Somewhere back in our ancient history (around 2014?) we started dreaming with a close friend about building a queer compound. For this post we’ll try to protect our friend’s anonymity and call him Markus. We’ve probably had the “queer compound conversation” with all of our closest friends over the years, but with this one friend those conversations were less playful and more serious. And as of this week, we actually got it done! Or at least we’re making great progress.
After Alison and I jumped into early retirement in 2018 we got even more serious about our queer compound idea and we started having regular brainstorming discussions every few months with Markus. At that point Alison and I figured it would take us at least 5 years just to get a detailed plan together, mostly because we wanted to spend our early retirement years traveling internationally as nomads. But things change and now we’re way ahead of that old schedule.
LGBTQ+ People and Old Age
In our financial coaching sessions we usually ask a question like this, What does financial preparedness for old age look like to you? Most of the people we talk too in our coaching sessions are on track to reach their own version of financial independence in due time. But they usually don’t have their life care financial needs factored into their retirement figures, so that’s something we encourage everyone to work on, no matter how young and healthy you might be right now.
We’ve also learned that many people simply can’t avoid debt since they continuously experience major financial obstacles throughout their lives, which causes real problems with people’s ability to save for the future. That’s especially true for LGBTQ+ people and people of color, including some of our own friends and chosen family. The reality is that lots of people in the USA are aging on their own without enough personal or financial support, and instead of planning a comfortable retirement they’re planning to work for their entire lives just so they can pay for their daily living expenses.
LGBTQ+ people tend to have lower incomes, higher debt, fewer career options (especially if they live in certain towns/cities/regions where discrimination is common), less job security, more exclusions from the world of personal finance, more challenges finding professionals to get sound financial advice from, and so on.
Alison and I are well aware of the fact that we’re living with extreme privilege at this point in our lives because we were able to save enough money to retire early. We are queer women but we are also privileged white women. I may not have started out with much privilege as a welfare kid with no decent parents to protect me, but I am definitely privileged now. Alison and I created an early retirement plan that included saving enough money to buy this new piece of property with cash using the proceeds from the condo we sold in Seattle. We’ll use our brokerage account to cover our living expenses basically forever, and we’ll preserve our Roth IRA’s until we’re elderly so we can self insure for our life care needs when we’re elderly. We used to feel bad that we weren’t high income earners but it turned out that in our case having middle incomes and high savings rates during our career years allowed us to save enough to retire early without needing to rely on Social Security. That’s reassuring since Alison and I could not live on our Social Security alone.
On the other hand, our new housemate Markus is a white gay man who spent most of his career years in lower cost of living areas with lower incomes. He made wise choices to keep his expenses low, saved consistently, and worked until a traditional retirement age to maximize his savings and his estimated Social Security benefits. Now that he’s retired Markus will use Social Security along with dividends from his portfolio to sustain him comfortably into the future. And because he unlocked the equity from his home, invested the proceeds, and moved to a new low cost of living location all in the last week, Markus has a strong enough portfolio to be able to self insure for his life care needs as well. And this is why we are so excited about our queer compound!
The three of us are building a coliving plan that combines individual financial sustainability with a sustainable community, and we’ll continue to change and update our plan at least annually. We’re also aware of the reality that the three of us are not the same age – I’m in my 40s, Alison is in her 50s, and Markus is in his 60s. By creating our queer compound we’re building a small community we can all rely on, and we’re also creating detailed financial readiness strategies for whatever life care needs our little community might have.
How’d we get here?
Step 1 – Have the Money Talk
First, Alison and I had a series of money talks on our own to discuss our personal goals and needs as a couple, because the health of our relationship comes first. We agreed that we do not want or need a home of our own to live in full time by ourselves. And we don’t need this compound to be our perfect forever home. Those decisions formed the foundation of our compound plan and helped us stay within our budget for our property purchase. Alison and I also decided that our queer compound is not intended to be an income earning rental property at this point. Alison and I own the property outright, and Markus has become our longterm renter. Our compound is designed to be a personal home for our chosen family, which allows all of us to have predictable housing costs and better control over our budgets. Since we don’t have a mortgage we don’t need to prioritize earning income from our personal home. Our goal is to charge our housemate a fixed rent amount that allows us to cover our utility costs and also help with maintenance costs. We’ll also benefit from a lot of conveniences and efficiencies by living communally, which is really appealing to all three of us.
At some point in the future Alison and I might consider turning this property into more of a traditional income earner by renting our living space out to someone else. We could decide to resume our international travels with longer trips again in the future when that feels safe and we love knowing that Markus will be here if we travel. He would be a very capable and trustworthy property manager in our absence, whether we rent our space out or not. Markus has been in our lives longer than most of our other friends and he is one of the people we trust and care most about on this earth, so we are very comfortable trusting him with our biggest asset. And at some point way down the road in the distant future when our family changes, we can turn the compound into two income earning rentals or sell it.
Second, the three of us had a series of money talks together to make sure everyone’s financial and emotional needs, goals, and concerns were clearly communicated and met. Communication is key! Alison and I had concerns about whether this arrangement would be stressful for our healthy marriage because we aren’t used to living full time with a third person. We also worried about the stresses we might be bringing to a really fabulous longterm friendship by intertwining money and personal living space with him. Markus worried about setting a budget that we could all live with longterm, but that turned out to be the easy part. We shared the details of our retirement budgets and reviewed portfolio numbers, and it didn’t take long for us to agree to the numbers. Markus was also really concerned about the idea that coliving would mean he’s dependent on us to some degree, and for a little while that was the primary topic of our planning discussions. Markus is the most independent person we know and he doesn’t like the idea of relying on anyone, but we’ve all reached the point where being able to depend on each other will be a major benefit. We know there will be challenges but we can face them together.
From the beginning of our planning discussions we all made it clear that having independence and alone time would be our top emotional priority, and we committed to creating our own separate spaces on the property. We also agreed that sticking to our budgets and making sure our housing costs are predictable and affordable would continue to be our top financial priority.
We’ve been friends for a long time and we’ve even traveled internationally together. But moving all three of us to the new AOC queer compound has created a situation where we’ll be sharing space and exchanging money on a monthly basis, and that will require a very different layer of trust and a whole bunch of new agreements. Most importantly, we know we chose the perfect person to be our housemate!
Step 2 – Find the Property
In 2019 we had some conversations with Vicki Robin at the Ecuador Chautauqua that we attended where Vicki was one of three amazing female presenters. Having a chance to chat with Vicki made our compound plan seem even more clear. We already considered Vicki to be a very important mentor just from reading her book, Your Money or Your Life, and following her blog but meeting her in person elevated things. Vicki’s comments and input on the topics of community, chosen family, and aging were profound and inspiring. All of a sudden it was even more clear that since we had reached financial independence we had the ability and maybe even the obligation to spend more of our time and money to benefit our community. We realized that week that we needed to make sure there were people in our daily lives who could depend on us. Since we had been spending most of our time traveling in other countries we didn’t feel like we were around enough for people to really depend on us. And though we loved our travels, we also wanted to be available in real life for the people we cared about. With all of these affirming messages we reached out to our dear friend Markus to ask a very direct question… “Are you serious about making our queer compound a reality?” His answer was, Yes! So we started planning to buy our future property right about now, in June of 2021.
Then in 2020 when Covid-19 was declared a pandemic we decided to stop traveling full time because it didn’t feel safe anymore and that’s when we really switched our focus to making our compound idea a reality. Covid-19 was the shock we needed to put our plan into action. I was having fun looking for property back in Washington State where we used to live and the three of us talked about buying a more rural piece of property where we could have two tiny homes, one for us and the other for Markus. We also talked about buying a duplex in the middle of a downtown area and we actually found one we liked. But then we decided we wanted to be closer to Alison’s mom in Arizona, and we also decided we were done with the limited sunlight and seasonal depression people often live with in Washington State. And as soon as we made that decision we found the right property In September of 2020 and bought it.
Step 3 – Capture our Housemate
Last week I dropped Alison off at the airport so she could fly four states away and be there in person to help Markus make the next big change in his life. He had just retired and sold his house and his U-Haul was ready to go as soon as Alison stepped off the plane. Markus was ready to start a new chapter with us.
Alison drove our friend’s car and Markus drove a big U-Haul filled with all of his favorite things, from camping gear to old family heirlooms. I had predicted it would take about four and a half days for them to get back here, but it only took them three days because they were very motivated. While they were driving I had time to do some last minute preparations at the house while I tracked their progress along the way, and I could tell after the first day that I would run out of time to finish some of the little projects I had in mind. Which was fine! When they arrived it seemed like we had finally achieved an almost mythical goal. And as we finished unloading our housemate’s U-Haul Alison and I had some serious dejavu!
Part of the strategy for making this queer compound idea happen for Markus was unlocking the equity in his home so he could invest those funds into a brokerage account. The timing for when he would quit his job and put his house on the market was something we had all been planning together for more than six months. Once we had his closing date locked into our schedule the last few steps seemed to happen very quickly. His house sale closed last week and now he has a portfolio and Social Security to sustain a comfortable retirement lifestyle for many years to come.
Today we had our first family financial meeting and we all committed to having those discussions weekly for now, though we’re assuming they’ll switch to monthly once we all settle in. Those family financial meetings will be immensely helpful as the future unfolds. We’ll discuss any needs and goals that relate to money and the health of our queer compound including our spending, budgets, portfolios, health care, and travel plans.
Step 4 – Enjoy Our New Queer Compound!
Alison and I are really excited to have our own home again, where I spend a lot of time working in the yard and Alison spends a lot of time tinkering in the house. We’re also spending lots of time with Alison’s mom since she lives only two and a half hours away. And we’re having a great time living with Markus. We’ve only been a coliving team for a week so far and this is still very new for all of us, but we’re having fun working out our systems for sharing space, meals, and money. We know things will change a lot over the next year as we finish more of our home remodel projects, and we’re all looking forward to getting enough projects finished so our housemate can adopt his next puppy!
A few people have already asked if there’s room for anyone else here at our fabulous new AOC queer compound, so in case you’re wondering there’s no room at the inn for more full time residents at this point. But you never know how things might change in the future.
Getting our homes updated and completed is a priority but the three of us are the most important part of our new queer compound. We’re a family! We’re happy to take things slow and be mindful about our spending because that gives us all plenty of time and energy to adapt to our new coliving situation. We’re having fun planning when we’ll have dinner together each week, and we’re making sure we prioritize our family meetings to talk about money as well as any concerns or ideas anyone has. We all have a lot to look forward to!
We are not certified financial professionals. For more information about us please read our Disclaimer.
Great idea. We have several child-free friends that have likewise talked about building an “old friends” compound in the future. But, our discussions all revolve around separate homes on the same property.
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Yes we have talked that way with a few of our other old friends as well and I could see evolving to that concept some day if we could work the bugs out. Our idea was about finding a bigger multi-acre property where we all could build our own homes more spread out from each other. Have you talked with your friends about how the property ownership would work? In our case we talked a bit about having a bigger property held in a trust between equal partners and those discussions added a layer of complication. If you have any fun ideas to share we’d love to hear what you’re thinking!
Nope, haven’t gotten to that level of discussion. Still just in the “wouldn’t it be cool” stage. But, if we do, I will let you know.
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Sounds good thanks!
This is so wonderful!!!! I’m curious about the structure of your living space and how you’re adapting together. How do you make sure it feels like Markus’s home too? I hope you share updates over time.
It’s so wonderful that you can expand your family this way. What a gift to all three of you!
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Thanks! We do plan to share updates if we can figure out what aspects are interesting and helpful for others. So far this feels almost experimental right now because it’s so new. As for the structure we were open to anything from a duplex to a rambler that we could divide in half. We decided to go with a small house for me and Alison with a separate “pa-in-law” suite that functions as a tiny house with its own entrance. We are all pretty excited so far!
That sounds like an ideal setup!!
I was really super interested in the cohousing model for a long time, and was even involved with a group that bought & built here in Portland. In the end, they were at first too pricy for me to afford, and then ran into some serious fiscal issues during the crash, and now I know someone who lives there and it seems kind of … messy. I like your micro take on this and think it’s more my style.
I can think of three people in my life who won’t have houses to sell and could probably use some kind of help with housing stability as they age, and who I’d enjoy having nearby but not inside my actual home. Right now I have no idea if something might fall together that would work for us, so I’d love to hear updates on how you manage expenses, division of labor, conversations around decisions – pretty much anything that comes up.
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It sounds like you have some great ideas ready in case the wind blows you towards some kind of coliving plan. I definitely plan to share those kinds of details about what we have going on here but if you ever have questions that haven’t been answered you can always send us an email and we can chat more directly too. 😁
I am so glad you found your ideal community. Since you mention a pa-in-law cottage, it sounds like Markus will have his own separate space with this setup and he can be an independent renter? So I am guessing the idea of sharing living space, meals etc on a daily basis rather than occasionally is more a choice than a strict necessity?
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Yes, he will have an independent space. We will come together several times a week to share meals, conversation or a movie. Whats most important is that we can be here for each other in good times and tough. We’re all not getting any younger and everyone should find their community as they age.
I love you that made your queer compound happen! Congratulations to all three of you!
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Thanks Sarah! So far so good here. Just getting settled in will take a long time which is good because it will keep us busy!
[…] forward to some alone time while Alison was gone helping our housemate drive a U-Haul back to our compound from a few states away. But literally 10 minutes after I got home I received a “prepare to […]
This is great! I’m in my late 30s and I have been trying to think of more creative ways to build community/close friends into my everyday life. It’s also a great idea for improving quality of life as you age. I’ve been trying to get more creative about solving for elder care and community to see if having kids is really something I want (rather than being the societal default to solve for these things).
One question about why you’re choosing to use your Roths to self-fund LTC? At the point you need LTC I would guess you should have sufficient medical deductions to cancel out tax on tax deferred distributions. I’m guessing you’ll be using the Roth along with tax deferred accounts to optimize medical deduction?
If you have any posts or insights on your self-funding strategy I would love to hear more on this from the tax and non-tax standpoint
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Hello Brandon, thanks for your comment. We were joking last night that you should win a prize for your question because it’s a good one! So the first beer is on us if we ever meet in real life. 😆 🥳
First about the compound idea… Things are going well with us and our housemate so far. His plan is to age in place here and we are thrilled to be able to support his wishes. A lot of planning went into this situation over many years to make sure it was right for each of us. We have figured out how to have privacy and independence, as well as community and close friends just a wall away. The trick is finding balance between independence and closeness, and I think we’re there now after about 6 months living here together. If you have friends you can imagine sharing with at this level, start talking and planning now!
About using Roth’s to self insure for our LTC needs… We don’t have a full post specifically on this topic yet, just a few mentions here and there as it comes up in real life for us. And we do have this topic on our list for a future post so stay tuned. But to answer your question, we’ve run calculations with each of our accounts (brokerage, IRA’s, and Roth’s) paying for LTC needs and using our Roth looks best for us. Using our Roth for LTC looks great because it helps us manage our overall tax obligations and there’s far more benefit to us that way rather than just optimizing medical deductions.
Using tax free Roth funds to pay for LTC needs would allow us to keep our total taxable income much lower while spending the same amount of dollars on medical and health related assistance. The proportion of the 7.5% exclusion would be smaller because we’re using Roth dollars and the remainder of our medical deduction would then be larger. After taking a larger deduction on a lower total taxable income number, our net taxes owed would be around half of what they would be if we used IRA’s. Also by using Roth dollars we’ll have an easier time avoiding an IRMAA surcharge on Medicare premiums. So for now based on all of the tests we’ve run we will plan to use our Roth accounts for LTC needs.
If you want to run some tests we’d recommend this link… https://www.dinkytown.net/java/1040-tax-calculator.html
Thanks for the response! If you’re ever traveling in the Washington, DC area please reach out. Would be great to meet up. Regarding LTC and taxes – that makes sense, especially since you’ve run scenarios. I think that question came to mind because I recently started the book “Tax Free Income for Life” by David McKnight. I can’t say that I recommend it because I’m not far enough into it, but it advocates for using insurance to mitigate potentially rising tax rates and the risk of outlasting your money. I figure its would be a good read since I can be biased against insurance. If you end up reading it too and want to compare notes, let me know.
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Oh, I will put that book on my list! Yes, that risk of outliving your money is a serious one, especially since we don’t have a crystal ball to see into the future. All we can do is develop our best estimates and keep evaluating as we move forward. And we would love a meetup in DC. We’ve only been there once and know there are many things we want to see around there. We really enjoyed talking through your comment. Cheers!!!
[…] And don’t forget inflation, because 2021 was a spectacular year for inflation on everything from food to lumber! We also experienced serious supply chain issues and material shortages for building our pa-in-law addition on the compound. Our contractor had to change suppliers and look for materials much further out of our local area, and the waiting times were surprisingly long for things like windows and doors. Everything cost more than the original estimates we set with our contractor back in February, but we planned for that possibility. And though we went over budget on the addition, we’re still on budget for total spending we had planned for the property. We decided to put off remodeling our fixer-upper for a bit so we could focus on finishing the pa-in-law. We improved the property and increased the overall value of the house. And most importantly, we accomplished our primary goal of setting up a co-living situation with our chosen family. […]
[…] and bonds ready, which funded our first year of retirement and helped with our construction here at The Compound last year as well. By January of 2022 we still have close to 3 years of living expenses ready for […]
[…] And we also created a new trust to hold our real estate and brokerage account since we now own a compound and our housemate and his puppy live here with us. Our housemate is 15 years older than I am and […]
[…] ready to focus our time, money, and energy on something unrelated to our compound. This year we want to focus on […]
[…] we just created a new Trust ourselves to hold our property and brokerage account since we built a compound and we want to protect our housemate’s right to live there if he outlives us. The drawback would […]
[…] down during the Covid pandemic, and spending all of last year taking responsibility for our compound. The logical next thing for us was to change direction again and create a new travel lifestyle that […]
[…] this year we were busy camping with our new trailer, and then we were busy improving our home and compound, and then we had that fabulous 3 week trip to Boston and Cape Cod in May where we hung out with […]