February 11, 2016

Could I Retire Today? - Feb. 2016 Edition

In August of 2014 I asked the question Could I Retire Today?    The answer was yes, but it would require us to move to my hometown where my dad still lives which has a cheaper cost of living and lower housing costs and rental returns.

A quick summary of that possible retirement scenario from 1.5 years ago was :
We would keep the rentals we jointly own with my father and try and beef up earnings on them by me helping my dad to renovate.
We'd sell all our other properties we own in our current city and move to my dad's city.
This would net us about 300k to spend on a house and some rentals.
I figured total income would end up about $33-42k including $12k from retirement accounts (using 72t early withdrawal) and a range of $21-30 from rentals.
I figured basic living expenses of about 25k which would give a good surplus.

That was the situation in 2014.

I took another look now and after some rough figuring, I think I could retire right now and stay in our current city.    To do it we would have to downgrade our current house to something cheaper.  We would also sell the out of town rentals and then pay off our mortgages.   In the end we'd end up with three paid off houses here.   That would include two houses we already own as rentals.    The two rentals would give us about $20k of income.    With the $12k from our retirement accounts we'd have about $32k annual income.   With the same $25k budget for basic expenses that would give us $7k a year for entertainment and margin.

I could modify the plan by keeping the rentals in my dads home town and using their income to continue to pay the mortgage on one of our current rentals.   That would be about a wash because the profit on those properties just about equals the mortgage interest and principal payments.   If I did that we'd avoid tax bills on those properties and I'd have the opportunity to spend some time in my dads town working on those properties to renovate them and improve their income.   And even if we didn't have any plan to keep those properties long term we could hang on to them until its more opportune to sell them.  

The only real change I'd have to do to switch to this kind of early retirement is to downgrade our current house into a cheaper home and then start drawing down retirement.


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