Retirees living off their investments in expensive resort towns

[Anonymous]

Anonymous wrote:I would not move to high tax CA from a low tax area that seems dumb

Rich people don't do that. They own a very nice house in Newport Beach, Laguna Beach, or Pacific Palisades and only visit California less than 180 days per year. It's never their primary residence.

Mitt and Anne Romney have one of the nicest houses in La Jolla. But they are still tax and voting residents of Utah. Those two lead a great lifestyle - skiing in Utah, summer in La Jolla.

[Anonymous]

Anonymous wrote:I’m relatively wealthy and I live on a 50 foot Leopard catamaran for 8 months of the year sailing between various Caribbean islands. I change up my resort town every few weeks. It’s a great lifestyle as long as you are handy and can learn about weather. I see lots of cultures, do some great diving right from my boat, etc. I usually have the cat in Curacao during Hurricane season since the ABC islands rarely get hit by canes.

Cool story, Hansel.

[Anonymous]

Middle class people often have higher income on retirement.

By time I retire I will be doing 401k for 45 years. RMDs start at 72. Could be 3-5 million by then.

By then people have no mortgage or dependents so a no income tax state is needed.

[Anonymous]

Newport Beach is a wealthy area in general and many residents have lived there for years. You might just be seeing wealthy California people at lunch in a wealthy area. Not surprising that they’re still wealthy when they’re retirement age.

[Anonymous]

Anonymous wrote:I recently visited a resort town in Southern California. I noticed that the majority of the lunch crowd in high-end restaurants were happy, relaxed retirees.

I kept thinking, these are the people who have saved up or sold businesses in the flyover country, and are now living the high life. The employees serving them are those without investments.

I am 45, and I really hope to be one of those retirees one day.

No way. The flyover people stay in flyover states and travel a lot, or go to the west coast of Florida!

[Anonymous]

Anonymous wrote:OP here again. Just in case it wasn't obvious, I want to say that I was so envious! I know I shouldn't be, but I am.

Why are you envious? They are ALL old and likely have health issues. Lights going off soon.....

[Anonymous]

Anonymous wrote:OP here. It's not worth focusing on the "flyover country". The point is that these retirees are able to live the high life because of their ample investments. Well done, but so many young people are not and will not be able to accumulate and invest as much. Just look at the mortgage interest they are paying, if they are lucky enough to become homeowners.

No they most likely did very well on their home purchase in California and higher salaries with 401k. People in flyover country do not have the same return on property. For example in flyover country you buy a house from 70k in 1990 and sell it for 190k in 2023 vs California 215k(average house price in 1990) and sell it in 2023 750k(average house price). So higher return on a larger amount of money. Same with 401k before tax 10%(though about 75% of people do not have access to a 401k). People on the coast have higher average salaries and more likely to have a 401k.

The people you are seeing most likely did a lot better vs average. Like bought a home for 200k and sold it for 5 million plus. This happened to a fair amount of people I know. They were just in the right place at the right time.

[Anonymous]

Anonymous wrote:Middle class people often have higher income on retirement.

By time I retire I will be doing 401k for 45 years. RMDs start at 72. Could be 3-5 million by then.

By then people have no mortgage or dependents so a no income tax state is needed.

This is probably true for me, but I don't consider myself middle class—being able to max out a 401k every year, buy a house, and pay off the mortgage seems beyond middle class. I expect I'll have more disposable income later in life. We stretched to afford our house, maxed out 401ks, and saved aggressively in 529 plans. By the time my youngest goes to college, nothing will be left to save for or pay off.

[Anonymous]

Anonymous wrote:OP here. It's not worth focusing on the "flyover country". The point is that these retirees are able to live the high life because of their ample investments. Well done, but so many young people are not and will not be able to accumulate and invest as much. Just look at the mortgage interest they are paying, if they are lucky enough to become homeowners.

I’m one of those happy retirees. When I graduated from college, mortgage interest was @ 12%. I was almost 40 when I bought my first house, at interest rates that were about the same as today. My investments have been through at least three major stock market crashes, plus one that happened when I was first starting out and had almost nothing in the market (so I don’t count that). There are charts out there that show that young people have greater wealth at their age than boomers did at the same age. Most of those retirees worked hard and saved to get where they are. Today’s young people can do so, as well.

[Anonymous]

I get that there are challenges facing today's youth but there is also a never ending sense of entitlement and look at me culture that social media has fueled. People need to have the latest phones, best clothing and take lifetime trips in their 20s. I'm all for spending on experiences but please dont pretend that todays youth is any different than similar challenges that faced previous generations.

[Anonymous]

Newport Beach is just a really weird example for this thread.

If you knew the area, you would know that Orange County is very commercial. It's not like it's Carmel or an isolated beach town...it's all part of the Los Angeles Metropolitan area.

PIMCO, which is a huge money manager, is headquartered in Newport Beach and there are dozens of large companies, P/E groups, big CA law firms, etc. within commuting distance.

To try to give people some understanding...it's like saying I went to Potomac and saw all these wealthy old people having lunch on a Tuesday...and then assuming they made their $$$s elsewhere and moved to Potomac (which we all know is not what happened).

Again, wealthy people like to live in warm, sunny climates. Well, if you get wealthy living in that climate...you don't leave.

I do agree, that those people probably find a lower-tax state in which to get residency for 183 days per year. It's a no-brainer.