NOW YOU GET MAD?

This message to the Tea Party has been circling the Internet since March if not before.  In case you hadn’t seen it.

HOMEOWNERSHIP FOR A RETIREE

Gene S.: “What percent of net worth should be in one’s home?  Let’s say a person is retired at 59 and has a net worth of $3 million, what should be the value of his home or condo?”

☞  So many factors to consider, including key ones impossible to know.  Like how long you’ll live and what kind of investment returns you’ll achieve.

Let me scratch the surface – and no more than that – by suggesting I would come at it from the other direction:  how much income will you have available to live on after taxes and inflation (including Social Security, once you start taking it) . . . and then how much of that are you comfortable apportioning to the costs of home ownership?

Ideally, you’d find a house or condo you really love – in part because it’s so economical.  These days, I need hardly tell you, there are a lot of motivated sellers.

Can you get by on $80,000/year in after-tax money and still afford this place?

If it’s a $250,000 house or condo, you probably can, easily.  If it’s a $750,000 house or condo – with all the property taxes, insurance premiums, and other costs – probably not.

A $250,000 home would leave you $2,750,000 to invest.  If you could earn 2% above inflation (but before 35% in federal and state income taxes) – all fairly conservative assumptions – that $2.75 million throw off $80,000 a year (in today’s dollars) all the way to age 100.  Could you live on that (plus Social Security) while bearing the costs of your home?

It would not be crazy to spend more than $80,000 a year; but the less you spend now, the more security and options you preserve for later.

You actually sound like a perfect client for my friend Less Antman (see the link to Ask Less, at left).

MUST SEE TV

Here is why we have a huge problem making our already messy democracy work. Don’t miss Rachel Maddow on the $200 million a day we are spending on the President’s Asia trip. (Which we are not doing, anymore than there were death panels or Iraq attacked us on 9/11, but it doesn’t matter: the right wing has made it fact for a huge segment of our population, a increasing number of whom will now be sitting in Congress.)

And then you have to watch this one, where she actually agrees with Rand Paul on something . . . and makes the fundamental point that adding $700 billion to the deficit by extending tax cuts on income above $250,000 will make the deficit bigger. Not smaller. Bigger. Not smaller. Bigger. And yet it is the Republicans’ number one priority. And we really, really, really need to fight it.

 

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