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  #1  
Old 09-27-2014
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Funding retirement boat

This question is more of a finance question than pure boating but I know their are several SN members that are very savvy about accounting and finance and will understand the desire to get a retirement boat.

If someone had most of their capital tied up in real-estate and simple ira funds ie not cash what would be the best way or at least the issues involved in deciding how to fund the boat.

Home equity loan?
Take money from simple ira?
Boat loan?
Something else?

The problem is that the house holds most of the money.
If the house sells first then you have to rent and have to deal with leases until the boat is found and refit.
If you get the boat first it has to be funded somehow.
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Old 09-27-2014
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Re: Funding retirement boat

I don't like any of those options if you're talking about traditional "retirement" -- i.e. 60+ end of career move.

Turning any of your retirement investments into a boat seems like a bad move. House, IRA... Those took a long time to appreciate and own, and a boat is just a terrible "investment".

20s, 30s, sure you can do some financially risky stuff and recover.

We'll never buy a boat that can't be bought outright with cash.
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Old 09-27-2014
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Re: Funding retirement boat

David,

It all depends on what type/size of "retirement" boat you are talking about.

We bought our boat quite some time before we retired. Instead of moving up to a bigger boat, we were able to pay it off before we retired. Because we did NOT go big! The funds we would have used to go big, we put into savings. Now we use the interest from that savings to do other, off-boat trips. Think around Cape Horn, or China, and the like.

I would advise you to NOT NOT NOT sell the real estate!!

During our cruising we met a number of people who were "trapped" on there boats!! They could never sell it for what they paid for it, and didn't have the $ to return. They made fine plans to cruise, but never gave a thought of a bail out plan.

IF, you find a very good rental agency for the place, it will not only provide a way to stop cruising (when ever that time comes) but will provide an income stream for you as you cruise. That is how we handled it.

Good luck and hope it works out for you!

Greg
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Re: Funding retirement boat

Details really matter and we don't know a fraction of what someone would need to know in order to give you advice, which will get you advice all over the map. You should really lay out all your goals to an independent financial Planner, who can ask you the appropriate questions in confidence.

There are simply too many things to consider, too many questions to ask.
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Re: Funding retirement boat

Quote:
Originally Posted by caberg View Post
I don't like any of those options if you're talking about traditional "retirement" -- i.e. 60+ end of career move.

Turning any of your retirement investments into a boat seems like a bad move. House, IRA... Those took a long time to appreciate and own, and a boat is just a terrible "investment".

20s, 30s, sure you can do some financially risky stuff and recover.

We'll never buy a boat that can't be bought outright with cash.
Damn, and I was starting to think I was the ONLY person out there who thought like you, and Greg... :-)

Admittedly, my attitude is perhaps a bit more colored than most, by the simple fact that I own a home on the water... I love it here, and at this point in my life, I wouldn't want to have to settle for anything less. But if I sold my home to buy a larger boat, there would be no way I could ever afford to live on the water again, after I was done 'Living the Dream'... So, I'll be sticking with my 'Retirement Bungalow/Puny Boat 2-Fer', instead... :-)

But Tempest is right, there are so many variables that can apply to individual situations, anyone considering this really needs to lay it all out for a pro to evaluate...

it really is amazing, how little attention is given to this in most publications related to cruising. One of the few books I'm aware of that really addresses the long term financials is Jim Trefethen's THE CRUISING LIFE. I read it many years ago, but I recall his advice and plan seemed pretty sensible to me, at the time...

There was a thread about it here, several years ago:

The Cruising Life, by Jim Trefethen, and Cruising Financials
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Re: Funding retirement boat

Quote:
Originally Posted by Delezynski View Post

I would advise you to NOT NOT NOT sell the real estate!!

During our cruising we met a number of people who were "trapped" on there boats!! They could never sell it for what they paid for it, and didn't have the $ to return.
That depends. Do you want to go cruising, or live on dirt? You can't sail a house. Sure, a boat is a bad investment, but you need one to cruise. What to do?

We sold our home and went cruising. Got rid of everything that wouldn't fit on the boat. No storage building. Many others that we have met the past two years did the same thing. Others have a home, and cruise part time, so they have both.

We owned our boat before we sold the casa. Free and clear. Got the title here, tucked away. There is no way I'd go cruising if there was a note on the boat. Also wouldn't want to be dealing with the hassles of home ownership, with repairs, upkeep, and paying property taxes. I could not afford it, combined with maintenance on the boat.

*If* you own the boat outright, sell the home, settle any credit card debt, and have retirement income, you can sock away plenty for when you need to go back to living on land. Even now, tied up to a dock in Galveston, our cost of living is super cheap. $342.00/month for the slip...plus food and booze. Go cruising, take away the marina fee and spend on some diesel.

Not sure what your options are on acquiring the boat you want, which is the question, isn't it? You'll figure something out. You never know....you might find a private seller (no brokers) who would carry the note with a biggish down payment. That's what I did.

Thanks for buying us lunch in Marathon, David! It was great meeting you two. Now, get with it! We've been to the Bahamas twice, gone up to Georgia, and now back in Texas for a year since that lunch. Good luck man.

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Re: Funding retirement boat

my tactic would be to buy a big boat a few years before retirement. When you cast off, you'll only really have the boat note as a tax writeoff as your primary home will either be paid off or a rental property. A few years before retirement because when youre retired, good luck getting a loan without verifiable w2 income
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Re: Funding retirement boat

In your case perhaps you can look at a reverse mortgage on the house and/or property to fund the boat loan.
For me I cashed in everything, and then it was so much cash to buy and outfit the boat and an annuity; a monthly income for life. Split into two accounts, the annuity sends our living money to a money market account and the safety fund money going into an easily accessed savings account.
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Re: Funding retirement boat

I will say that I like to keep things simple. One step at a time, in the order that they need to be accomplished.

Without knowing your financials, I'll guess that you have a sequencing problem. Some may call it a critical path issue.

If your goal is to downsize and sell the house and it's contents and live on a boat for X number of years. Then do it. Sell the house, get rid of the stuff, invest the money, Rent in an area that has a lot of boats for sale, like Annapolis, don't sign a lease. get month to month. And start shopping for the boat, there's a boat show in 2 weeks.

The obstacle is the house, when you sell it, rent something small...like a studio!
If it doesn't fit in the Studio, it won't fit on the boat.
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Re: Funding retirement boat

I guess I am approaching this subject different.

As I see it, if you are renting a place to live in, you are doing two things. One, you are giving away money that could better be spent on the boat/cruising kitty. And two, you are paying some one else's mortgage for them.

We rented out our house, it went up & down in value, but some one else is still paying it off for us! It's now a revenue stream that pays us each month.

We found a good rental agency and they have helped us a lot. We just make sure to save part of the rent each month to cover the cost when renters move. For our house, we normally get a yearly lease and it's sure working good for us!

And I am not even bringing up the escalation in value over the years you cruise.

I once had a job that took me over seas. The money was GREAT and it sure looked fine. Many of my co workers thought it to big a hassle to keep or rent out there homes. So, they sold them. Saved the whole time they were working making the big $$$. Turns out, even making great money, NOT ONE OF THEM could afford to purchase there old house back!

I figure I'm not a teenager, so I can learn from other peoples mistakes.

Greg
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