Funding Purchase of a New Home After Full Time RVing

mds1 · October 30, 2017

My wife and I are saving to go full time in an RV. For the sake of discussion, we are planning to stay on the road for at least six years. We know the time will come when we have to decide to move back into a sticks and bricks home, rent something or hopefully replace our RV.

What plan did you guys follow knowing you might be faced with maybe buying another home or a replacement RV in the future?

rynosback · October 30, 2017

Not sure what you are asking? Besides the answer of saving up for what ever you would want. Our plan is 10 years or more right now. Could even go more. Might even just move a couple times a year after 10 years. No real plans but exploring the US. If something needs to change, we will make a decision when needed.

Big Greg · October 31, 2017

That's where we are now after 10+ years on the road. We are planning on a 55+ community in FL next year as we like water and green vegetation not the desert. We like the AL gulf coast but there are very limited 55+ communities whereas FL has hundreds. To fund it we have saved and invested $$$ over the years to purchase a manufactured home, and the truck and fifth wheel will pay for some of it. Greg

gjhunter01 · October 31, 2017

We have a 12 year plan to full time and then settle down to a small house or condo somewhere. The plan includes living off the land via workamping, volunteering and just keeping expenses low. This has allowed us to save our pension and eventually SS which should cover most of our settling down cost.

Greg

Twotoes · October 31, 2017

I didn't sell my sticks and bricks when I went full time. I rented it out. When I am ready or need to get off the road I will either move back in or sell it and buy something else

Biker56 · October 31, 2017

I sold my home when I went Full Time 18 years and 2 days ago.
If I have to quit Full time it may be because I need a Nursing Home/assisted living help or need use of that prepaid small plot with the Memorial stone on it.

No plans to buy another S&B. If I can't take care of my MH then I sure couldn't a S&B.

mds1 · October 31, 2017

Excellent replies - thank you,

We are not yet full time but hope to make it at least a six year journey. We have ideas what we will do at the end of it all. So, after our stick and bricks sells we are placing some of the proceeds in savings/investments. Selling the truck and fifth wheel would be added to those funds. If we had to make the decision today we would most likely rent something (near a lake) to avoid the maintenance needs. We should be able to pay the rent from then current income.

But if we decided to buy a new sticks and bricks: To fund this we have a idea of what money we would have available six years from now. We looked at current real estate adds to find out what that money would buy today, less inflation, to make sure we could live in something similar. We also included what we thought we might need for furnishings and a new daily driver.

As a previous poster stated, we will make the decision if and when it comes. Personally, we are hoping to just replace the rig if necessary to stay on the road and decide later what to do.

One area I've not figured out is a withdrawal schedule for tax deferred investments as that effects taxes. But that's another topic.

Also have been keeping a list of what others did when they came off the road for ideas!

Big Greg · October 31, 2017

mds1, I use tax software on my PC to do my federal taxes (no state tax in SD) and then use it to input various amounts of money withdrawn from our IRAs to see how it affects federal taxes for a good idea on the next years federal tax. Greg

Kirk W · November 1, 2017

When we sold our house to go on the road our initial plan was to stay out for 10 years. We put the proceeds of our house sale into an investment fund for the eventual exit plan. After a time we adjusted the plan to 15 years or more but health and the vagaries of getting older jumped in our way and we left the road after 12 years, although we do still do some RV travels. Our plan was to look for senior housing and where we are today is an RV community made up of mostly former fulltimers.

mds1 · November 1, 2017

Thanks again for the replies. I told my wife one thing we should avoid once we come off the road is making a one time large withdrawal from our 401K plan for the purpose of buying a new home. For one, that would increase the portion of social security that is taxed that year.

So whatever we decide to keep in savings for a new home would preferably be a solid decision we plan to stick with.

Biker56 · November 1, 2017

10 hours ago, mds1 said:

I told my wife one thing we should avoid once we come off the road is making a one time large withdrawal from our 401K plan for the purpose of buying a new home. For one, that would increase the portion of social security that is taxed that year.

A big increase in Income will also affect what you pay on Part D the next year also.
I found that out after a 10 year 7% annuity ended. I didn't know about it. Should have taken some of the interest out every year to avoid the part D penalty.

Smitty77_7 · November 1, 2017

Lots of unknowns ahead, say 10-15 years out.

-What will property values be in a location a person maybe interested in coming off the road to?

-Or, what will rents be, same location?

-How will investments grow? And what could inflation do?

-How hard is it to get financing for a mortgage, in retirement? And what will rates be down the road?

These are just a few of the considerations. So far, we've kept both our rental home as well as our residence (Now our 'vacation' home, with MIL living in it.) in Southern California. Doubt we'll want to make either of these our 'forever' home. So as we travel, we keep looking at areas with the thought of 'Would we enjoy living in this location?'. We've a short list of cities and towns that have made out list so far.

We do like what I've coined 'Smart Debt' to my wife and family. Which in my vocabulary is a mortgage at low interest rates, and then paying off a mortgage with inflation adjusted dollars. While a the sometime retaining our funds in mostly tax free investments. So as we move along one these next 10+ or so years, we may go ahead and sell one of the Southern California Properties, roll the portion of the Capital Gains not covered by our one time $500K exemption, back into a property as a down payment (Avoid paying taxes on the portion GT $500K, and then taking out a mortgage at that time.) We can then either keep this location as our new 'vacation home', and or turn it into a rental until we're read to actually come off the road.

These are our current thoughts. And a Shout Out to the members, current and former, of Escapees - many times when researching for retirement. The need to have an Exit Strategy in place, was highly recommended... Great group of people, sharing their knowledge!!

Best to all,

Smitty

don&penny · November 3, 2017

On 10/31/2017 at 7:15 PM, mds1 said:

Thanks again for the replies. I told my wife one thing we should avoid once we come off the road is making a one time large withdrawal from our 401K plan for the purpose of buying a new home. For one, that would increase the portion of social security that is taxed that year.

So whatever we decide to keep in savings for a new home would preferably be a solid decision we plan to stick with.

You might consider "slowly" converting your traditional 401(k) money over to a Roth 401(k) (if your company provides/allows that option) or roll it over to a traditional IRA then "slowly" convert that to a Roth IRA. Either way, you will pay income tax on the amount you convert to a Roth as you do so, but will ultimately end up with it all available as tax free money when you withdraw it to use. I emphasize "slowly" so that you don't push yourself into a higher tax bracket when you do the conversion. It is legal to convert just a portion of your money each year and you can define the amount when you do it, thus letting you control your adjusted gross income to avoid the higher tax bracket.

The other benefit to the Roth is - if you find you do not need the money, there are no RMD's (Required Minimum Distributions) for you or your heirs, as there are on traditional accounts. The one draw back would be, if you need the money you roll over before 5 years have passed since you first deposited the money into the Roth account, you would have to pay taxes on the earnings too, but otherwise you do not pay taxes on the Roth earnings when you withdraw the money.

Don