How much to spend on retirement boat

[Lioness]

A guideline

I’ve been buying and selling boats for my personal use for almost 50 years, 7 boats at last count. Ive paid cash and also financed, and as a CPA, I’ve come up with a guideline for myself.
Don’t spend more than 10% of your assets (excluding your home) on a boat. You’ll have just as much fun on any size boat, and my guess is you could survive a 10% decline in your nest egg.
I now cruise on a 49’ DeFever, but I had just as much fun on my 27’ Sea Sport. I’ve cruised the same places in the PNW and AK on both boats and the same amount of fun in both vessels. The only reason I’ve jumped up in size is that my partner has bad arthritis and the pounding and gymnastics of a small boat don’t work for her. What do I get for the greater length, lots of creature comforts, of course. More importantly I get gourmet meals and the wonderful companionship of my smiling and always enthusiastic wife of 40 years. And she gets seasick less often than me!
Regarding financing, I’m not a proponent, but that’s a personal decision, especially if you adhere to my 10% guideline.
Just go do it, and have fun!

 

[smitty477]

I’ve been buying and selling boats for my personal use for almost 50 years, 7 boats at last count. Ive paid cash and also financed, and as a CPA, I’ve come up with a guideline for myself.
Don’t spend more than 10% of your assets (excluding your home) on a boat. You’ll have just as much fun on any size boat, and my guess is you could survive a 10% decline in your nest egg.
I now cruise on a 49’ DeFever, but I had just as much fun on my 27’ Sea Sport. I’ve cruised the same places in the PNW and AK on both boats and the same amount of fun in both vessels. The only reason I’ve jumped up in size is that my partner has bad arthritis and the pounding and gymnastics of a small boat don’t work for her. What do I get for the greater length, lots of creature comforts, of course. More importantly I get gourmet meals and the wonderful companionship of my smiling and always enthusiastic wife of 40 years. And she gets seasick less often than me!
Regarding financing, I’m not a proponent, but that’s a personal decision, especially if you adhere to my 10% guideline.
Just go do it, and have fun!

"Don’t spend more than 10% of your assets (excluding your home) on a boat"

I am curious...when someone is approaching retirement as in this thread does the 10% rule generally still apply?
What about the fixed incomes (SS, pensions, annuities, etc) of these retired or nearly retired potential buyers , what role does that fixed income amount play?

 

[Lioness]

Hi Smitty,
Remember, my title was “a guideline”. While each situation is different, I’ll give you an example. Let’s say you have $15K in monthly income snd $500K in assets. I wouldn’t spend much more than 50K on a boat., because I wouldn’t feel comfortable risking more than 10% of my nest egg. Yes a bigger monthly income (especially if you keep personal expenses under control) would allow you to spend more on a boat, but the guideline for me is to keep financial commitments and risk within reason.
Everyone gets to assess their own risk tolerance, I’m just giving you my general guidance.
Most importantly, if you have the genetic deficiency that requires a boat in your life (I am so guilty of this) go for it now! Just keep things reasonable.

 

[SteveK]

"Don’t spend more than 10% of your assets (excluding your home) on a boat"

If you said 10% of your net worth that would make sense to me when purchasing a toy. But excluding your house, just 10% of all other assets does not readily compute.

 

[smitty477]

Hi Smitty,
Remember, my title was “a guideline”. While each situation is different, I’ll give you an example. Let’s say you have $15K in monthly income snd $500K in assets. I wouldn’t spend much more than 50K on a boat., because I wouldn’t feel comfortable risking more than 10% of my nest egg. Yes a bigger monthly income (especially if you keep personal expenses under control) would allow you to spend more on a boat, but the guideline for me is to keep financial commitments and risk within reason.
Everyone gets to assess their own risk tolerance, I’m just giving you my general guidance.
Most importantly, if you have the genetic deficiency that requires a boat in your life (I am so guilty of this) go for it now! Just keep things reasonable.

AOK - I understand that itys just a guideline just interesting. Since the initial post was about the selection method (at or near retirement) to judge how much $$ is appropriate this seemed to fit in.
My thoughts are that both expenses and fixed income play a huge role in that decision along with any other nest egg considerations. I now see situations where aquaintences with nearly the same nest egg are worlds apart in their ability to own a boat. In some cases that is not stopping them from aquiring the boat, some will have no issue at all and others are headed for the cliff.

 

[smitty477]

"Don’t spend more than 10% of your assets (excluding your home) on a boat"

If you said 10% of your net worth that would make sense to me when purchasing a toy. But excluding your house, just 10% of all other assets does not readily compute.

In my case I was asking about folks at or near retirement. In my view from the couples (or persons) costs and 'fixed' incomes play a larger role than the % of nest egg from what I am seeing with others.

 

[ScottC]

Another way to look at this...
If you are fortunate enough to have enough in your retirement nest egg to buy some simple, inflation-adjusted annuities that, together with Social Security (also inflation adjusted), cover your projected expenses in retirement, the remaining amount in your nest egg could be considered money to "play" with. You can buy (and maintain) a yacht with it or take other risks that otherwise might cause you to lose sleep at night.

For many years, I've had a fairly dim view of annuities. But, I've come to understand better that even in these low-interest-rate times, annuities come with an "actuarial benefit" that you can't get elsewhere. For quick, rough "what-if" calculations, you can use this:

https://www.immediateannuities.com/


And NO - I do not sell annuities or any financial instruments whatsoever.

 

[smitty477]

Another way to look at this...
If you are fortunate enough to have enough in your retirement nest egg to buy some simple, inflation-adjusted annuities that, together with Social Security (also inflation adjusted), cover your projected expenses in retirement, the remaining amount in your nest egg could be considered money to "play" with. You can buy (and maintain) a yacht with it or take other risks that otherwise might cause you to lose sleep at night.

For many years, I've had a fairly dim view of annuities. But, I've come to understand better that even in these low-interest rate times, annuities come with an "actuarial benefit" that you can't get elsewhere. For quick, rough "what-if" calculations, you can use this:

https://www.immediateannuities.com/


And NO - I do not sell annuities or any financial instruments whatsoever.

"Another way to look at this...
If you are fortunate enough to have enough in your retirement nest egg to buy some simple, inflation-adjusted annuities that"

I agree with most of this - at this time inflation adjusted annuities are rare and when available the rates are relatively low.
There are a number of folks who we know who have sufficient SS and/or pensions to accomplish the same goal.

 

[Dbnunn]

In my situation 75 and reasonably fit and healthy Dutch national resident in The Netherlands with :
Good retirement income, all paid up car(s) and house. Some shares for at least coming 5 years berth and service charges.
Proud owner paid up President 52, berthed in Spain currently which is "Code Orange" which means No Go unless Essential travel otherwise no Insurance cover and 14 days quarantine. Not able to visit whole 2020, local service looks after her and sends me the bill.
Semi lockdown situation which has no end in the short term. Apart from some time gardening and on the golf course bored. The admiral and myself are considered high risk due to age.
Consider a further 5 years active boating cruising life.
Currently negotiating the purchase of a Bayliner 3587 from 1997 which needs upgrading to be able to cross the North sea to cruise along south coast of the UK. Our future plan in a couple of years. This local buy with the upgrade work will keep us busy for the coming months = no longer bored.
If no Corona and say age up to 50 buying a second boat before selling the first one would be considered madness. Selling (with much regret) the President 52 is at this moment is No Go as buyers are not in Spain due to the enemy Corona.
We will take a small 20% mortgage, with 10 years fixed interest rate of 1.09% for the local buy anyone agree with me or are we mad

 

[ScottC]

I Dbnunn,


I totally understand and have had some similar thoughts. Our boat is in France and we are stuck in Sweden. Briefly considered buying a 23' speedboat to use for the short term, just to keep boredom away. But, as with the states, the boat and RV markets are red-hot here in Sweden and there are few non-project options available at reasonable prices. We are hoping to continue with our Mediterranean plans next year, so don't really want the long-term hassle and expense of owning two boats. It's very frustrating to own a boat, be retired, with all the time in the world...and not be able to use the boat :-(

 

[OldDan1943]

Hmmmm, is it possible to make a mid ocean of your boat?

Have your boat moved by a captain in the current country, meet them mid ocean, transfer the crew, taking charge of your vessel.
Expensive as hell but, a devious mind can always think of a solution.
Granted, it would take take 3 vessels.

 

[Irish Rambler]

Enjoy Gruissan ScottC.
We regularly drop in when cruising along the coast. (We have a berth in Narbonne up the canal du Robine).
Try a nice cool beer at one of the bars around the marina .
If you ask around and go and visit the salt museum, very interesting and if you like oysters there's a bar there too.

 

[Highwheeler]

What’s it going to cost you to own a boat?

As Art said, the maintenance is a significant issue to consider. Good rule of thumb 10% of the initial cost per year. $100,000.00 boat= $10,000. Per year ( if you are lucky and nothing Major breaks.

 

[ScottC]

Enjoy Gruissan ScottC.
We regularly drop in when cruising along the coast. (We have a berth in Narbonne up the canal du Robine).
Try a nice cool beer at one of the bars around the marina .
If you ask around and go and visit the salt museum, very interesting and if you like oysters there's a bar there too.

Thanks for the tips!!

 

[Bryant]

Retirement

As Art said, the maintenance is a significant issue to consider. Good rule of thumb 10% of the initial cost per year. $100,000.00 boat= $10,000. Per year ( if you are lucky and nothing Major breaks.

I think this is a bit of a misnomer. I'd call it "Cost of ownership", of which maintenance is a part. Your estimate is quite accurate but you also have to be able to add on to that annual figure potentially significant amounts to repair/replace failed systems just from normal operation. The bottom line is that probably the smallest cost of owning a boat is the initial purchase price. If you buy an older trawler for $100k and own it for 10 years, you will have spent much more on owning and operating it than you did in purchasing it.