By Dr. Anthony Ellis, WCI Columnist
Whoever said “Time flies when you’re having fun” may have been newly retired. The past nine months as “semi-retired” (working two days a week and long weekends on a quarterly basis) have passed by as if we were fast-forwarding commercials on a DVR.
My wife says it is because we have been traveling frequently. I say it is because I turned 59 in April.
We moved into the home we bought for our retirement on our mountain in North Carolina in August 2022. Our children had gone before us, having landed jobs downtown before they arrived. My wife and I were still disposing of 30 years of accumulated stuff with an “estate sale” at our Michigan McMansion that netted a whopping $1,200 after auction fees and resulted in a 16-foot flatbed trailer of residual junk being carted off to charity.
That was a GOOD thing, but it was also one of the hardest things we had ever done. We had been in our dream home that we planned and built in 2003 for about 20 years, and we raised our children there. The McMansion was full of memories. But it was also full of 20-plus years of accumulated things. It took months to go through these things and dispose of many items we liked but had no room for in the downsized space in North Carolina. At least my children will not have to do what we had to do over several years with my wife’s parents’ estate and their 50-plus years of accumulated belongings. We learned a lot about the things we bought that became garage sale fodder. As they say, “One person’s junk is . . . well . . . another person’s junk.” I suggest getting rid of most junk every few years.
Selling the McMansion in Michigan within a week of putting it on the market and downsizing was GOOD, and the timing was, too. In some areas, real estate prices have dropped 10%-15% since mortgage interest rates ticked up from 3%-4% to 6%-7%. The sale provided a huge chunk of non-taxable equity that filled out the retirement nest egg. The process, however, was arduous and UGLY. Those few months from April to early August 2022 were stressful.
While we were throwing things away, donating others, and packing the rest in two PODS six weeks apart, I was shutting down my position as the CMO of the local community mental health center. Soon, I was going to be “a dude in the basement seeing patients on a screen” instead of being at the apex of my career and earnings. Saying goodbye to coworkers and some patients and moving away from lifelong friends was emotionally draining. My wife and children were leaving their childhood friends behind for the new dream, and there was no going back. My kids said, “It’s weird to think of someone else living in our house.”
We sold the McMansion and placed 60% of the proceeds in high-yield savings, initially at about 2.5% and now at 4.25%. An additional 30% went into short-term notes, structured notes, and supply chain financing at an aggregate yield of 6.5%. About 10% went to a small private REIT allocation. These funds are either wholly or incrementally liquid and represent a two-year emergency fund, which is GOOD. The first two chunks also yielded an aggregate of 5.3%. The REIT (Fundrise) has been BAD in that with losses in 2022, despite paying quarterly dividends, the account was down overall ($397) from 2019 to the present. That small part of my portfolio made no money in those four years. I liquidated the account and reallocated those funds. That is BAD, but I have seen 2022 real estate losses mentioned by others on WCI. You cannot win all the time in every asset class. When I liquidated this position, I did not feel commercial real estate was the place to be in 2023-2024.
I wrote previously about the decision to NOT pay off the 2.5% mortgage on the downsized retirement home with the McMansion proceeds. The mortgage payment is only $921 a month. That is GOOD (in fact, it is spectacular). The property taxes were recalculated for 2023 with the appreciated assets (house on 10 acres and the vacant lots of five and 10 acres on either side), and this new assessment popped the taxes up about 10%.
The dream of living on the mountain was born in 2015. It took almost eight years of owning and paying for two houses to finally bring it to fruition.
Here’s my view of the North Carolina mountains.
More information here:
A New Way of Doing Business (and Saving Tons of Money) in My Retirement
Early Retirement and the Likelihood of Regret
It has been GOOD that our original 2016 North Carolina house and land purchases had grown in value by about 50% in the eight years since we bought the place. It was inevitable that the taxes would go up along with the property values. In our county, tax reassessments are done every three years. The North Carolina taxes are still about half the tax amount we paid on the McMansion on four acres in a posh “mostly doctors” subdivision in Michigan, which is GOOD. The North Carolina family anti-apocalypse compound also costs one-third as much to heat and cool. We have no water bill and no yard to mow, and we had no lasting snow to speak of this winter, which was also GOOD since it used to cost me about $1,250 a year to get the snow plowed in Michigan and $2,000 a year for yard care.
This geographic arbitrage has been GOOD and has many moving parts, but things are just less expensive in North Carolina. Auto insurance, property taxes, the general cost of living, and energy costs are just a few of the areas with cost savings. The state tax rate was higher by 1% in 2019 and prior, but it has been cut several years in a row from 5.25% to 4.75% in 2023, so it is now closer to Michigan (4.25%). North Carolina does not (currently) tax Social Security benefits, and there are no local taxes due as there were in Flint, Michigan (1% for Flint residents and 0.5% for non-residents), which is GOOD.
It is hard to put a price on the availability of beautiful hiking venues and excellent local vineyards in all directions. That was GOOD. We hike several days a week, up to five miles at a time. Two of the local vineyards were voted No. 1 and 2 in the “best new vineyards in the country.” The restaurant choices are also GOOD, and we have two dozen “favorites” that we enjoy, frequently after a nice hike. There are cute little towns in all directions, and Asheville is only a half-hour drive away. Of course, there are dozens of excellent restaurants and more hiking venues near Asheville and all along the Blue Ridge Parkway. The area has turned out to be GOOD for us and suits us perfectly other than the BAD attitude of a rare “local” toward “Yankee” transplants seeking to retire here. Luckily, they are mostly trolling social media and are avoidable.
Traveling every other month has also been GOOD. We are currently training for a 75-mile hike across Spain from northern Portugal on the Camino de Portugues. This wedding anniversary trip got canceled by the pandemic, but it’s now planned for our 30th in May 2023. I am learning some Spanish and Portuguese, and we are getting in shape for the 12-mile-per-day walks in the Iberian countryside. So far in the past nine months, we have gone on three family vacations. My wife and I have gone to Costa Rica, returned back to Michigan three times, and taken a tour of the National Parks in Utah and Arizona (Zion, Bryce Canyon, Arches, Monument Valley, and the south rim of the Grand Canyon).
There were expenses not accounted for fully in the North Carolina budget, including Christmas and birthdays that I forgot to put in and a new heat pump. I budgeted 1% for maintenance. But the heat pump was 20 years old and went BAD, so it was due. We had replaced all the appliances, the roof, external paint, and the water heater in prior years (2018-2021) when we “visited” the house quarterly to make sure we genuinely liked the area. It turned out to have been a GOOD idea to do most of the work in the place while I was still practicing full-time. The heat pump cost an UGLY $12,500, installed after applicable rebates. It is supposed to last until I am 74. The salesperson told me it was half that amount pre-pandemic, which I did not need to know.
We opted to replace the worn-out and UGLY front door, build a new extended prow to protect it, and add a small porch. This turned out beautifully. These two large expenses represent the only drawdown in our funds as my two days a week of telepsychiatry and an occasional long weekend in Michigan have fully covered all our other expenses, as planned. That has been GOOD even though our vineyard and restaurant expenses are routinely over budget. The quarterly “work-a-long-weekend” visits to Michigan serve a second purpose in that we could spend time with our friends in Michigan. Since I work telehealth from our basement, I have no commute except when we travel to Michigan quarterly . . . and it is deductible pre-tax, as is the lodging.
My old front door (left) vs. my new front door (right).
More information here:
Functional Longevity: What Use Is Retirement If You Can’t Move and Think?
One UGLY budget item was family health insurance. Dr. Dahle has mentioned that family health insurance frequently costs as much as the monthly grocery budget. I budgeted $1,000 a month but it has been $1,150 a month, and the insurance is not very good, leaving a stack of unpaid bills after the paltry and spotty benefit amounts. I bought it through a health insurance broker, and I had to get three different policies. I couldn’t get a reasonably priced Obamacare policy because I had stage 1A melanoma removed in 2021. So, my “limited benefit policy” costs about $6,400 a year.
My 22-year-old daughter couldn’t go on the main policy with my wife and two other children, because she was working a gap year to earn money for PT graduate school and was “not a student.” She has her own Aetna policy (which I pay for). My spouse and other two children (ages 16 and 18) are on a decent Aetna family policy. To make sure that I had not made a mistake, I contacted a second health insurance broker, and he priced out multiple policies and could not give me a better deal. I do miss my free HMO policy from my prior employer that I lost when I dropped down to half-time. The potential OBRA coverage packet arrived after the date that option expired. No kidding.
One UGLY example: I had a four-millimeter polyp on a gallbladder ultrasound about 18 months ago, and it was recommended that it be followed since polyps that become bigger than a centimeter have a 10% risk of being cancerous. Luckily for me, the most recent follow-up ultrasound showed no polyps. The hospital would not let me pay as an uninsured person since I have insurance. My policy benefit of “$50 for any X-ray” left me the rest of the UGLY $850 insured price and the bulk of the radiologist’s fee. The uninsured price was $450, less the $50 “any X-ray” allotment from the insurance company, so I would have paid $400 instead of $800. I would have been better off on this deal uninsured, but one cannot “go bare” or risk actual financial ruin.
I am soon going to get a chance to see what other coverage holes I have in my “limited benefit policy” as I had a BAD mishap on the trail while hiking here in March. I stepped on an embedded rock, rolled, and injured my ankle in the same way I injured the same ankle about 15 years ago. With a torn ligament and a small avulsion fracture of the distal tibia, I was reminded of a lesson that I had forgotten which can be summed up as “never take your eyes off the trail.” I am guessing that my urgent care visit, ankle series, a pair of crutches, and the ankle boot will be about $1,000 and that my policy will cover half of this amount.
More information here:
Health Insurance in Early Retirement
In summary, the last nine months have mostly been GOOD.
My Happiness Index has increased from 6/10 —> 9/10, although the ankle cost me two points for the time in the boot. One last GOOD item: The pension I am owed from the hospital system for which I worked the longest is offering a one-time lump sum payout. This was unexpected and is related to them “transferring the obligation to an insurance company.” Since I would not have started drawing this flat amount until age 60, I am eligible to receive about 80% of the benefits I would receive from age 60 to age 80 all at once as an IRA rollover. I think I will take the money and invest it myself. I do not trust insurance companies, inflation will likely continue to erode the benefit, and it’s not guaranteed that I’ll live from age 60 to 80. In addition, getting all of this money upfront and preserving the principle ensures that several hundred thousand doesn’t disappear if my wife and I meet an untimely demise on an international trip or in a motor vehicle accident. If we die, the pension amount disappears.
The ankle injury. My own fault. Lesson learned . . . again.
It’s mostly the health insurance costs and the uncovered medical expenses. We also have no dental or vision coverage. Luckily, we all got glasses and dental exams and cleanings before we moved. We have decided to pay out of pocket for dental care, which could get UGLY. It is GOOD that three of our four children have already had braces and have had their wisdom teeth out (about $6,000 each).
Our drawdown of McMansion proceeds in nine months of semi-retirement was about $20,000, due to planned renovations, uncovered medical costs, and the new gold-plated heat pump. Which also happens to have a built-in light show and plays music via Bluetooth . . . just kidding. The 10-day locum vacation coverage at my side gig that I have lined up for July will put us back to scratch for year 1. Due to making less money while still stoking all the retirement accounts in 2022, our taxes dropped substantially, and we are getting a federal refund for the first time in many years. Not having to put funds in the kids’ college accounts or my retirement accounts after 2022 (except for my side gig SEP IRA) has dropped our expenses further. Prior to 2022, educational expenses for private school, college account funding, and retirement contributions added up to about $120,000 per year. This is now reduced to 25% of after-expense profit, going into my SEP IRA in 2023.
As you might surmise from the extensive list of the GOOD and the brief list of the BAD and the UGLY, things are going very well. The most challenging event in nine months of pursuing our mountain dream was my ankle injury hiking one of the trails that we love. My part-time work is paying the downsized bills. My children have had no problem adjusting to our new environment. My wife has a volunteer job one day a week at the Council on Aging, which supports Meals on Wheels. My wife and I have been going back to Michigan quarterly to see our friends, and that has also made the transition less onerous.
This summer, all of us are going back up for a week so the kids can see their friends, too. We have hosted three sets of friends here for up to a week, showing them the local amenities. We are all going to the local YMCA and taking care of our health; eating better home-cooked foods; and still enjoying the outdoor, restaurant, vineyard, and entertainment venues. We have enjoyed spending more time with our family in the smaller space.
It has all gone mostly as planned, but then again, we practiced by coming here quarterly for years, installed the older children in college in North Carolina as they came of age, and helped our eldest buy her first home here in 2021. Once my ankle heals up and we find a cash-accepting dentist, I can save up for my next colonoscopy.
If you’ve recently retired, how are things going for you? Any unexpected costs or savings? How have you dealt with dropping out of the full-time workforce? Comment below!
Thank you for your transparency on the challenges of medical insurance/medical bills with semi-retirement. Informative article! Since you work 2 days a week, would it be worth it to consider slightly increasing hours to part-time status to have those medical benefits back (although you often pay more for benefits as part-time employee)? You must be close anyway working 2 days a week?
My prior (and current part-time) employer does not offer health insurance to half time employees. I do actually work “half time” as the two days are 0730 to 530 (20 hours).
I have considered finding a new employer here in NC that would offer health insurance to a half time employee. Finding a new employer that allows all “at home” telehealth at a similar wage per hour may not be easy.
Changing jobs just for that benefit would require a lot of other adjustments that outweigh the financial issues?
Free or low cost health insurance was taken for granted. Now, it’s a concern. I won’t get Medicare for 6 more years.
I always enjoy reading your articles Dr. Ellis. Thanks for writing this beautiful masterpiece. I wanted to suggest that you look into direct primary care physicians for you and your family health needs given the challenges you mentioned above regarding health insurance.
I’ve heard of this. Pay a fee per year for all the care you need.
The funny thing is I generally need none. After the ankle X-ray, I spoke with an orthopedic friend of mine and developed a plan with an Amazon.com ankle $46 boot and paid for PT X 3 out of pocket.
My worry is cancer. The melanoma can come back. If it does, the treatment is not a PCP…it’s MD Anderson or similar.
I only go to the doctor for lethal problems. I get a once a year physical and labs and a colonoscopy every few years. I have no chronic conditions other than GERD.
Help me understand how direct primary care helps me?
It seems like a lot in the GOOD column comes from living in a warm area with good food and nature and has less to do with retirement itself. Makes me wonder why people stick out 30 years in cold Midwestern and East Coast towns before moving to places like North Carolina or Florida.
We wanted to move to a warmer climate for years. Yesterday, after our 5 mile walk along a stream, we were having our anniversary lunch at an outside venue in the sun and later went to our daughter’s house for a bonfire cookout.
At our prior Michigan spot, it snowed yesterday.
If you don’t ski, snowmobile, or ice fish, the Michigan winters can be tough. Lots of Netflix.
I prefer the weather here. Michigan also has very few hiking venues similar to ours unless you are willing to drive “up north”. A lot of folks there do this…leading to horrible traffic on holiday and summer weekends.
Many areas of Michigan on the lakes are awesome. The costs are the winter and the traffic.
Thanks, this is a nice follow-up on your bit about happiness in retirement. You write mostly about external factors (finances), and I love hearing how you align them to foment your internal happiness game. You said:
“Having more time to think and reflect allowed me to see the absolute wonder of our good fortune. I also had to continue to throw off the residual family legacy of unhappiness that was ingrained in me. At times, it had tried to throw a shadow on me. Sadly, I appear to be the only person in my family of origin that is happy.”
It seems to me that the financial issues are table stakes for you, and you use money to bring your family’s pursuit of internal happiness into focus.
Personally, the irony is that irrevocable financial mistakes I made the first year of retirement (like the NG-457 claiming gaffe) actually make me chuckle a little (even though it cost an extra 13k in taxes), whereas I take the daily pursuit of internal happiness much more seriously than I expected to. Finding joy in the moment is the currency of retirement.
“You write mostly about external factors (finances)…” This is primarily because this is a blog about finances.
My pursuit of “internal happiness” required that I work less. I recognized this at about age 50. I knew I was not going to be a doc who worked into my 70’s.
Having seen my father’s 70’s and my father-in-law’s 70’s and various other folk’s later years, or early demise, I have almost completely written off the 70’s. If I’m still here and intact and able…well, great news.
I know this is an unpopular view from prior posts. I am trying to complete my “bucket list” between ages 58 and 70. Whether people agree on this or not makes little difference to my plans.
I ate lunch with a friend’s parents recently. The elder gentleman was about age 83. He has a large residual portfolio (in the several millions).
He asked how I was. I updated him. He looked me dead in the eye and said, “Don’t let the years get away from you like I did.” He is battling a lethal health issue and sees death on his doorstep.
I’m very happy these days. It’s partly due to my finances allowing much less work. I’m not bored in the least and things are going as planned, except for the ankle and it’s on the mend. 😊
My husband (ED) and I (Pediatrics) are in a very similar situation. It’s so helpful to hear your honest review of many of the things we’ve been contemplating for months. Do you mind sharing which locums company you’d recommend? And, our biggest concern (besides health insurance): how were you able to sell your McMansion and not get destroyed by capital gains taxes?
I’m still working for both my prior employers, so when I say “locums”, I’m talking about inpatient work in Michigan at my long term side gig. I haven’t used any locums companies.
The McMansion had just regained its 2005 appraisal value in 2022, like many of the houses nearby. So, when we sold it for this price, there was no capital gain. The basis was actually about $65,000 higher due to improvements. Due to this and still owing one third of its original cost, the funds we received after commissions were less than the cap for a couple as to taxable gains ($500K).
“Thanks to the Taxpayer Relief Act of 1997, most homeowners are exempt from needing to pay it. If you are single, you will pay no capital gains tax on the first $250,000 of profit (excess over cost basis). Married couples enjoy a $500,000 exemption.”
Ah, I see. We live in the South and have had the good fortune to see a significant enough increase in our property value to still have a capital gains problem, even after the exemption and the subtraction for improvements. A “golden handcuff” problem (which is not really a problem). We’ll solve this by retiring or reducing our income first, then selling the house.
It’s very reassuring to me to hear that you also are the only member of your family of origin who seems to be happy. I always say I’ve learned my way out of my nuclear family’s Puritanistic, joyless culture. The validation that you’ve done the same as a psychiatrist is important.
One of the biggest concerns I have as we contemplate semi retirement or early retirement (I’m 54) is the loss of part of our identities, as we’ve both practiced medicine for around 25 years. I’m curious to hear how your wife is managing this. As in, is it difficult to stay interesting? Relevant? Respected by your children? Connected to your community? Is it hard to find things to talk about?
Thanks for weighing in. Your post came right when we needed it.
I hear you on the house equity. We have friends who have made hundreds of thousands on homes. As you say, not a bad problem to have.
I have been in Psychiatry since 1991. I count residency, so that’s thirty-two years. I’m still doing it two days a week and a few weekends.
I’ve had no difficulty adjusting from “Chief Medical Officer” to “a dude in the basement on a screen” because I was a bit burned out my last five to ten years of practice.
It’s been great to be able to spend more time with my family, but Psychiatry was never that bad at 37 to 45 hours a week.
My wife is volunteering one day a week. We still have three kids at home (age 16, 18, and 22), so it’s never boring. They will be home all summer before they go back in late August.
We are making new friends and there is no shortage of long time friends who want to come and stay a week.
I never embraced the social aspects of medicine. There were no after work connections to the job for me. No galas, no parties, no meetings. I figured medicine took enough of my time.
Having a group of hobbies helps. Hiking, swimming, traveling, reading, writing, and growing mushrooms are mine. In fact, I’m @docmushroom on TiKTok and have been posting cooking, hiking, and traveling videos there.
I cook a lot and my food is pretty good. I don’t miss full time work at all. Luckily, my wife also likes the same hobbies (minus swimming). She works out three days a week with my 22 year old daughter at the YMCA.
With all these things, we are busy, happy, and never bored. I’m setting up our next “walking trip” to Ireland for August, and we still have dozens of trips on our bucket list: Greece, Italy, New Zealand, Australia, Equador, spots on the Caribbean, Asia, and so on.
I also benefit from my perspective that the 70’s and 80’s are no guarantee physically or cognitively. It adds a sense of “do it now”. Tall men are like Great Danes. There are just not that many over a decade old…or older than age 80 for humans. 😊
Hi – congrats on your (partial) retirement. I am 64 and completely retired a couple months ago after working half time for two years. I was fortunate that my half time employer did offer health insurance.
Since I have little income now I was able to qualify for an inexpensive ACA plan. I didn’t completely follow why the melanoma history impacted the Obamacare eligibility. They didn’t even ask about my health history. If you’re making much money though the ACA plans aren’t cheap. You could have applied for COBRA up to 60 days from your last day of employment but that’s not cheap either.
I’m living in the same paid-for house in a LCOL area. The COL makes a huge difference not only in being able to afford retirement but also during the years of accumulating retirement savings. I’m living off the savings in my taxable account and should be able to for several years.
I don’t think you mention specifically but it sounds like you are trying not to touch your retirement savings and just live off the part time salary. That’s fine but it sound s like you are sweating out fairly small unavoidable expenses like the ankle injury and saving for a colonoscopy. I think you’re using the house proceeds as sort of a contingency fund so use it and don’t sweat it.
Anyway congratulations again. Sounds like you’re doing great.
Correct across the board.
The ACA policy they quoted was about $10,000 for me alone, I think. As I still make half my prior full time wages, the subsidy was low and onerous to qualify for. Two of my kids were home and both were working. They wanted proof of all income for all of us.
Also correct about letting loose of the “small stuff”. As you say, the $$ from the McMansion sale can cover budget shortfalls. I guess I’m just aware that my first year health care costs and insurance could easily be $20,000. That’s noticeable. I’ll need to stop breaking bones hiking 🥾.
Family of 3 here, 52, 52, 9, and our annual health insurance costs $21,000 for a bronze level high deductible plan. That’s before anyone sneezes. Your cost aren’t bad.
Both of our healthcare/insurance outlays are bad. That’s a lot of money.
It’s part of the FIRE game though.
I made a mistake in 2017 and left my job to go elsewhere…grass is greener. I hated the other job and left to go back to my former employer. This one year mistake cost me in that at year eight at the original job, I would have vested in $60,000 worth of monies that could have been used to pay several years of these costs.
I should have listed this in my biggest financial mistakes post.
Congrats Dr. Ellis on doing it so successfully!
(If the column was enough already don’t waste your time reading this!) My version of this column would run thus (prior to decent editing): Tricare as the pay off for spouse’s 25 years of service makes things a lot easier than health coverage for Dr. Ellis. Not quite as profitable (yet) as the pension, but certainly a lot easier than the headaches our privately insured friends suffer. Me getting a reduced pension from 5 years civil service (plus military years) prior to 62 is still worth knowing that it has started and is running smoothly- my nightmare scenario was applying and learning something had been fouled up 5 years earlier and so losing it altogether. Such a small penalty amount for us- <5% our monthly autopilot incomes- will not affect our long term finances and I haven’t lost money until I outlive 70 or so.
I have fully stopped medicine- didn’t renew license for this year- and with lingering covid concerns (and having learned why not to get on any charity boards from my last long sabbatical) I am still not fully involved in local activities which I might eventually join. This leaves me somewhat bored now grandson is in daycare but I am still working hard making a new garden and have multiple other irons in the fire I will attend to eventually. The urge to go back into practice has faded and is now laughable instead of a serious possibility. Spouse has been fully retired from medicine 12 years now. I wasn’t ready and wanted to get those military years as a pension if I could.
Buying a house at 3% mortgage was a great deal on mortgage, poor deal in a booming housing market which has since slowed down. But we have a house that is new instead of my age in this older neighborhood with no HOA so my crazy hippy garden plans don’t get push back, very close to grandson (and closed right before his birth), and I quip that we should have practiced some selective arson (on lots of our preference) in the neighborhood to have several new builds to choose from in the area. (Our place is a new build on the site of a house fire.) Cost 40% more than old place for 2/3rds the house and 1/10th lot size. Selling our old place ‘quick’ before interest rates shot up, despite sale price about what we paid 16 years earlier (so we paid about $11K/year ‘rent’ in home improvements/ repairs/ realtor above interest in mortgage), was a blessing since showings and maintenance of an empty house with 3 acres and a pool 5 hours away was pretty gruesome for this homebody (with a new grandson!). Sadly our buyers- 4 months after our home purchase a year ago and perhaps less qualified than us- got a 5% mortgage but imagine if they’d been stuck with today’s rates!
We didn’t vastly relocate- same state 5 hours away- and did the opposite of geographic arbitrage, moving INTO a larger city from a small town’s rural exurb. However smaller place, less rapacious utility company, shorter drives everywhere save us on those measures. Also our restaurant and shopping choices (some a short walk away instead of a 30 minute drive) are spoiling us. However the trek to the sailboat on the Gulf is much longer. So now we go for nearly a week instead of just a weekend. We don’t return to our old place; kids and friends all over the world are just as deserving of a visit as friends there and we stay in contact electronically.
We took some funds from retirement taxable accounts to pay off our mortgage (not guessing we could get 4.5% for a while had we held off doing so until this year), and some to cover taxes on finishing Roth converting all our IRAs (now contemplating doing more with our government TSP plans). Still prepared for current spending into our 90s especially with SS and RMDs eventually, and home equity to buy into a retirement home if that’s still how they work then. However really need to spend or give MORE and trying to calibrate that without spouse going crazy buying stuff.
Sounds like a great plan that has come to fruition.
You appear to have a lot of ROTH money, whereas I have none. Excellent work.
For my pension lump sum amount (rollover $$ will come to me in July), I did not really consider turning this into Roth money as the amount is large enough to trigger the highest marginal rates on top of my half time wages.
Enjoy your garden and new home as well as the sailboat weeks. Sounds fantastic!
Yah you should wait until you really retire if there’s a decent gap between then and SS/ RMDs. We are pretty cheap- always had near military pay not even higher end FP/PM pay- so I’ve kept the conversions in the 22-24% bracket easily once spouse retired. That jump from 24% to the next one has to be a bridge too far for better paid doctors, especially if you might be in the 22% bracket for a few years. I have even realized we won’t have a true RMDs boosting our income out of this tax bracket problem (ie supersaver issue) even if one of us is widowed it looks like, but I believe it’s unlikely current tax brackets will stay this low so we might be paying well more than 22% when RMDs start anyway. Still considering this math and crystal ball reading problem.
Just out of curiosity how much less was the North Carolina home vs Michigan? 0.5x or less? I think of both Michigan and North Carolina as both relatively low cost states, not like moving out of California or New York City. Did you think about just buying a cheaper home in Michigan or were you ready to make a fresh start in a new, distant place? Would a similar size home in a Michigan been that much of. A savings compared to North Carolina?
The Michigan house cost about $500K to build on a 4 acre $90K lot in 2003. It sold for about that combined amount, making the $65K of improvements worth no money.
If we had wanted to stay in MI, we could have stayed right there on that 4 acre lot in a beautiful subdivision…but I couldn’t pay the bills there on half time wages. The house was huge and we didn’t need that much space anymore. It was purchased by a doctor with four young children. They replaced the whole kitchen immediately and took their total cost up to about $650K. That buys a nice place in Michigan or NC.
I had wanted to move to the mountains ever since we traversed 110 km of the Peruvian Andes in 2013. It could just as easily been KY, TN, GA, or any more temperate state with mountains.
Our eldest went away to college in 2014 in NC and we saw the area then. We liked the whole Asheville, NC area and found the current place 25” away through making two trips a year.
We wanted more land and less house and we found it. The house was half as much as the Michigan house, but with the 11 acre lot on one side and 5 acre lot on the other, we have 25 acres of mountaintop now. It’s sort of funny, but the land and house here with the extra two lots are now worth as much as the MI McMansion.
The square footage is a lot less (2500 versus 4600). It’s cheaper to heat and cool and the property taxes on the whole deal are half what we paid in Michigan as the empty lots are cheaper. Michigan has some of the highest auto insurance rates in the country and I was paying for snow plowing and lawn care.
It’s really about the mountains and the weather and downsizing…but also, it’s a different lifestyle here. We are in the woods. We live on a mountain at 2900 feet. You can find nice lakes, restaurants, brewpubs, and vineyards in Michigan. You can also have an outdoor lifestyle in a cabin on a lake in Michigan. The price is the winters…from November through March…five months of “too darn cold”.
It shows how real estate varies by location. Here’s what $600k buys in Portland Oregon, expensive but not in the realm of high cost cities like San Francisco.
Not a bad house, but no one would describe it as a McMansion dream home. When I read your post I thought you would be downsizing from a 1.5-2 million property.
Here’s what $300k buys in Portland (actually $360k for 720 square feet)
I can see how it would be nice to be a doctor in a truly low cost of living state.
The McMansion was 4600 sq ft. It had a beautiful cherry kitchen and high ceiling great room with a fireplace. It was on 4.25 acres on a river. We had a massive master suite with a coffee station and a sauna in the bathroom. There was a bonus room over the garage, a 900 sq ft basement apartment (for each child as they became teenagers) and all the counters were granite. There was a huge deck and a lower level private patio area. The subdivision lots were all at least two acres. Honestly, it was one of the best gated subdivision near the three hospitals. The most expensive homes in the conclave were 1-2 million.
The NC place is quite modest. It’s 2500 square feet only because the basement is fully finished. The main floor is 1500 sq ft. It has a separate 600 sq ft garage with a wood shop in its lower level. Fully $250K of its value is in the 25 acres of land.
The view is spectacular. We sit out on the deck many evenings and watch the sunset. We have a one mile summit trail on the property to hike if we don’t want to drive to hike. We live in the woods. The driveway is 0.33 miles long and there are no neighbors within a quarter mile. It’s really a different life. Black bears pass through occasionally.
We will be upgrading the kitchen and completely redoing the master bath soon. We have done a lot here in the past four years. My eldest daughter lived in it during and after her last two college years until I was able to finish up the Michigan career. She was living the dream before we were able to get here.
This is an excellent post. As a 57 year old, I took a different path to Career 2.0 and am similarly looking to move, at least part time, from the Midwest to the Mountains (CO). Your piece was well-written, and it gave me lots to think about. I really liked the GOOD/BAD tags, because, in your mind, you add things up this way. I am sorry about the health insurance fiasco. It is unfortunate that this is such an issue with early retirement or downsized careers later in life. Otherwise, well done!
In the months before we moved, I made sure we all had new glasses, recent dental work, and such. I had finished up the follow up on the stage Ia melanoma and had a negative whole body PET scan. I also had an EGD and colonoscopy and the f/u ultrasounds of the gallbladder. I needed one more and that one cost me about $750 here as I said in the post.
At present, as far as I know, I have no health problems except GERD and the ankle issue. I take generic Nexium. None of the rest of us have any complaints or meds.
As I mentioned, my wife and three of the kids are on a decent Aetna PPO policy and theirs costs about $7200 a year. The three kids use essentially NO healthcare, but a a few years ago, my youngest had to have knee surgery. His bills were over $30K and insurance covered almost all of it.
dude anthony awesome post and great that your happiness factor is 9/10! You are living the dream man. ?- you mentioned going over budget when eating out and then having some unexpected expenses like your heater going kaput. does it help to have some income to psychologically not freak out with these unexpected expenses? Sounds like even if you were retired today you still would be able to afford these expenses, but wondering how much of that part-time work acts as a crutch to these expenses.
Keep living the dream man y tenga divertido in espana mi amigo! y cuidado con su pie cuando caminando!
I’m making over $200K. It’s true that we can cover all these expenses with this income. As I said, once I do a ten day inpatient stint this summer, we will have spent nothing but this income the first year despite the renovations, heat pump and restaurant/vacation expenses.
When I liquidated my REIT account, I moved the bulk of the amount that I had put in there from house equity to my SEP-IRA, so I didn’t need to come up with that $25K out of income.
We spend a LOT on vacations, restaurants, and vineyards.
We took family trips to Mexico for ten days in June 2022 and to Anna Maria Island for Thanksgiving. My wife and I took a ten day Costa Rican “mom and dad only” trip to Tamarindo, and a nine day National Parks tour out West that started and finished in Las Vegas. We have gone back to Michigan quarterly and the whole family will stay in a beautiful house for a week this summer (while I’m at the hospital working 0800 to 1400).
At present, the income makes the budgeting less important. Of course, to be completely free, I’ll stop doing this work in a year or two, but it’s making the transition easy…and fun. I sound like we are sticking to a budget, but it’s pretty loose this year and next due to this income. We will have to tighten it up a bit when I’m not working at all.
Gracias. El viaje a Portugal y España será épico. Seré cuidadoso.
So many parallels… I, too, quit full-time work in my 50s and left the cold winters of the Midwest last October to move to NC and after a few months find work 2 days per week at a clinic in my specialty down the street. Sold off the 5400 sf doctor home to move into a 2100 sf home. We had considered 2 geographic areas of NC, the Asheville region and RTP, ultimately choosing the latter area.
The McMansion to smaller house transition and the big important CMO job to “dude in the basement” is worth the new life and freedom.
I’m guessing it’s similar for you. Ties and dress pants to shorts and T-shirts. Huge fixed expenses and taxes to more discretionary $$.
I love our new life. I’m happy for you. Best wishes in the sun and mountains.
For those who don’t know: The towns and cities that surround Research Triangle Park are Raleigh, Cary, Apex, Holly Springs, Wake Forest, Durham, and Chapel Hill, North Carolina. Raleigh is the biggest city within 30 minutes of Research Triangle Park and also happens to be the Capital of North Carolina.
Congratulations, sounds fantastic. Very similar situations, except the finances work out differently, and location choice has everything to do with staying in relative proximity to family. . 64, two psychiatrists in private practice, moving from NYC metro to PA near family. We have family and friends in both places Have a nice house, not McMansion, but beautiful wooded privacy, high taxes, high COL.
In moving, able to buy a beautiful upgraded larger house on a large property, with privacy, rolling hills, long lines of sight, gorgeous pool. Property and state income taxes are much lower, and home purchase was close to a swap.
Both continue to work 15-20 hours from home by choice (not sure yet whether that will be over 2 or 3 days weekly), generating 500-600k in income. ACA Insurance goes down from $2800/mo which includes our 19 and 26year old, to $2200/mo for just the 3 of us. 26 year old will pay for his own. Ridiculous prices, but manageable given income. When we stop working, we will be able to afford the expenses of the home from our 401k savings. After just having stopped disability, office rent, lowering malpractice premiums, tax benefits, and lower COL in general, financial situation is easier. And I get Medicare in a few months, wife in a year.
Most of all, I am excited to have a better balance for cooking, reading, writing, painting gardening, etc. Very excited, as this move and balance have been my hope and plan for a very long time.
That sounds like a well executed plan!
Get a nice house with a view in a beautiful area, drop many expenses, work two days a week, and live it up while you are able. Pursue wellness, gastronomy, travel, and other hobbies.
Drop out the two days when you want. Sounds a lot like our dealio.
Of course, I’m partial to this plan. Best wishes to you both. Have a blast this summer!
Thank you, and wishing you the same!
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