Retirement Planning - Lessons Learned

[Fuddy1952]

Relatives don't borrow money. You can give them some if you want but you will never see it again. If you're on good terms with them, don't do it - it will end the good terms part. BTDT

Over the years I've loaned friends and relatives money. Cheap insurance for those I never want to see again.

 

[goeduck]

My suggestion would be talking to neighbors, friends, i.e. people in your situation. You then arrange a group and collectively write a petition. Canvass every affected area getting signatures. Once you have that your group arranges a meeting with those in charge: supervisors, treasury department, whatever entity responsible for assessing property taxes.
As taxes increase there's a breaking point that's not sustainable...people can't afford it, move away, etc. Your petition outlines this. The most difficult part is research: knowing what the tax revenue has been over the years, where that money goes, etc.
Basically pointing out things have to change, people leave, tax revenue is lost which means increasing it for those left who then leave (domino effect).

Here they use comparables from actual sales. With all of the databases, pictures, descriptions etc. available on the internet these days the county probably has tax increases on autopilot. When mine went up this year, I googled and sure enough I found 3 comparables within a few miles that were at my "new" assessed value. To your point, getting them to reduce the tax rate per $1000 would be the way to go. According to a recent report, property values here went up 21.5% in 2021, so why would the county need 21.5% more in taxes?

I am not in the county that Seattle is in, but in Seattle there are now more renters than homeowners. Each tax increase on the ballot mentions how much a homeowner's tax will increase if the measure goes through. It never mentions how much rent will increase* so the dummies voting do not think they have to pay for it.

*I know that would be a harder number to establish but there needs to be something to get renters to realize the impact to them.

 

[ultrarunner]

The lions share is education plus the port of Olympia also factors… thing is voters vote for these things.

In one part of the county school measures kept losing and research showed the percentage traced to a large senior mobil home park… so the next measure was crafted to exempt seniors at this park and measure squeaked by…

Washington had voter approved I747 which greatly restricted increases but was later tossed by a judged…

The next year my taxes went up 80% over the base on what I paid the year before…

It got particularly bad in the Real Estate run up before the crash… one over the top sale price in the area and we all pay but that over the top sale was foreclosure 2 years later…

I wish I had the answers but spending years in constant appeals isn’t how I want to live life even though I have never lost an appeal…

Maybe form a non profit or religious affiliation to achieve tax exempt status?

 

[Bearsixty7]

My suggestion would be talking to neighbors, friends, i.e. people in your situation. You then arrange a group and collectively write a petition. Canvass every affected area getting signatures. Once you have that your group arranges a meeting with those in charge: supervisors, treasury department, whatever entity responsible for assessing property taxes.
As taxes increase there's a breaking point that's not sustainable...people can't afford it, move away, etc. Your petition outlines this. The most difficult part is research: knowing what the tax revenue has been over the years, where that money goes, etc.
Basically pointing out things have to change, people leave, tax revenue is lost which means increasing it for those left who then leave (domino effect).

We need to do that here. My property has doubled in value since I purchased it new in 2004. The local officials claim they have lowered taxes, which technically is true, they lower the tax percent from 1.2% to 1.1% and think they are really helping but when the property value increases 10-15% a year, my tax burden is still much more each year.

When I purchased here, I looked close at what taxes were and figured that even with a 5% increase each year I should be able to keep up and live a decent life and put away significant savings. Well that hasn't happened the last 8-10 years. My 2.5-3.5% annual raises on barely a 6 figure income doesn't keep pace with a 10-15% tax increase on a larger 6 figure property!

I think we need to get laws passed where your property tax bill can never increase more than 2-3% a year regardless of appraisal increases and it needs to be retroactive back to when you first purchased your property. This will provide home owners some tax increase protection.

I never get over a 5% raise, why should the government.

 

[Larry Caldwell]

I agree the odds are against you if you start investing right now. But still, analysis has shown that the only way to get long term returns that match the long term averages is to stay invested regardless of what the market is doing short term. I think this is because of another fact revealed by modern analysis: All of the investment gains that push up an average return, are earned in those few days of extraordinary market increases. All the other market numbers year in and year out, are just random noise that can be ignored. So - if you're not in the market on those extraordinary days you're not going to keep up with the long term S&P or whatever other index you like.

But yes, maybe with the market so high then real estate or some other alternative less linked to the economy, might be a better choice. If you have the analytical skill to identify the better alternative.

From my early days: Nice lady at Fidelity said why do you have this one account with so much cash when the market is rising? I replied that's what's left of my first significant investment in Fidelity Magellan back when Peter Lynch was a celebrity for beating the market year after year. That's the remaining half of what I put into Magellan. "Oh."

I didn't tell her this Fidelity account was my after-tax account while my long term investing was elsewhere in a Deferred Compensation (IRA) plan that I was locked into with my employer. Previously I had accepted a Fidelity offer to assign a Personal Investment Advisor and then learned when we met him that he wouldn't even look at that other half of my savings in the employer plan. We thanked him and walked out, that wasn't retirement planning advice at all!

The two key words are, "stay invested." The people who get burned in a downturn are the ones who sell low. Sometimes that is unavoidable. People lose their jobs and can't make mortgage payments or foot the bill for repairs. A lot of people tapped their 401k for living expenses. Anyone who could hold the course in 2008 did just fine. It only took the market about 3 years to make them well, and within 5 years they had averaged a decent return.

Say you have an income of $60k, and a $30k emergency cash fund. If the market crashes and your job still looks secure, hold your breath take the dive with your emergency fund. At worst, you will probably get your $30k back. On the upside, that $30k may be $100k within 5 years, and another 50% crash would still leave you $20k to the good.

Now let's invest that same $30k today. If the market drops 50%, your $30k becomes $15k, and having to tap it for emergency expenses wipes it out. If you let it ride, that same 150% return over the next 5 years pumps it to a whopping $22.5k. You are still $7.5k in the hole. Over a decade you will make your money back, but your average rate of return will be pathetic. You would have been better to just sit on your money for 5 years and wait for an opportunity. As Warren Buffett has advised, "Don't get greedy."

Some investments will do better than others, which is why DIVERSIFY is always a good idea. Bonds right now are a horrible investment, and guaranteed to lose money unless you hold them to maturity. Value stocks with a good dividend return are a good way to build equity. If you get into a DRIP, the dividends will go into additional shares with no broker or management fees, and during a downturn you are getting those shares at a substantial discount. Nobody is going to try to sell you a DRIP because nobody's palm is getting greased, but if you have ten or twenty years to go, you could do worse. Meanwhile, you can buy a share a month, or whatever, directly from the company with no fees. Diversify that one too, with at least three different companies.

I'm sticking with stocks right now (stay the course), but have diversified into offshore funds that are not dollar denominated. Metals are low right now, so are a good ultra-conservative place to stash some cash. just don't expect great returns in the long run. If you are looking for someplace to put funds until equities melt down, gold and silver are good, platinum and palladium are likely to fade because EVs don't need catalytic converters.

How you balance your portfolio is up to you, but you really need one. Holding enough cash to take advantage of a downturn can be profitable. Everybody needs that 6 month emergency fund, because having to bail in bad times will kill you.

 

[Jstpssng]

You just described about 15% of the American population where everyone is "legal"

One thing I have to say is that really, all you need in life is Health,food, water and shelter. Everything else is gravy. We're just used to a lot of gravy. I'm very grateful for what my wife and I have. We are fortunate that we have not had any medical or financial catastrophes, good steady employment, and family to support us.

I tell young people to live below their means. Enjoy life today, but save something for tomorrow in case you live to be 100. Pay yourself first. Set goals and work towards them. I try and show them the power of compound interest and dollar cost averaging. And...

You left the biggest thing out, but I fixed it for you.

 

[Fuddy1952]

We need to do that here. My property has doubled in value since I purchased it new in 2004. The local officials claim they have lowered taxes, which technically is true, they lower the tax percent from 1.2% to 1.1% and think they are really helping but when the property value increases 10-15% a year, my tax burden is still much more each year.

When I purchased here, I looked close at what taxes were and figured that even with a 5% increase each year I should be able to keep up and live a decent life and put away significant savings. Well that hasn't happened the last 8-10 years. My 2.5-3.5% annual raises on barely a 6 figure income doesn't keep pace with a 10-15% tax increase on a larger 6 figure property!

I think we need to get laws passed where your property tax bill can never increase more than 2-3% a year regardless of appraisal increases and it needs to be retroactive back to when you first purchased your property. This will provide home owners some tax increase protection.

I never get over a 5% raise, why should the government.

It's simply greed. I grew up one county over and it's become industrial (crummy), not at all nice place to live. The county seat I graduated high school in that little town, administration offices in a courthouse. Then county got greedy, building a new $multimillion office complex. They didn't need it, but high wages spending taxpayers money. As long as people pay they keep going. Having enough people saying enough is enough is what it takes.

 

[3Ts]

I think we need to get laws passed where your property tax bill can never increase more than 2-3% a year regardless of appraisal increases and it needs to be retroactive back to when you first purchased your property. This will provide home owners some tax increase protection.

Florida has that. The tax dollar amount can not increase by more than the government's CPI. It is very good for the seniors in that the tax bill will not exceed their ability to pay. It resets when the house is sold and does not transport to a new house. If a senior sells and downsizes, the property tax they pay resets as well.

We lived in our place for 28 years and the tax bill at the end was about $2k, the neighbor's moved in shortly before we left had a bill for essentially the same thing, at about $6k.

 

[MossRoad]

The two key words are, "stay invested." The people who get burned in a downturn are the ones who sell low. Sometimes that is unavoidable. People lose their jobs and can't make mortgage payments or foot the bill for repairs. A lot of people tapped their 401k for living expenses. Anyone who could hold the course in 2008 did just fine. It only took the market about 3 years to make them well, and within 5 years they had averaged a decent return.

Say you have an income of $60k, and a $30k emergency cash fund. If the market crashes and your job still looks secure, hold your breath take the dive with your emergency fund. At worst, you will probably get your $30k back. On the upside, that $30k may be $100k within 5 years, and another 50% crash would still leave you $20k to the good.

Now let's invest that same $30k today. If the market drops 50%, your $30k becomes $15k, and having to tap it for emergency expenses wipes it out. If you let it ride, that same 150% return over the next 5 years pumps it to a whopping $22.5k. You are still $7.5k in the hole. Over a decade you will make your money back, but your average rate of return will be pathetic. You would have been better to just sit on your money for 5 years and wait for an opportunity. As Warren Buffett has advised, "Don't get greedy."

Some investments will do better than others, which is why DIVERSIFY is always a good idea. Bonds right now are a horrible investment, and guaranteed to lose money unless you hold them to maturity. Value stocks with a good dividend return are a good way to build equity. If you get into a DRIP, the dividends will go into additional shares with no broker or management fees, and during a downturn you are getting those shares at a substantial discount. Nobody is going to try to sell you a DRIP because nobody's palm is getting greased, but if you have ten or twenty years to go, you could do worse. Meanwhile, you can buy a share a month, or whatever, directly from the company with no fees. Diversify that one too, with at least three different companies.

I'm sticking with stocks right now (stay the course), but have diversified into offshore funds that are not dollar denominated. Metals are low right now, so are a good ultra-conservative place to stash some cash. just don't expect great returns in the long run. If you are looking for someplace to put funds until equities melt down, gold and silver are good, platinum and palladium are likely to fade because EVs don't need catalytic converters.

How you balance your portfolio is up to you, but you really need one. Holding enough cash to take advantage of a downturn can be profitable. Everybody needs that 6 month emergency fund, because having to bail in bad times will kill you.

Why would you invest your emergency fund??

 

[Fuddy1952]

Why would you invest your emergency fund??

Your emergency fund has to be secure.
In our retirement years I switched from reinvesting capital gains and dividends some of the funds into a cash core account. From that I can instantly wire transfer to my bank or when market drops buy or open a new fund.
Einstein when asked what he considered a true miracle replied "compound interest".