundling house, auto and life with one carrier (auto owners) and using a local agent. Good luck!

  19. Elaine says:

    As a regular reader at age 72 (who never comments), I feel I can add a bit of hard earned life experience to this conversation. My husband and I did pay off our mortgage in our 50s and we never regretted that decision. Employment can hold unexpected surprises and we were BOTH laid off from different jobs in our late 50s at nearly the same time. We survived that experience because we had no mortgage and had learn to live “smaller” in the 15 years prior. We also prioritized our retirement savings using similar vehicles mentioned in this blog. In fact my husband retired after his severance ended, and I was able to continue working at a much lower level of income because we got very serious about retirement earlier rather than later. And although it was not planned, I retired 3 years after my husband – to become a caregiver to my mom (life got in the way of our plans – and we survived that as well.) Now in our 70s we are still doing just fine.

    BUT – one missing element of this discussion should also be included – for anyone in their 50s planning and heading into retirement. Life does not always go as planned! In his 50s my husband began to lose his vision. He is now legally blind. While all other elements of our health remain stable, aging can also impact your energy levels. I believe we waited too long to move from a very large 3 level townhouse into a condo (and everything stated in this post about condos is true – much less expensive dollar and energy wise.) Our townhouse of 30+ years became a hazardous place for someone without sight (lots of steps) and the bedrooms where not easily accessible for aging folks. We moved into our condo (2 bedrooms, 2 baths, den) when I was 69 and my husband was 70. All the of effort fell on me (remember life changes like blindness can change the rules) so that meant I did it all. ALL included finding a new place to live, downsizing (a considerable task after a long life), selling our home, buying our condo, packing, unpacking, setting up new utilities, changing all our demographics with everyone … etc. My energies were naturally reduced and yet my work load was greatly increased. My recommendation is to do ALL that effort in your 50s – reduce those abode expenses now, expend that change of location energy now while you have the greatest amount of energy and you BOTH can participate. Do NOT assume the health and energy you have now will be there in 8 to 10 years! Life sends curve balls and folks over 50 stand a greater chance of experiencing those curve balls. That is just the nature of aging.

    • Marie says:

      As an almost-51-year-old who last year moved 5,000 miles with a lot of other stresses involved, this is super helpful. I have some health issues and I have to accept that I will never have the energy levels I used to. I had hoped that this would be a final move and that I could eventually retire here, but it’s just too expensive no matter how I cut it. And even though it’s a small townhouse sort of house, it’s still so much maintenance. But hopefully only one more move after this and *not* to the massive acreage I’ve long dreamed of, but to something much more modest and manageable.

    • JD says:

      Elaine, I had something similar happen to me, only my husband was in his late fifties when his health suddenly started to fail. Certainly, that’s uncommon at that age, but as we get older, things will start to happen eventually. May I suggest Debbie and Dan talk things over with an attorney who specializes in elder affairs as they make these decisions? I found one to be very, very helpful as far as assets, healthcare, and future assistance.

      Moving back and forth across the country will be really nice, but for how long do you plan to do it? I live in Florida — we often get people who do the “north-south” living here, but eventually, they have to make the decision either to stay in Florida, many, many miles from family, or move back home, close to family but also to the worse winter weather. So when thinking of getting a place in the south, think about how long you realistically plan to use it, and let that guide you on renting vs. buying, etc.

      I think Debbie and Dan have some tough decisions to make, as they have several good options! I wish them the best of luck.

    • Miss B says:

      Dear Elaine, What an incredibly detailed and helpful comment! I’m in my 40s and appreciate you sharing your life experience! Good luck to you!

    • Linda says:

      Thank you for your comment and observations. I’ll be 61 soon, still working and single and “what’s next” is always on my mind. While I have a relatively small townhouse, (2 floors, 3 bedroom, 2-1/2 bath), I want my next move to be smaller. My mother is 88 and still in the big house (and property) we kids grew up in — and it’s too late for her to move now. While it’s a great property,I can see the toll maintaining takes. Things start to fall apart, you need to outsource more tasks because you can’t do it yourself any more. I’m taking care of both my home and my mom’s. As other’s have stated, a smaller home will give me more time to enjoy life now.

    • Karen says:

      Thank you for sharing such important insight and experience❤️

  20. Julie says:

    I lived in Michigan prior to my retirement (sounds like it was near Debbie and Dan). I retired to Arizona in a lovely retirement community. We have many snowbirds here in the winter with folks from the northern states. I would definitely recommend downsizing the house to something easy to manage and less costly. This becomes an issue for many retirees often due to unforeseen circumstances-illness, costly repairs, etc. I’d also recommend renting a place in your target “winter home” area for a year prior to purchasing a second home. It’s great to check out different cities/areas for winter homes for several years so you can find the perfect place for your wants and needs. Don’t rush into locking yourself into a winter residence. I love my Arizona home but people come and go here all the time. It’s not for everyone. Best of luck!

  21. I am a girl of options and I think the greatest positive to point out here Debbie, is you have tons of options! You aren’t in a position where you HAVE to move or HAVE to work forever or HAVE to do anything different to stay afloat or find happiness; you simply get to decide if you want to try something else for awhile or not. Move or not move? Your situation sounds very similar to mine in wanting to move but it not being the best time with the market the way it is. Since you aren’t in a position of NEEDING to move, I would say watch the houses in your desired area, check them out when you see one that you think would work, but remind yourself you aren’t in a rush. I totally understand the convenience factor of moving now, but is convenience going to be worth it if the market is in a downturn in 5 years, you are preparing to retire, and you own 2-3 time as much as you would have on a mortgage and then have to decide whether or not to work longer? 2nd question: You could change very little and be set up to retire within 8 years. But, again, you have so many options! There are quite a few areas you could most likely reduce spending and increase saving and retire even earlier. Your decision with the housing will definitely impact this question and could lead to retiring sooner or working a little longer. Mrs. FW question of what happens after retirement is a big one here, what are your plans then and are you working them into your numbers? I keep retirement ready numbers for “survival”, “desired”, and “cushy”. This helps me know if I pull the cord at my survival number, I’m going to have very little extra but will still live just fine. I’d most likely return to some kind of work for fun money. My desired will keep my lifestyle about where it is now if I never return to work. My cushy number will give me the option of having a few extra trips a year or an extra cushion for medical expenses should I break a bone or need surgery or something totally unplanned (I’m healthy but very active and accidents happen!) Your last question with your cash really depends on a lot of your decisions. I also had a sum of cash sitting in a savings account just in case I found that house to move and I just recently popped it into the market. If/when I decide to move, I can pull it back out for the downpayment and the fees to do so will likely be less than what I’ve gained between now and then (according to an online calculator) and that is assuming the market would also be in a downturn when I do pull it out so I’ll have some losses going on. All in all Debbie, you are in an incredible spot financially that many would be so jealous of. Unfortunately, you are in an emotional spot that sucks! You have so many options and the ability to pull the trigger on pretty much anything you want to do. The answer now is some deep soul searching to figure out what you and Dan value the most both now and in retirement and determine how those fit together. This will most likely mean you’ll be giving up some things you really really like a lot in order to have the things you love, but with your zest for life, I imagine you’ll replace those things with other things you like a lot. And the greatest part of all of this, nothing has to be permanent! If you make a decision and a year later feel in your gut it was the wrong one, you can move back to the old area or return to buying things you used to or get another job or whatever that is. I tend to get stuck in these conundrums of what is the absolute best and perfect choice and there isn’t always one. My husband reminds me that it’s better to have regret of action than regret of inaction and with examples in both of those areas, I completely agree and now tend to try new adventures vs staying where I find the comfort. Good luck and have fun!

  22. Heather says:

    Many HOAs cover water, trash, pools, gym and exterior maintenance so you are getting some services for those fees. They also cover your roof, exterior painting, etc, so you don’t need to worry about those expenses. In regards to potentially renting it for income though, check the HOA CCRs carefully. I own a rental condo in Arizona and the HOA requires a minimum 3 month rental to discourage short term AirBNB/ VRBO rentals. They also only allow 2 renters per year/per unit. My understanding is that many HOAs are now going in this direction to discourage short-term renters that will disrupt the quality of life for the permanent residents so be sure to check that out if you’re hoping to rent a condo on a short-term basis.

  23. Amanda says:

    The 401k limit changes after age 50. They can contribute an extra 6k “catch up” to help them retire faster! I didn’t see this mentioned. Maybe I missed it? Thanks for sharing 🙂

  24. Teresa says:

    I suspect we are about to see a “correction” in the housing market, so you might want to keep looking for the perfect house and be ready to “jump” when the stars align. We are in a similar situation…just far enough from our children to make it too far! And we have to fight Atlanta traffic! So your case study was VERY personal to me too! I’m enjoying seeing all the ideas people are sharing. We are considering buying a condo in Atlanta and outfitting a travel van for full time (almost) travel since my hubby can work remotely. Good luck! You are in a good place financially so you have a lot of options! Well done!

    • Bri says:

      Agreed – Since you’re not in a rush I would put off the decision to move closer to the city until the next shift in the economy and see what the numbers look like then. Right now things are getting pretty inflated everywhere and there may just be some opportunity you aren’t aware of yet in this market.

  25. Lisa says:

    I also agree that a condo close to work and family sounds like the perfect solution! HOAs vary based on community so make sure you find out what is covered. You should also look at a governance agreement to see what the rate changes look like. We considered buying a condo when shopping for our first home, but the complex we were most interested in had no set fee raise structure, which scared us off. (We had lived in the complex as renters for years and knew the fees went up quite a bit one year for some major maintenance projects and never went back down.) While the HOAs might seem scary, I think the building maintenance, especially while you’re out of town or when you’re older, will be well worth the expense. Many of our neighbors in the complex were older retirees who downsized for the convenience of not maintaining their own property.

    Additionally, depending on where you’re planning to winter, have you considered purchasing the home now with your additional savings and renting it either short or long term? You could begin building equity in that property now and potentially use it as a home base for your travels in the years before retirement. You’d be that much closer to a paid-off mortgage with 6-10 years of rental income under your belt.

    Congratulations on the hard work and good luck on what comes next!

  26. Beatriz Cervantes says:

    One thing this couple should consider is retirement age. My husband and I both retired at 60 and are living the Dream — except that we pay almost $1500 a month in medical insurance premiums because I am 3 years shy of Medicare. Once her husband stops working, no one will reimburse cell phone costs. I suggest they prepare a post-retirement budget and compare to current income and expenses. Also, I would want to grow that retirement fund!

  27. Melissa says:

    I struggle with whether I should make any comment or not but I feel like I need to say something. Many, many times I see comments for those of us in our 50’s of how we should prepare to age in place. My mother is 86 and lives in her 2 story home with no problem. My mother in law lived in her 2 story home until she died at age 100 with no problem and she had 5 acres to mow. I grew up with grandparents and great grandparents and got to know their homes and saw how my parents grew up. That experience changed my life as I learned about antiques and country living. The Frugalwoods are only about 20 years away from the advice of moving to a condo to age in place. My comment isn’t especially relevent to this couple as they seem to be open to the idea of moving. I just wanted to point out that being in your 50’s is not exactly old person territory, although mileage may vary. :o) Many blessings.

    • Dan says:

      Thank you for sharing Melissa. All this talk about preparing for aging messes with my mind. We’re still very active and have no plans on slowing down. While a condo seems like a good idea, I keep thinking about what that monthly HOA fee could do elsewhere which is one of the main reasons I struggle about buying a condo.

      • Kj says:

        Dan – do the math on what you pay for those things that a typical HOA fee covers and you’ll have a better idea of a limit after which you consider it a loss. I once owned a condo and the fees, though they seemed excessive, paid for themselves. Roof repair/replacement, yard work, building exterior maintenance, pool repair/maintenance, blanket insurance (you only need to insure your interior), etc. However, you do have to be prepared for special assessments for major work, particularly if your HOA doesn’t manage their budget well. If they don’t they can hit you with special assessments that if those same lousy budgeters agree on it. Before you purchase a place you have the right to ask to see a copy of their books to make sure they’re spending reasonably, banking good ’emergency’ funds, etc.

      • Mrs. Frugalwoods says:

        Dan & Debbie: I think the “planning for aging” advice stems from the goal of helping you a longterm plan, not an implication that you’re old now :)! I imagine that, ideally, you wouldn’t want to move twice in the next decade, for example, and so it seems prudent to consider the longer term as you contemplate this move. If you weren’t considering moving, I don’t think the concept of aging would be so prominent in the conversation. I hope that helps! And on the HOA fees, I hear ya. I hate the thought of them; however, it may be good insurance on not needing to worry about the property as much when you’re not living there in the wintertime and could also mitigate repair & exterior work when–way in the future–you’re not up to the yardwork and snow shoveling that a house requires.

        • Debbie says:

          Mrs. Frugalwoods,
          We love your wisdom (beyond your years!) and do not take offense to these “growing older” comments. We can’t thank you enough for this wonderful idea of a case study and everyone throwing in their two cents! Thank you all for your ideas, encouragement, creative thinking, analytical thinking, and for being so very supportive!

    • Eileen says:

      I have a friend whose mother lived until 102 and in her own home (ranch) until 100! Those things do happen. However, that friend’s wife had a mother who lived way too long in a split level that they’d owned since the 1970s. She had stairs going everywhere, way too much stuff (that she wouldn’t part with) and when she lived there for 2 years in her 80s as a widow (losing her husband who “did everything” including drive), it was immense stress on my friend (and risky for her).

      A small health issue landed her Mom in the ER and my friend had to spend a week in an adversarial “discussion” with her mother to get her to agree to move. My friend spent about 3-4 years dealing with all of this (not counting the years before where she urged them to make a change) and then had to spend MONTHS dealing with the home and its contents.

      By comparison. My parents downsized twice after my father’s early retirement at 58. My mother downsized twice since his death. My friend always says how much of a gift that was to her children (me and my siblings) in comparison to what she dealt with.

      As long as people are happy with their living situation with an eye on the future, there’s no wrong answer imo. And considering the financial impact of any major decision is mandatory in your 50s.

    • Mrs. Gardener says:

      I am also in my 50s like you Melissa, as well as Dan and Deb.

      My mother moved into a continuing care community from a single house at age 80. Though Dan and Debbie are nowhere near that age,
      the idea in some comments is to prepare for aging in place since they are already considering moving.

      In some ways my mother’s move was positive, there are three levels of care and she has been in all three, which has provided continuity during some minor crises. It certainly will make it easier for us when she eventually passes since there is no house to clean out.

      However, there were also some negatives. She gained an enormous amount of weight, which I think would have been held in check by having a home and yard to care for which to care. If I remember correctly, the author who wrote about the “blue zones” mentioned Costa Rica and a man who was 80 who climbed a hill every day to visit his mother who was 102! Non-optional physical activity can keep you in shape.

      When my mother moved from her apartment in the CCR to assisted living in the same CCR, she moved to a different group of neighbors, had to make new friends, and we had to take her cat. So the idea that you will move to age in place doesn’t take into account different levels of decline, which will come with their own losses and the possible need to move again.

      Most people are talking about condos as if there are no sacrifices in terms of lifestyle other than space. But Dan, how will you feel having put in all this work on your house if you live in a place where the upkeep is not up to your expectations? People talk about no upkeep but you won’t have control over the level. How will Deb and you feel about going from seeing horses in your back to hearing your neighbors voices and music through the walls? While it does seem to make sense to move closer to family in the long term, don’t rush a move.

      Dan and Deb could really sock a lot more away for retirement in the next 5-10 years if they try and are in good shape and can be in even better.

  28. Cody says:

    Just wanted to mention that since they are over 50, they’re eligible for an extra $6000 catch up contribution to 401ks and $1000 to IRAs, which could shield a lot more money from taxes.

  29. Tricia Koroknay-Palicz says:

    I would explore down-sizing / moving to a condo near your family and jobs. Might it be possible to even do this on a trial basis, renting out your house and renting a condo, maybe for a year, so that you can get a feel for what such a lifestyle change would entail, without committing to it? My father in law also lives in Michigan, and I’ve ran his numbers and contemplated all of this very carefully on his behalf. Though financially it would make a ton of sense to give up his big house, and he has no need to keep it (e.g. it is just him and a dog in that giant house, and family never needs to stay there), emotionally he is not ready.

    • Debbie says:

      Tricia,
      I do believe emotions play a big part in this, but I’m trying not to live on emotions! Thank you for your comments!

  30. Annie says:

    This post is one of the most personally helpful I’ve read, in part because the people involved are in their 50s (though we are in that age range and still raising kids and worrying about the coming perfect storm if college, retirement and our own aging parents!). Appreciated this I’ve a lot, especially the advice to resist the lure of taking on more house.

    • Debbie says:

      Annie,
      I’m so glad this is not JUST about us, and that our scenario could be helping others! It really is a lot to consider.

      • Annie says:

        It really was helpful. Plus I am from Michigan so I know just how brutal those winters can be! I have parents on big rural properties up there who are not at all prepared for what happens when they can’t heat with wood or deal with the snow or the frozen pipes or the ice on the roof etc. etc. etc. We started a lot later than you in terms of raising a family so we are still in that part of our lives .

  31. GL Gardener says:

    Why not downsize to one car only? We did that. Went together to our employment and it worked for us. It took some planning in the schedule so we could each have the car for things we wanted to do but we did it for 15+ years. Quite a savings. I would never be happy in a condo. We are gardeners. But someday we will downsize to a one floor house instead of the multi level large farmhouse we have now or find a multi level home with an elevator. It will also be brick and not wood siding. We are starting to look for something but it will be in the country close to children. We are newly retired and enjoying it. We live in Michigan and yes the car insurance is the most expensive in the nation. When we go to warmer locales for the winter we rent. Also remember that your children could move out of their current area for jobs….you need to be happy where you decide to live. You will love retirement.

  32. Joan says:

    My only issue with condo ownership is special assessments that come up. These can be quite large. I would definitely set aside funds for that contingency if I bought a condo.

  33. Laura Lee says:

    It sounds like Debbie and Dan have their future plans nailed down. And kudos for them hunkering down to make their retirement all it can be. I would agree with Mrs. FW, a small condo will save hassle in the long and short term and help them work toward their goal. I see HOAs a cost of doing business. The pain in rump fee for all the flexibility a condo offers. Plus being so close to family is always a plus!

    Hustle those credit cards for reward miles and let your savings stack get that higher interest rate. Easy peasy money for current travel and future travel money.

    I know you both are in your prime but I have heard from older family members that it feels good to downsize. Especially if your going to be jetsetters/ snow birds don’t let all the stuff hold you down from getting a smaller, cute condo. Especially if the area is as hot as you say than you can probably do great with short term rentals.

  34. Ginger Merrill says:

    So commendable your saving and paying off your mortgage with an end in sight ! In addition to reducing non essential spending, has Debbie considered returning to work for a couple of years and banking those $ and increasing her 401k and IRA contributions. A couple of years full-time might bring in more $ for retirement.

  35. Kudos to Debbie and Dan for setting up their families for a better future by figuring out their own retirement needs now! That’s truly one of the best gifts they’ll give their kids.

    I know for me, when we needed to reduce a lot of our monthly expenses, the thought of cutting out all those things FOREVER (or at least long-term) made the prospect sooooo daunting. So what I did was do a no-spend month (or you could do Mrs. FW’s Uber Frugal Month Challenge!). Giving myself a timeline with a fixed “deadline” made it easier to jump in with both feet, and when the month was up, I was able to see that it wasn’t nearly as bad as I thought it would be. Plus, when I saw what we were able to put into savings, it gave me the motivation I needed to keep going! I truly credit our no-spend month as the start of most of the smartest things we’ve done with our money, so if you’re hesitant about such a drastic change long-term, just do it for one month and see how it feels. Best of luck to you both!

  36. Robin says:

    Something that has not been mentioned, is that many condo communities offer a “rec room” type of facility that can be reserved/rented for parties. My cousins moved to a small condo in the city, closer to work, and frequently host parties in their facility’s rec room. It provides both a kitchen and bathroom, plus a deck overlooking the city! This could be a great way to downsize, while still being able to host family parties.

  37. Bill M says:

    I have not read all the comments. I am not going to restate any financial anything.
    After living in Florida 15 years I found we lived there about 12 years too long. The first year or 2 were more of an adventure.
    By the third year of living where it is impossible to do much in the summer Florida became very boring. This is especially true for anyone who moves there from the North who needs to work. During the summer expect waking up to very heavy dew on everything until about 10:00 a.m. Then expect the day to be too hot and humid after about 2:00 p.m. to enjoy the outside. By then it is even too hot to be on or at the beach even though there is a nice breeze. The breeze is always hot in the summer except during a hurricane. Then about 5:00 expect a thunderstorm. After the thunderstorm the humidity generally rises. Florida is the only place the temperature got hotter after sunset! Seriously. In the North the temperature generally goes down a bit after sunset. Not so in Florida. We lived near Daytona Beach. Go closer to Orlando and more overpopulation and crime and summer weather is worse.

    Winter is not too bad, but it gets damp cold so even 50 degrees F many times feels colder than about 25 degrees F here. Seriously, I live in Western Michigan near Kalamazoo and in the winter I can be outside and warm in a medium weight jacket almost any day of winter. In Florida I wore my acrctic parka that I have never worn any other place other than Montana.
    February has a lot of rain.

    Most of the year the place is filled with Geko lizards that get into everything. You like to walk in the woods? always be aware of many very poisonous snakes and especially alligators. They have been known to get into houses.

    Housing is very expensive. For a nice house in a nice area expect to pay about $500,000 to 750,000 for a 2 bedroom 2 bath hurricane resistant house. Trailers and manufactured housing in Florida? It does exist and gets destroyed very easily in the major storms and hurricanes.

    Oh, hurricanes. You can expect to spend your summers in preparation of at least a major storm. They can cause more damage from floods and tornadoes than a hurricane.

    If you only spend winter there you’ll need someone trustworthy to maintain your property during the summer. This is not cheap. Expect to pay about $250 or more for a lawn service alone. Now if you have bushes or trees, even more. Expect a hurricane and you need someone who can ready your house and property for storm protection: windows, doors, air conditioner, and anything else that can be damaged by wind and water. There are very few houses with a useable attic, and even less with a basement.

    Then after a storm expect to make a summer trip to personally survey or repair your house if it was in the storm’s path.

    If I were to move it would be back to the Smith Mountain Lake area of SW VA. It is a very nice area. Gets hot and humid like most of the USA during summer. Housing, unless right on the lake is affordable, not many if any major storms, generally not much snow, and when it does snow, it’s gone in about a week or two. Weather generally starts cooling in November with December and January cold, February can be very spring like, but some years it did stay cold until March. Mostly by march tough we enjoyed nice spring weather. There is plenty do to hiking the mountains, fishing in the lake or near-by streams, floating the Roanoke River, plenty in Roanoke and Blacksburg. You are not far from Washington D.C., Philadelphia, or several Atlantic coast beaches. Taxes in Virginia are much less than here in MI. They have much better roads too. Some of the best in the USA. Better than FL also.

    One last thing, Florida has the worst drivers in the USA and you have only two major over crowded roads, one on each coast. I-95 on the East and I-75 on the West.

    The farther south you live in Florida the hotter the summers and the farther north the colder the winters.

    One final note on Real Estate Taxes. If you are only a part time resident you are hit with very high taxes. If you are a full time resident you get a homestead exemption which drastically reduces your tax. I think mine were reduced about 50 or 60 percent by being a full time resident and my neighbor who was a snow bird paid out the … for a smaller property.

    • Debbie says:

      I’m liking the picture you are painting with your words about Smith Mountain Lake area! Sounds like we should plan to visit this beautiful area!

      • Florida Man says:

        There’s lots more to Florida than that! I moved from PA to Tallahassee for college and never left. I love it (even the oak snake that’s taken up residence in my garage). I’ll take Florida in July over a northern winter any day of the week, but maybe I handle heat better than most. Also, the prior poster neglected to mention I-10, which is much more laid back 🙂

        Hurricanes aren’t a big deal if you prepare properly. I’ve lived in SC, Florida and Japan (typhoons). If a big one is going to get your house, there’s not much you can do about that, but I’ve slept through plenty of category 2-3 storms. Hurricane prep = batteries, oil lamp/candles, propane tank, beer. Do all your laundry in the days ahead of time and eat what’s in your fridge. Once the power goes out, cook off what you’ve got in the fridge/freezer and supplement with what you have in the pantry. I pretty much only use my gas grill in the aftermath of a hurricane. Around here, you can *always* find a gas grill on the side of the road in the spring that doesn’t need anything more than the burners replaced. Grab that thing and get it in good shape for storm season. One more thing, if you get a generator, you’re a jerk if you run it at night (note: that’s a controversial opinion, but I’m sticking to it). The great thing about hurricanes versus tornadoes/earthquakes is that they never, ever sneak up on you.

        I love north Florida. Can’t speak for those south of Gainesville… I’ve heard they’re kinda weird, LOL. We’re bizarre, we have interesting flora and fauna (sometimes Florida Man AND the legislature at the same time!). We have Waffle House AND Whataburger. Come hang out 🙂

        My advice re: retirement, is to do a careful triage of your wants/needs. Don’t buy into the HGTV homebuying/renovating/house has to be *just perfect* mentality and you’ll probably be fine.

      • Suzy says:

        Debbie, we live on the coast of VA and owned a vacation home at Smith Mountain Lake (SML) for 10 years. We absolutely love it there! Even now we are considering the possibility of moving there permanently. It is a beautiful area where you have both the lake and mountains. And property taxes are very reasonable. Well worth a visit!

    • Sally M. says:

      I have to second this. I moved from Vermont to Florida because I met someone who lived there and I was the one most willing to move. I have now lived in Jacksonville, FL for 2 years and hate it there for many of the reasons Bill M states. We are now in negotiations to spend Summers in Vermont and winters in Florida. If you are thinking about becoming Snowbirds, rent, don’t buy until you have spent more than one season in the area you are interested in.

    • Michele says:

      I have lived in Florida my whole life. I agree with most of this. My husband said, “if they want to know what is is like to live in Florida, tell them to take a hot shower, do Not dry off, just put on your clothes and go.” Funny, but not quite accurate, all year. Anyway, I think (near Fort Myers) we have very, very low cost of living. Yes, we have hurricanes, alligators if you are near water, bad drivers (we say because the people who retired here- ha ha), no basements, and flat land. I never plan to move. Travel, yes, but I don’t worry about a rare lizard on the patio (the cats get em for me.) Best of luck. I think Bill should write books, he is very descriptive.

  38. Caryatis says:

    I would definitely switch that almost 100k of cash to a high yield savings account. You can do that TODAY, without losing any liquidity.

  39. Donna Wilson says:

    My husband and I have a lot in common with Debbie and Dan. We met and married at Beaumont Hospital in Royal Oak Michigan. Yes, we married in the hospital chapel 🙂 Soon after we married he was offered a great job in Dallas TX (pediatrician). We have two grown children and are now thinking of downsizing and returning to our home in Ferndale, Michigan, inherited from my parents in 2009. The winters are harsh in SE Michigan so we also are thinking of a condo in TX for the winters. We have a caretaker for the Ferndale home when we are away. The most difficult part is handling lawn care and home care of either home while in the other. Plumbing issues and heat/ac have both necessitated flights back to deal with. It’s expensive dealing with the upkeep of two homes, and so we are thinking it might be better to choose a condo with the turn-key lifestyle it would allow. Also, property taxes and insurance on two homes is financially daunting. I don’t want to be a wet blanket, but just thought our perspective might be somewhat helpful. Good luck!!

  40. Monica says:

    Most important thing is to get that excess cash from savings and checking accounts the into a 2% account right away! Jus leave enough in the checking for monthly needs. My teen has 17K in an Ally Savings account that is earning $30 each and every month for him! I just set up a bunch of Ally accounts a few months ago – easy to do and you can easily transfer that cash back to your checking account when you need it.

  41. Jennifer says:

    If you do nothing else, get that cash out of your traditional bank and into something paying more interest. I think I’m getting 2.15 % from Marcus. It had been 2.25 percent until rates dropped a few weeks ago. That’s quite a bit of interest you could be earning on $94,000. And it’s FDIC insured.

  42. Kristen says:

    It’s such a unique and personal experience for anyone contemplating moving out of a home into a condo/townhome – it’s not just financial as we know! I don’t offer advice, but have a few things I think should be considered as they make some hard decisions:

    1. If you do a condo/townhome, might the grandkids want to stay over sometimes? If no, 1 bedroom is enough. If you want the option, consider an extra room, even if it’s tiny!

    2. Would you purchase your winter home, now having TWO places to deal with during the off-times? I’d consider doing a long-term rental in the winter location before committing to purchase. Are you going to stay there over the holidays when all your family is in MI? Are you going to give up all that family time, that seems important, during the winter months? It sounds like a great idea to flee the snow in the winter, but seriously think about how this would pan out. My aunt and uncle live in MI (they have for ages) and they spend their winters in the south in a rental they’ve leased year after year. They stay in MI through Christmas, head south, then back to MI in the spring. It’s a short period and they love, love, love it!

    3. Can you carpool to work together more often? It’s a great time together in the car to catch up. Can you meal plan on the weekends so you have easy food ready when you get home? Take snacks to eat at like 3pm so you’re tided over.

    4. Good luck! You have many options and you’re in a great position to not HAVE to do anything. That’s a great spot to be in!

  43. Erin Miller says:

    Hi Debbie and Dan. I’m a younger reader but have been watching my parents on their retirement journey. They also winter in the south and bought a place in Florida. They ended up putting a bunch of work into it last winter but now it is done and they have been entertaining family and friends since. The one thing I wanted to point out was they bought a condo near family, but bought it pre-construction. Since they (and you!) have a longer timeline until they need the place to be ready this was a great option and the value of the condo is already 100k over what they paid for it. I know HOA fees seem like a rip off but your budget indicates over 200$ a month spent on home repairs which would be small in a brand new condo or townhouse. There are also pre-construction houses that wouldn’t have the HOA fees and again, I would urge you to consider that since you can get exactly what you want and you have the luxury of time to wait. Good luck!

  44. Rebekah says:

    If it is a seller’s market and Debbie and Dan do decide to move, they can sell their house and rent for a while closer to work/family. Maybe rent a condo or smaller place to see if they like the idea of downsizing, better to try it on before committing and being unhappy. I currently live in a seller’s market myself-and I can’t stomach selling for a profit and spending it all + quite a bit more on the next place. I think the idea of renting hurts a little bit after owning but it comes with much less responsibility and can be used for a bridge if you are anticipating a housing downturn.

  45. Cindy says:

    Well if you can stay in your super inexpensive home and pay it off, keep saving, then I’m sure you guys will definitely be able to retire in 8 years. By then it won’t matter where you live since you won’t be commuting anymore anyway!
    If you move closer to work, buying a more expensive home(and let’s face it-any newly bought home new or old will come with its own set of $$ problems) may actually push your retirement dream a little further out. So if you want to work longer, go for it.
    The options provided by Mrs. F and others to really downsize, rent or buy a smaller townhome/condo are good and should be considered. A lot of these readers are very young, retired already, or retiring before you plan to. So don’t think the recommendations are for old timers. The recommendations are given for you to build wealth beyond your expectations, minimize your commute, simplify, and make your lives easier.

  46. Lana says:

    Keep building up your retirement savings and also make extra principal payments on your mortgage and get it paid off. What about a condo closer to your family but not necessarily in the same expensive area. Maybe 15 minutes away would it be cheaper? My husband and I sold our house and now live in a condo and we love it. It is very handy when you want to go away for the winter just lock the door and forget about it. I would rent something in the winters down south for a few years instead of buying.. It can be stressful and expensive to have to keep two homes that you are not in all the time. We had a home up north and down south. We sold the one down south it was too much $ to keep up with both.

    • Debbie says:

      Hi Lana,
      The area where we work is the most expensive area in the state of Michigan. You would have to drive about 30 minutes away to get to cheaper housing. The condo option is a more affordable option, except for the HOA fees. Right now, Dan is doing all home maintenance himself, so this would be an added expensive. However, we would save quite a bit of money with the cost of commuting back and forth to work, etc. I do not think, at this point, that purchasing an additional home would be a good option for us. I do like the idea of renting for the winter months and maybe landing in a few different areas before we would do anything permanent. Thanks for your comments!

      • Bri says:

        Debbie,
        I love that thinking and that would be my suggestion. You could have a lot of fun finding a rental in areas you’ve always wanted to see. As an airbnb/vrbo host I’ve loved having renters doing those longer stays and I give them a heck of a deal per month because I don’t have to worry about the constant cleaning and turnaround. They benefit by having a furnished place that they’ve hand-picked, that is within their budget, and no worries about setting up utilities or anything! One of my renters told me that’s how she’s seen the country and she loves it. She even brings her pets, and, invites her family to visit on her yearly adventures so they get to visit her and vacation in new places at the same time. ( I admit I love this model even for myself!). If you have any more or less time in a given year you are entirely flexible, and you don’t ever have to worry about finances because you know 100% of the cost up front 🙂

  47. Dicey says:

    I haven’t time now to read through all the comments, but it looks like there’s a lot of advice that’s already been given. If I may add a couple of suggestions, I promise I’ll come back when I have more time. Since you mentioned MMM, please check out this thread:
    https://forum.mrmoneymustache.com/throw-down-the-gauntlet/dont-payoff-your-mortgage-club/
    There’s a lot of food for thought there, no matter what you decide to do.

    Yours is a classic example of what happens when mortgage paydown/off is prioritized over retirement saving.

    My thought is NOT to buy a condo. HOA fees and endless rules can be difficult to adjust to, especially if one has been a homeowner for years. I would consider selling the home now while the market is strong and the proceeds would be completely tax free. I’d then look for something to rent as close to work as possible, preferably walking distance. Move, invest the proceeds from the house and wait and watch the economy, specifically the RE market, for the next few years. Focus on saving as much as possible to ensure a secure retirement. The real estate market is always, always cyclical. Sell this house high and wait until you can buy the next one low, just like you did previously. When you do identify the next house to buy, you can pay cash if you want. If you read through the DPOYM Thread linked above, you may not choose to, but you could.

    Best of luck to you!

  48. Rebecca says:

    Debbie and Dan are actually not maxing out his 401K. Since they are both over 50, they are able to add a catch up contribution every year of $6000 (each), bringing the total to $25,000 allowed per year. So if they are able and wanting to put more in tax free, that would be something to consider.

  49. Connie says:

    Would there possibly be a condo option closer to family? As long as this did not increase your commute, it would help you to be in place for retirement.

  50. Lacey says:

    After reading the other very informative comments and taking a short break, I realized I have something to offer to the mix. I don’t know if this has been touched on yet but there is one more option (like you don’t have enough of them!) …

    I recently needed to sell my too-big house in southeast Texas so I could move to north Texas to help my sister take care of, and enjoy the company of, our aging parents. I’m 57, never been married (but have a wonderful guy back in Houston) and have worked from home for several years, so the transition has been relatively ‘simple’ BUT with one more perk: I was able to use a little of my savings to purchase an RV. I currently live on my sister’s property out in the country, which isn’t an option for most people, but using the RV to both live in (stationary) and travel in (a boon when searching for the right place to buy a home) has helped me in several areas. The universal option there would be to find a good RV park close to where you work; they are literally popping up everywhere as this has become The Thing to Do, thanks to Millennial Minimalism. [In fact, I and a few other people I know are considering buying a patch of land to flesh out with infrastructure and start an RV park.]

    For one, RV parks can be both highly functional and inexpensive, considering what you get: plumbing, electric, WIFI, safety, and near full-service with some parks. I have a few RV fulltimers who LOVE their ability to travel anywhere and decide later exactly where they’d like to put down roots.
    There’s also the perk of being able to pack up and leave if/when you want, depending on what sort of RV you’re living in and what you have to haul it with, if it’s not a smaller RV that your car can pull, or a motorhome-type. For myself, I am saving a LOT of money on a mortgage, home insurance, property taxes, and utilities, socking away about two thousand MORE bucks a month (an extra $24,000 a YEAR, if it goes on that long) as I search for a home to buy. I still pay “rent” to my sister that would about match what I’d pay at a park.

    I shot the works and got a very comfortable 39′ pre-owned 5th Wheel but didn’t have a powerful truck or hauler to pull it with, so I pay a service about $400 when I want to move it. Since I’m stationary and not a traveler (yet!) I only intend to move this one more time to another property and that’s it. So $400 from the dealership to here (could’ve been an RV park, as well), and another $400 to move it when I find the Perfect House / property to purchase – $800 beats paying around $40K for a big truck 🙂

    Later, if I choose, I can rent it out to traveling vacationers via services that vet the renters, and those services pay all the insurance while making sure everything goes smoothly. Kind of like AirB&B but for RVs and trailers.

    Or I can keep it here and rent it out to people coming to the area for the local monthly flea market festival, which brings in a ton of people looking for a place to stay, splitting the rental revenue with my sister.
    OR I can sell/exchange it when I’m done with it – Yep, there are those options, too (that’s how I bought it!)

    I had a 4-bedroom house that was full of antiques and art, and I needed to downsize anyway so, being an artist and a web designer, it made sense to just pack my dog and kitties and move into an RV. I found an inexpensive one with an RV dealership here in Texas and paid roughly $27K – TT&L INCLUDED! – less than my car costs! for an awesome 1 bedroom “apartment” and have never looked back. I store my furniture and boxes in my bro-in-law’s workshop next door, crowding him out a little, but I still have plenty of options: Sell my stuff, one piece at a time online; buy a monthly storage space and move it there; build my own storage space here or somewhere else; or simply wait it out, moving it all when I find my little Paradise. This has been a huge lesson in downsizing that I never knew I needed – and now I’m on a ROLL knowing that even my prized antiques can be replaced, as can most everything else later on when I move into traditional digs – if I go that direction.

    Had I bought a motorhome, I could just jump into the captain’s chair and drive anywhere I want – think Florida, northern California, Arizona, New Mexico… Where I bought my ‘rig’, they also sell very inexpensive motorhomes so I’m seriously considering trading this in on one, once I know what my finances are doing (buy a house? or just drive one away!)

    So, no matter which option you decide on here, it’s always fun to dream of all the ways you can liberate yourself from mortgages and taxes for awhile, if not permanently – and it’s such an easy joy to research online, as you’ve been doing, for what could be your Next Big Thing.
    I wish you both all the best in your endeavors!

  51. Martha C says:

    I wonder about the “owning two homes” scenario and haven’t seen too many people comment on it. We’ve considered it (we’re your age, Debbie and Dan!) but have been talked out of it by knowledgeable and experienced friends. Turns out owning a “snowbird” place in FL (or anywhere!) is a big hassle as far as keeping the property maintained when you’re not there. It’s easy to get swindled by contractors when you’re not there to supervise the work.
    We’ve decided retirement (in Ohio) may well include short-term rentals for several months in FL in the winter, but we’re not going to become dual property owners. We’re focusing our savings on having the $ for that kind of rental each year, and if we change our mind we’ll have the $ to do other things with.
    I would also echo the “you never know” comments about getting older, health, etc. I had a debilitating heart attack last year which really threw us for a loop. Also, my parents bought a “dream house” in their 50s which is not at all practical for their 80 year old selves (Parkinsons, dementia, arthritis, heart disease), but now they don’t want to move and frankly it would be overwhelming with their health issues.
    We downsized our home 5 years ago to a ranch which was a deliberate choice. We don’t NEED one-level living now, but we love it, and we’re ready if we need it later.
    Good luck, Debbie and Dan! I’m glad we’re not alone in this “frugal, how to hack the 50s and 60s” lifestyle

    • Debbie says:

      Martha,
      I’m thinking along the same lines as you! I think I would enjoy the freedom to rent in the winter months in different places!

  52. Cindy says:

    How about CD savings? When my father-in-law was approaching retirement, he put a chunk of money into high-interest, long-term CDs every year so that he has something gaining interest that is risk averse.

    Also, LOVE Ally. Everything about that bank is brilliant, including their CDs. But their rates do flux with the fed interest rate. It just dropped to 1.9% but I’ve seen it go as high as 2.3%.

  53. Renee says:

    I’m team condo…
    Will you need two cars if you live that close to work? Being so close Debbie could easily drop Dan to work on her off days if she needed the car. Once you’re retired it should be even easier to only run one vehicle

    • Debbie says:

      Renee,
      If we did move closer, we did talk about going down to one vehicle and doing the drop off to school…I mean work ! 🙂

  54. Heather Evans says:

    Would it be more expensive to build a home?That way you can make the house to suit your needs for family gatherings and retirement

    • Dan says:

      We have looked at building, but we haven’t been able to find a way to make that work. Houses are in such high demand in our area that building prices have skyrocketed past established homes.

  55. Andrea says:

    Age 50 and older are eligible to add an extra $6k to 401k’s if they can squeeze that out of their budget, and max out both accounts, your looking at $48k annually before employer match.

    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions

  56. Kay says:

    Consider first if you are making a short term plan, say from now until retirement or if you only want to make one move and have it last.
    Another factor is the amount of space you truly need to be comfortable. In theory, less space is cheaper but if you are the type of person who might feel “squished”, do get a big enough space. My friends moved into a small condo and it was too much togetherness and not enough space for their projects. As an older person, I would not do a driveway hill in snow country and would make sure to live where I don’t have to clear my own sidewalks and driveways. I am similar age as you and now my focus is on having a place that is easy to live in just in case I might need cane, etc. Personally, if you can swing it– keep current house until retirement and use your crockpot to cook all night. Then store the ready food in fridge for reheat when you get home or bring it in cooler. I have stopped in convenience stores and asked to use their microwaves on my long commute. There are ways around eating out. Sometimes the best plan of action is to stay in current situation a bit longer.

  57. Elise says:

    Debbie and Dan,

    I appreciated reading your story, as my fiance and are I having these exact same discussions with my parents right now. They are retiring this year in Northern California, while my brother and I and our families live in Southern California. So the question stands: should they sell their paid off house to come move to Los Angeles and be with us?

    We have discussed them downsizing to a condo or apartment as well. Reading through a lot of the comments, it seems like there is a lot of concern for the dues associated with condos. Are there any apartment housing options that don’t require such hefty monthly dues? HOAs can get pretty steep in LA too, but we have been able to find a number of places where my parents could avoid the fees.

    I certainly still consider you young, and I can only imagine what it feels like to have so many readers bring up the aging process. That being said, I guess it is something that is inevitable if you are planning to spend a long and healthy retirement with your loved ones. For my family, I want my parents to be as close as possible so in the event of something unpredictable happening with their health, I can be there for them as much as possible. It seems like you come from a tight-knit family as well, so I am assuming your children would want to do the same. On the flip side, it seems like your grandchildren would be so lucky having you so much closer by. Aging process or not, being close to family always takes huge priority in my book.

    I think one of the biggest questions is could you be happy with downsizing the size of your home? At one point you said you are quite picky, but in another you said you don’t need anything fancy. I would venture out to say that you might actually end up being really happy with a downsize! My fiance and I always thought we wanted I nice big fancy apartment, but having recently downsized to something more modest but with an open floor plan and a minimalist atmosphere, we find ourselves happier (our guests and parents also love being in the smaller place more as well). Perhaps your family would love being in a small, homey apartment with a great open entertaining space!

    Wishing you both all the best. I hope we will get some updates!

    Elise

    • Debbie says:

      Elise,
      We are picky in the sense of wanting a first floor master (which we currently have) a larger living space for entertaining., and a private space in the yard to sit outside. A walkout basement would be awesome, but not completely necessary. So, when I say picky, its hard to find all this criteria with the right price tag! I do not want a large home, just a comfortable home!

  58. Catalpa says:

    What about a cottage house or in-law suite on one of the kids’ properties? If you went this route you could easily go south for winter. Even if you just tried it out for a year or longer, would give you more wiggle room.

  59. Jessica says:

    In the interest of offering you a different point of view, consider if staying put benefits your beloved grandchildren. Do they live in urban settings? If so, would they lose out if you left what appears to be a more rural area? Do they spend much time at your house? What experiences do they get with you now that they may not get if you moved? As you know, there are more considerations than just the financial when it comes to moving. Since they are a major factor in your decision making process, you may want to place extra emphasis on a quantity and/or quality of time together comparison. Also, as someone commented above, the stability of your children’s employment and living situations might play a role in your decision. If you moved to a place you love, nearer work, and nearer your family, that would be marvelous. But if you moved to a place you only tolerate, in the interest of having a shorter commute to work and family, and then family moves and your jobs end through retirement or other means, that would be a real shame. You’ve finally gotten your current home just the way you want it. Are you excited for a new adventure? Or would you rather enjoy what you’ve built a little longer? Best of luck with whatever you decide, and congratulations on getting yourselves to a place where you have the freedom to choose!

    • Debbie says:

      Jessica,
      We actually live in a subdivision which outlines an equestrian center, so we have a little bit of both worlds! My oldest daughter and her husband just moved back to Michigan within the last six months. They were in Boston, MA area. They are currently renting, but they are actively looking for a permanent situation with housing since they landed jobs in the Anchor Bay area. We have no desire to move close to them, since work is still a good hour from that location. The grand kids spend time at our house at least 1-2 times per month since they’ve been back in Michigan and I LOVE this! We have always said we wouldn’t move unless we were excited about it. So far, there hasn’t been much in the housing market to get excited over!

  60. CP says:

    This is great stuff. Hi guys! I went ALL IN on the FI movement in 2015 at age 55. The closer I get to age 62 the more I realize I didn’t save enough. SS is not enough to travel the world and having 500k in your IRA is really not enough either. I read FI blogs starting with MMM in 2014. I realized drastic measures were needed to have the kind of retirement I had envisioned but I was tired of playing offense in a full time job and not getting anywhere.

    In 2017 I quit my job and started playing defense through frugality, my wife quit her job 8 months after me. We now work part time as healthcare workers in our own business and we are FI, however we are not where we would like to be. We do not want to start drawing on our investments. So we will work to pay the few bills we have while our investments double hopefully over the next 10 years. Rule 72! I am happier playing defense through frugality and not working very much than I would be playing offense earning more money and having more bills and a full time job.

    All IN for us was to get rid of debt ASAP, we did not want to be in any debt so the Mortgage was first to go. We started making 3-4x mortgage payments in 2015 to get it paid off. Fortunately we had lived below our means when it came to housing and could afford extra payments. It was paid off in 2017 the same year I quit my job. All other debts followed shortly thereafter. We were penny pinchers for 2 years with EVERY expense as we paid down debt, sold assets and increased our savings.

    It is amazing how fast things start to turn around when you go ALL IN on debt and savings. Our spending now is based on how much money we make. If we keep the spending at ultra low levels we can still save 60-70% of our income working part time. If we vacation a lot then our savings drops to 25%. Having no debt makes the difference.

    With the part time work we are not going to rely on SS or our investments. I realize this is an extreme example and you probably shouldn’t follow it but hopefully things will turn out just fine and we can use our SS at age 67 and investments after they double. We should have made changes in our 20’s or 30’s towards our financial future but better late than never. I turn 60 in a few months and I am content taking the dogs out, riding my bike, gardening, doing house maintenance and going to work for a couple hours a day.

    Life is good, for me I made the right decision to go ALL IN 4-5 years ago. It has paid off. Now I preach this to my grown kids in hopes that they have the ability to play more defense than just playing offense. I have advised them to go for a 30-50% save rate as soon as they are able. Of course it is much harder when you are young to be frugal especially when making a high income. I read a lot about finance now and the book THE MILLIONAIRE NEXT DOOR say’s that to be a proficient accumulator of wealth you need to play both offense AND defense. Young people getting started in the careers need to know this! Live below your means and avoid lifestyle creep and you will be in a much better position when you get to age 50.

    Thanks to the Frugalwoods for such a great post for those of us in our 50’s!!

    • Dan says:

      CP, thank you for sharing your experience, and congrats on your success and plans. Posts like this are giving us a LOT to think and pray about for our next steps. We’re enjoying all the suggestions and life experiences from everyone here.
      I like the idea of part-time work once I retire from my current job. Could help me ease into the next chapter in our life while I figure out what to do with all the free time.

  61. Anne says:

    Keep in mind when house hunting that it doesn’t have to be perfect. You may find that after retirement you are reinvigorated to do a bit of minor improvements, once you have so much time on your hands. By all means don’t buy something that is a total fixer-upper, but planning to make some small changes to make it your own can be fun.

  62. Mary in Maryland says:

    I know way more than I’ve ever wanted to about condo ownership. The things that drive up condo fees are elevators, pools, (actually any water feature–I lived in one that spent thousands each summer trying to keep a fountain going), and shuttle services. If you bought into a first floor unit in a low rise, your fees would probably be minimized. You also want to check on the condo’s financial reserves. One I lived in had failing windows and balconies, low reserves, and many older residents who didn’t see any point in long-term maintenance.

  63. Jean says:

    When buying a condo, it is not just the condo fees. It can also be special assessments. My husband owned a condo before we were married. Not only did he have to pay condo fees but special assessments. The association voted that speed bumps needed to be installed throughout the condo community so each condo owner was assessed an amount to cover all of the costs. Only takes a few of the members to be an overriding majority to pass on special costs. Our Canadian friends bought a new to be built condo and the builder walked out on the job, not completing many things, had roof issues, etc. They were assessed many thousands to pay those costs. Just be careful!! Also, with hurricanes, tornados, homeless persons breaking into homes, etc., owning a place in the south can be very expensive and stressful when worrying over the place in a hurricane, etc. insurance in Florida is outrageous. Renting would be more ideal. We owned a floathouse on lake Norris for about 8 years. Had several windstorms where it or another home broke loose from its cables and had damage. Always had work to do when we arrived after a long drive from Florida. Decks always dirty, had to move patio stuff out of house and onto deck, etc. u will find in your 60’s you start to get tired of outside work, gardening, etc. by your 70’s you are really tired of it. Good luck

  64. Emma says:

    My husband and I have our car and home insurance through Costco/Ameriprise and it is the best rate we have found. Since you are Costco members, you might consider quoting a policy with them to see if you could reduce your monthly outgoings that way. It was not a savings for my parents when they checked, but it certainly is for us. I’m not sure why it’s the most cost-effective option for us and not for them, but it never hurts to inquire.

    • Bri says:

      I spent a long time hunting and I found USAA to be by far the lowest both in auto and home, particularly when bundled. That went for myself and my parents. So if you are a member, are eligible, or your parents are (are vets), then it’s worth plugging the numbers into their site.

    • Dan says:

      Thanks Emma, I’ll give that a try. I usually shop rates just about every year or two at the most. I’m currently with Frankenmuth Insurance and no one has been able to beat their rates for me. Most people in the country don’t understand our rates. What we’re currently paying is on the low side for most people.

  65. Jane says:

    I’m 59 (divorced) so I’m reading this very closely. I’m interested in the condo idea, of course, but it’s hard for me not to think about it as sort of an ending of the life I like. I like having a yard for my dogs and garden.
    But yes, I also would like less work.
    Meanwhile, as to having room for entertaining family. Maybe it wouldn’t always be convienant, but many condos have areas to reserve for parties, etc., if you plan ahead.
    I’d also like to say that when I was growing up, my aunts and grandmother living in a townhouse. Somehow every holiday was there with at least 30 people ! kids did often go outside to play or in the basement, but otherwise, everyone was pretty much in a small living/dining area and very small kitchen.

  66. Louise says:

    Wishing you well as you work through your options!
    Remember your grandchildren won’t always be young and will be moving out some day, perhaps out of the area. That might give you some target dates for your decisions. You might want to have five more Christmas’s with the snow, etc.
    Why Florida? If you aren’t particularly interested in the ocean, look for anywhere south of Michigan. List what you want in a retirement place, check the climate map of the U.S., and see what you find.
    Do look very very carefully at potential health care costs if you retire before Medicare. Just premiums and deductibles are the biggest part of our retirement budget, and we’re fairly healthy people, only a few years older than you are. This continues to shock me. You might be able to hold on to the rest of your budget after retirement, (may save on clothing, food, gas, professional fees, etc.). But be extremely pessimistic about future regular monthly charges for health care plans.

    • Debbie says:

      Louise,
      I have heard about the ridiculous premiums out there! I’m sure this is quite a stopper for a lot of people right now who are considering early retirement. Thanks for the heads up!

  67. Melissa says:

    Hi! I saw Dan and Debbie commenting earlier (I’m a little late to the party), so I hope they get this. One way to move south and still have some flexibility is to choose a community/ area where there is a robust dual season income opportunity. My parents have owned an apartment in Luquillo Puerto Rico for about 10 years. This is the first year they have not rented in the summer (due to Hurricane/ insurance implications). The summer rental market is as hot, if not hotter, than the winter market. So my parents would spend time in the winter there (before they retired they would rent the unit most of the year except for their vacation time), then in the summer their property manager would rent it out using VBRO and providing the service of cleaning, key exchange, etc.

    Its not for everybody, but its something to consider. Parts of Florida would likely have this benefit, as would many other areas. And I can’t say enough good things about Luquillo. Its got a robust “continental” community of retirees in the winter as well as lots to do.

    Good luck!

  68. Thanks for sharing Debbie! As much as it pains me, as the founder of a bicycle-focused FI blog, I would advise against buying a new home right now. The markets are bananas, in the Midwest and elsewhere. The situation you described is happening here in Wisconsin and elsewhere, where bidding wars and lines around the block for open houses are common. The housing market is in a major bubble right now. I’ve been considering rental properties but I’m waiting until the market changes. A duplex I looked at three years ago just went on the market again for $55,000 more ($130k to $185) than it was three years ago! And it already had an accepted offer!

    Of course, it works both ways, and you could find your own home in a bidding war, driving up the sale price of your home significantly. But it might make sense to wait until the housing market is in calmer waters. Or, take Mrs. FW’s suggestion of buying a condo. Managing two properties would be a major challenge – maybe extended stays in warmer climates during the winter might make more sense? Anyway, good luck on everything!

    • Debbie says:

      Thank you! So far we are holding tight where we are! Not much out there in homes for sale that is making us want to jump!

  69. Meredith says:

    It might be hit or miss, but another option when down south might be something like house sitting or house sharing. I don’t have personal experience, but I’ve heard of folks who have good luck with some online house sitting platforms (e.g. living rent free for 6 months in new Zealand).

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