Counting down to retirement - so many choices!

[Mainuh]

Hello all,

 

New SKP members (ink is still wet on our membership number). We’re coming down the home stretch to an early retirement (hopefully) in our late 50’s. Hope to pull the plug at the end of 2015 and prep the house over the winter for a spring sale, find a nice 40’ Phaeton or similar MH and with any luck hit the road in late fall 2016. Wife is not ready or willing to consider full timing, but we’ll snowbird for 6 months or so and buy a smaller, perhaps seasonal home here in Maine to use as a base camp for warm weather operations… something we could buy outright with a low (<$125) monthly tax bill. We’ve been meeting with a retirement planner and created a budget to get a clearer picture. Have spent a lot of time searching here on budgets and trying to identify some of the costs we may not have considered. There is no doubt, there are an almost infinite number of details to consider.

 

I guess my biggest concerns are around insurance. For ourselves and the rig. We’ll be “paying ourselves” completely from savings/investments until we hit 62 (wife in 2019 and me in 2020). So if we draw $50K, it would appear with the Affordable care act (no political commentary needed), we’d be eligible for a little over $9K in subsidy which would put us under $5K/year or about $400/mo. Is anyone actually doing this and receiving the subsidy? Do you pay full cost up front and get reimbursed when you file that year’s taxes?

 

The other concern is purchase, registration & insuring a rig. We’re looking for something along the line of a 3-4 year old Tiffin 38-40 (Phaeton or bus if Tiffin). Don’t really want to register in Maine and pay 5.5% sales tax and a hefty excsise tax. Have read some of the domicile info and doesn’t seem to be any clear winner on it but TX and AZ seem to be promising. We will as mentioned likely still own property in Maine, but would only be there part of any year. I know insurance can vary widely based on where you call home, but what are you folks with a rig like I mentioned paying a year for coverage?

 

We will likely haul an enclosed trailer (yes, I do understand about some places not having room or a parking area, extra costs – but a good friend has been doing it for years and has never had problems after researching ahead and a “covered garage/workshop” on the road would be nice too when it works). Given that, and the fact that neither of our current cars can go 4 down, I’d like to have a 650# motorcycle in the trailer with the car. Seen a few trailers with a side door at the front to load toys. Any thoughts on a trailer like that? Hope to find some videos of loading and securing a mc and car in trailer to see what’s involved.

 

I will say I joined escapees after only a day or two reading the forums here. The quality of info and participants seemed wonderful and many benefits so didn’t hesitate to join! Thanks for any insights you might have on any of my rambling above. Meanwhile I'll continue seaching the previous posts here for a great wealth of info.

[Gannet]

In my opinion.

 

AZ is not a good choice. Pretty high income and sales taxes.

 

FL might be a better choice than TX, with one possible exception. FL and TX are about a wash as far as taxes go. FL is easier for licensing and vehicle issues. TX will require a special driver's license for a rig that size; FL does not. TX requires vehicle inspections, FL does not. FL may be slightly higher for vehicle insurance. The fly applies to the availability of health insurance that is "good" nationwide. Be sure to have a good idea of exactly what plan you will buy before committing to a domicile state. Consult with a specialist RV health insurance agent; there are a couple who work with Escapees.

 

Other states aren't worth considering if you're not on Medicare. Again, imo.

 

Good luck!

[Gannet]

Try Kyle at this site. Super-helpful AND knowledgeable. Full-timers (yes, even maybe-snowbirds) insurance is very specialized. The vast majority of agents won't understand that situation ime.

 

http://rverhealthinsurance.com/

[skp51443]

We tried AZ as full timers, moved to SD and saved a pile of money. These days TX is probably a better option or if you go east FL. Escapees can set you up with a domicile and mail service in either TX or FL that will take care of that.

 

Be careful to keep your stays in AZ under the limit, Maine might have something similar but with any time spent in other states that shouldn't be a big deal.

[Kirk W]

It is great having you as part of the forums and also as a new member of our club! Let me offer this welcome and also an invitation to join us in Tucson next March for the annual Escapade!

 

In reading through your post I am just a little bit concerned about your plans with regard to domicile. You need to make a break with Maine if you intend to have your domicile in some other state. Reading your plans it sounds as though you intend to spend much of the year in Maine and I suspect you also plan to keep all of your business connections there as well. Coming from a state that has an income tax you can expect that they will be checking to be sure that you actually leave Maine in changing your domicile. You state that you will "snowbird for 6 months or so" and then return to buy another home in Maine. I suggest that you read some articles about the issue of domicile, starting with this one which I wrote and also Defining Your Domicile in the May/June Escapees Magazine, You may also want to read How to Become a Real Texan from the Escapees RV Club. It is important to remember that if you license your vehicles and then take them back to Maine to store them, you may become a target for the code enforcement officers.

 

On the healthcare issue, make sure that the rules are the same for income from investments as for income from a salary. I don't know that it isn't, but in many other areas it is not treated in the same way so be careful. I was already on Medicare before the current bill was enacted so have not gone through this, so am only offering a suggestion and not advice. On your RV insurance, since you plan to sell the present house before you hit the road, you should consider getting a full-time clause on your policy to cover those things usually covered by home owner's insurance. I suggest that you contact one or more of these agencies for advice.

 

Miller Insurance RV Advantage Foremost Insurance

[kb0zke]

Welcome, Don. Kirk raises some excellent points that you will need to consider. Some time with an attorney and tax adviser will be money well spent. I'm NOT either, but I would wonder if you really have left Maine if you still own property there. You might want to consider selling your current property, taking the money out of state (maybe using it to open a bank account in Florida, Texas, or South Dakota), and then buying property in Maine after a few months of not owning property there. Perhaps some sort of time share might work for you, since you could perhaps consider it as rental property. As I said, I'm not an attorney or tax advisor, so I don't know what you should do other than do some research.

 

As for which state to choose for your domicile, again, do some research. If you are going to spend your time traveling between Maine and Florida, for example, Florida would make more sense for a domicile than the other two. If you are frequently traveling between Maine and Arizona, then perhaps South Dakota or Texas may make sense. Only you can that call.

 

You can have your mail forwarding service anywhere, but most people find that it is easier to have it in the same state as their domicile. Again, you have lots of choices and you need to do the research to find the service that best fits you.

[Mainuh]

Hi gang,

Thanks for the replies so far. I have read your articles Kirk. And thanks for all the time and effort you obviously put into them! We plan to be up "north" 5-6 months of the year. Not even necessarliy living at the Maine house all that time. I have family in Nova Scotia and may well spend several weeks there as well as other parts of New England and Canada. For that matter, we've owned property in NH for many years now, but it's certainly not my domicile. I guess NH isn't considered as a good domicile even with no sales tax for other reasons? We are working now with a retirement planner, but probably need to consult a tax attorney as well to make sure we're doing all the right things. Thinking Florida for domicile at this point. The wife simply will not "let go" of the 4 walls of an S&B. But the sale of the house we're in now, should easily allow us to pay cash for something perhaps 3 seasonal, maybe near a lake or the ocean as well as cover all or most of a late model used DP.

 

As far as income from investments, we'll ask again, but have discussed that with the retirement planner. Looking forward to dropping down to the 15% bracket! If we're drawing off $55K to live off, that's our income. Right now, no other plans to work, although it's possible that could change, but I don't envision needing more money so the investment draw could be lowered if other income were realized. We will check closer on the ACA and how it works while living off investments...

So Kirk, I'm not sure I understand your concerns over our domicile. How would this be any different than anyone else, including full timers who retain property in the state they once lived in full time? Let's set a different scenario and say I don't sell my current house. Even by the definition in your article, it really just sounds like I change some paperwork, register to vote, register vehicles and declare Florida domicile, then FLorida it is... I don't see any conditions that say if you own property elsewhere or retain property already owned you can't claim domicile in another state. So if that's accurate, what's the concern? Until we sell the RV sometime down the road, tthe tax collector isn't likely to find us sitting at our Maine property on the front porch in a rocking chair. When we hang up the keys for good, then we'll change the domicile again... most likely back to Maine or wherever our daughter settles as the wife wants to be close to any potential grand children. Like most everyone else, the domicile thing is largely for the benefit of registration costs, sales tax and inspections on the motorhome. Making all of them as inexpensive and infrequent as possible.

 

Dave: Thanks for the welcome. FYI, I am N1AO. Curious if you do anything radio wise from your rig? I've sold all my HF gear (mainly did CW), but still have a 2m/440 and contemplating whether or not to keep it.

[LindaH]

 

AZ is not a good choice. Pretty high income and sales taxes.

 

Income tax in AZ isn't too bad...at least wasn't when we used to live there. However, licensing fees for autos and RVs are a killer! When we bought the motorhome in my signature this past December, we looked into moving back to the state, but quickly gave that idea up when we calculated that licensing fees just for the motorhome would be in excess of $1,600 per year!

 

 

 

How would this be any different than anyone else, including full timers who retain property in the state they once lived in full time? Let's set a different scenario and say I don't sell my current house. Even by the definition in your article, it really just sounds like I change some paperwork, register to vote, register vehicles and declare Florida domicile, then FLorida it is... I don't see any conditions that say if you own property elsewhere or retain property already owned you can't claim domicile in another state. So if that's accurate, what's the concern?

 

The concern would be the amount of time you spend in Maine. All states have a time limit, after which visitors are considered residents and are expected to get driver's licenses and register their vehicles. In Arizona, for example, that time limit is 180 days (unless you take gainful employment...then it lessens to something like 30 days).

 

I don't know what the time limit is in Maine, but you should find out and make sure you don't spend a day over that time limit in the state. And make sure you can document how much time you are in or out of the state in case you are ever questioned.

[Mainuh]

I'll have to spend some more time reviewing this, but here's document for those looking for definition of a "Maine resident" and domicile:

http://www.maine.gov/revenue/incomeestate/guidance/Residency_Guide_12.htm

 

It's got a pretty detailed section on domicile status. Note the FAQ questions at the bottom. It would seem to me that you have to very clearly establish domicile elsewhere. The fact I may still own property there doesn't necessarily make it my domicile if I've done the required steps to make domicile elsewhere. But I could easily be missing something.

[Jack Mayer]

Don,

 

On the ACA issue.....it is a mess. Finding a nationwide PPO is the biggest issue. We are TX domiciled and I have BCBS under a subsidised ACA plan acquired on the Exchange. You MUST get the plan off the Exchange, as far as I can tell, if you want a subsidy (and that does make sense). You can reduce your monthly payment at any rate up to the amount of your "subsidy". You do that when you set up the plan on the exchange. I took less than I could have because if something is messed up I did not want to have to pay back all of it in one lump. So, as an example, although I might qualify for a $300 subsidy, I only specified reducing my monthly payment by $150. I will get the rest at tax time if I still qualify. So my payment to BCBS that is directly pulled from my bank account is reduced.The numbers are an example, not my real numbers. I took this route mostly because this was the first year and things were not clear - at least to me. I will say the BCBS, at least this first year, has so many billing issues that it is perhaps questionable using them at ALL for ANYTHING. I have literally spent in excess of 40 hours on the phone with them and they STILL cannot get my billing right. Frankly, if there was an alternative to them in TX for a PPO with a wide network I would leave them. (Note: the billing issues with BCBS have nothing to do with the ACA or the Exchange...and everything to do with BCBS. My exchange stuff was correct from the start and remains correct.)

[Kirk W]

Don, on the domicile change, it is very true that owning property in a state does not make that your domicile. What does so is determined by the laws of each state that you spend time in, legally speaking. If you should ever go to court over the issue the courts look at where you do all sorts of things, with most considering every thing you do including shopping, doctor/dentist visits, banking, and just about anything that either attorney chooses to bring up in an effort to prove his point. I have done a lot of digging on the subject and it is not a clear-cut thing and has never been to the US Supreme Court so there is no clear ruling to cover everyone. Based upon what you have said I see two potential sources of a possible challenge worth being concerned about. The first is the Maine income tax people loosing revenue and the other is the code enforcement people over spending too long with vehicles licensed out of state at a Maine address. I don't know how aggressive either of these agencies are in Maine and that plays a big part in how likely you are to experience a challenge. For these reasons that I would be very careful in your actions, as much to avoid that challenge as to be able to win if it should happen. If you have an attorney, I suggest that you discuss this before you make the change.

[JRP]

Don, Welcome, and you're correct that just owning the property does not by itself effect domicile. There are several of us who own property in multiple states while fulltiming and using a different state for domicile. The concerns are your initial timing, and how much time you spend "living" in Maine each year. To accomplish the initial change of domicile without dispute from Maine, it would be better for you to be out of Maine for an extended duration when you claim your initial change of domicile. Many folks get into trouble when trying to claim their domicile changed, but they remain living in the same house, same state that has been their domicile for years. After that initial year, going back occasionally for short term stays shouldn't create an issue.

 

As far as the tax issue, it wasn't clear. But what many get hung up on, is that if you live too long in one state, or if you take paid employment is a state, you can become a Part Year Tax Resident of that state (even though your domicile may remain in another state). As a part year tax resident you owe state taxes not only on any earned income from working within that state, but also a portion of all your non-earned passive income for the year, like interest, dividends, etc.

[Al F]

In the last day or so the incoming congressional leaders are vowing to change the ACA. With one of their key agendas being a reduction in government spending, I wonder if that will include cutting or eliminating the subsidies

[Clay L]

Regarding your question about NH.

The yearly cost for car and motor home plates is exorbitant. I paid almost $2000 for my 1999 car and 2004 motor home in 2004.

They also tax interest and dividend income. I had to pay them money in years when I didn't have enough total income to have to file a federal income tax form.

We moved to SD which has no income tax and no tax on interest or dividends. The combined yearly cost for plates in 2005 was about $186. It increased slowly for for nine years until it reached about $250 the year (2013) we moved to CO .

[Daveh]

The ACA is threatened both by the recent elections and the Supreme Court's decision today to review the wording of the Act regarding the permissability of the federal exchanges. The only thing the congress can do in the next two years is to go after the subsidies. I suspect this is not going to go over well in the states where the ACA is already established but we shoulld certainly expect to see defunding legislation in the near future. This new Supreme Court case does not have the merit of even the first one but just the fact the Supreme Court decided to hear the case is concerning (probably another situation where Chief Justice Roberts will be the deciding vote). I suspect that even if the legal basis for the federal exchanges is overturned by the Supreme Court, the States with the exchanges already well established will find a way to continue them. However that leaves even more of a state by stae mess than we have right now for fulltimers.

[Vladimir]

Wife is not ready or willing to consider full timing, but we’ll snowbird for 6 months or so and buy a smaller, perhaps seasonal home here in Maine to use as a base camp for warm weather operations…

We found that we would rather have a "winter" home and sunbird during the summer months.

 

Your mileage may vary. But as a Forester we really enjoy exploring the National Forests and public lands up north. Snowbirding is really more about the weather than anything else. I do like doing astronomy during the winter months in the southwest, but all the other activities take place during spring, summer, and fall up north.

 

We found we did LESS traveling during the summer months since we stayed home to "fix and repair" and run our vacation home business.

 

If we had to do it again, we would head own a home in Arizona and head north every spring!!

[sandsys]

One of the things about domicile is you are now required to sign a statement saying you plan to settle in the new state when you are done traveling. For those of us who had no idea where we would eventually settle that seemed a small risk. You clearly plan to return to Maine unless your daughter makes somewhere else desirable. You also chose a Maine name to use on this forum which indicates you link your identity strongly with that state. However, if you buy a 3-season vacation home there rather than a 4-season house that makes your intent to not live there be a little stronger. Will you be changing your doctors/bankers/lawyers including changing your wills/health care directives/etc. to comply with your domicile state? All of these things may be taken into consideration if you ever have to defend your domicile status. "Moving" just to avoid taxes is not advisable as that could be considered evasion. It could well turn out to be cheaper to stay residents of Maine rather than risk the costs and potential penalties of defending against Maine tax collectors.

 

Linda Sand

[Mainuh]

Income tax in AZ isn't too bad...at least wasn't when we used to live there. However, licensing fees for autos and RVs are a killer! When we bought the motorhome in my signature this past December, we looked into moving back to the state, but quickly gave that idea up when we calculated that licensing fees just for the motorhome would be in excess of $1,600 per year!

 

The concern would be the amount of time you spend in Maine. All states have a time limit, after which visitors are considered residents and are expected to get driver's licenses and register their vehicles. In Arizona, for example, that time limit is 180 days (unless you take gainful employment...then it lessens to something like 30 days).

 

I don't know what the time limit is in Maine, but you should find out and make sure you don't spend a day over that time limit in the state. And make sure you can document how much time you are in or out of the state in case you are ever questioned.

Hi Linda,

 

Maine's domicile regulation (I posted a link to it for others) suggests 183 days. I'm sure we won't be here more than that while snowbirding. Their criteria seem pretty straight forward and easy to comply with. I also have relatives in Nova Scotia where my grandfather came from and can see spending a fair amount of time in NS. we also have a camp in NH and talked today about modifying the driveway there and adding a 50amp hookup to spend some time there. So any place in Maine would only likely see a few weeks here and there between nh, Nova Scotia and other New England campgrounds.

 

It looks like Florida may be the choice but have to do a comparison between SD, TX & FL to be certain. Who knows where the ACA and health care will be in a year or so when we are ready to cut loose... Looking at it today, FL is far cheaper than ME on several fronts. We actually are part owners of a home there in FL as well (my mother in laws estate).

[Kirk W]

One of the things about domicile is you are now required to sign a statement saying you plan to settle in the new state when you are done traveling.

Tell me more about this as it is completely new to me. I do believe that I've read that Florida now has such a provision as they also have a process designed to work for their large seasonal & retired population, but in the extensive research that I did on the subject of domicile I never found anywhere that had such a requirement, but it has been a few years since I did that research. I'd appreciate it if you could point me to the states which have that requirement.

 

Statement or not, the legal definition of the term domicile, as used by the courts does include the intention to return.

 

In a strict and legal sense, that is properly the domicile of a person where he has his true, fixed, permanent home and principal establishment, and to which, whenever he is absent, he has the intention of returning. Anderson v. Anderson, 42 Vt. 350, 1Am.

Law Dictionary: What is DOMICILE? definition of DOMICILE (Black's Law Dictionary)

[Jack Mayer]

Kirk, in settling my fathers estate I had to sign a domicile "verification" certificate for Merrill Lynch and have it notarized. This is definitely new, because I did not have to do that with ML two years ago when I probated my mothers estate. For those of you that dislike government "intrusion" it pretty much had all the info on it you would find intrusive. SSN, DL number, address, length of time at that address, PREVIOUS address, length of time at that previous address, phone number, PREVIOUS phone number. Don't want to submit it? Then they will not process ANYTHING for you. BTW, this form does not look like a common ML form...I'm very familiar with what they typically ask for and the formats of it. The financial guy just says that it is "required" to do anything...that if it is not submitted and approved they cannot process any paperwork even on an existing account. Interestingly, I have not been required YET to submit such paperwork for my personal accounts. That may happen if I do an account change, though.

 

It is not clear YET if they are going to accept the Escapees address. It is still in the mail. If I had to guess...I would guess that the Escapees address will be an issue because it does come up in the common mailing databases as a mail forwarding service. I would bet that I get pinged on it. Then the fun starts.

[budeneighe]

Protectionism run amok!

[Kirk W]

Jack, that sounds like company regulations that they base on the legal departments guidelines intended to avoid problems with the feds. I'd be very surprised if it has anything to do with state laws. What state is the estate in? If the only place asking for that was M/L then I doubt it is a state issue. Domicile has always been a rather muddy issue because of it's being a legal term that very few states address but is the culmination of the total of all living activities. It would simplify things tremendously if each state were to accept some uniform standard, and that standard were then confirmed by the federal government. As much as I do not like shifting more powers from the states to the feds, there are many things in life that would be less complicated if uniform across all states and especially so for the RV fulltimer.

[Jack Mayer]

Kirk, it is AL.

 

I agree that it is likely ML doing it, but we will see what happens with others over time.

 

There is no "practical" sense resisting the form, because they have all the power. You will just hurt yourself. It IS practical to resist this stuff at a more national level. And I do all I can in that regard. Not to get political, because it is both parties - but there is WAY too much power being transferred from both the individual and the state to the Feds. I'll leave it at that.

[Mainuh]

Kirk, Jack & all,

An update on things. Since last post we have hired a 2nd CFP and gotten the 2nd opinion on finances and it was (thankfully) a "concur". So... plans to retire in 2016 are moving forward. A new twist to the equation which should simplify things considerably is that the wife came up with the thought of not replacing our house in Maine when we sell the current one in 2016. After the really crappy winter we had this year, we don't want to be worrying about getting 1-3' of snow every 2-3 days for weeks on end like we had this season. So now comes the dilemma of what to do with everything. Right now a storage unit being discussed. But the good news is a house just like ours a few doors away just sold in about 10 days. So not too worried about selling when the time comes. We had a great trip to AZ in March (unfortunately about a week after the Escapee rally - even though we were in Tucson). We rented an RV for a week and stayed on a friends lot in Catalina which can accommodate 3 RV's easily. We looked at RV's in Tucson & Mesa and saw some floor plans we really liked and were pleasantly surprised what we should be able to get in the price range we are looking at.

 

Currently wrestling with our 2 cars... neither of which can be towed 4 down, and one would have to be trailered. Wife's Subaru Outback would be a great vehicle to explore in but AWD with CVT means it can't even go on a dolly... trailer or nothing. My friend in AZ loves his enclosed trailer and uses it as a garage and work space all the time. The wife could also use it for her quilting efforts and have lots of room to spread out. Many forum respondents are very gloom & certain doom on towing trailers, but my buddy says he's never been charged extra and never not been able to have it onsite with him or paid extra. But I have a motorcycle I want to bring it along too. I know about lifts, but thinking about the car & bike in the enclosed trailer. Plenty of time left to explore options but the variables seem endless.

 

Still examining all the healthcare options and issues too... I'll be 58 and the wife 59 when we hit the road on late fall 16. Excited to finally have a countdown date. I'll retire at the end of January 16, and the wife a few months after. I'll be spending the late winter and spring getting the house ready to sell and RV shopping as well as hosting yard sales! :-) Already started selling off miscellaneous things from the garage etc... Makes it seem a little more real. <200 work days remain!

 

[Kirk W]

An update on things. ..............A new twist to the equation which should simplify things considerably is that the wife came up with the thought of not replacing our house in Maine when we sell the current one in 2016.

Thanks for returning with an update! We do appreciate knowing what happens next once we get involved in these discussions. For many of us it is kind of like getting to go through our initial experiences again by helping someone else to find their way. Each experience is a little different so it never seems to get old. I still get excited with great sense of anticipation when I share those late stages of planning and first days on the road. Both Pam & I still consider that to have been one of the most exciting and best periods of our lives!

 

I may be prejudiced because it was what we did, but I really think that for many(if not most) who go on the road there is a huge advantage to not owning any stick house, anywhere. We spent time on that issue also, but since we eventually stayed on the road for nearly 12 years and when we did settle it was in a completely different location.

 

On the car issue, most of us tend to think the method we found to work for us is best, and I'm not exception to that. I'd not want to do the trailer method but that doesn't make it the wrong answer for you. Health care is the next major step that I would work on as it is one of the biggest financial issues for most of us. Since you have made the decision not to keep a stick house you may want to consider changing your domicile as well. In that vein I suggest you read this article for a previous issue of Escapee's Magazine several years back.