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THE GOOD LIFE: BUYING A HOME AFTER RETIREMENT
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If you’re still 20 to 30 years away from retiring, should you already be thinking about buying a retirement property?
In a survey conducted by USA Today, 33% of adults aged 45 to 65 plan on moving after retiring. An additional 24% are not sure what they will do yet. This data suggests that, for many Americans, housing is a factor that should be taken into careful consideration when planning for retirement.
BUYING A HOME AFTER RETIREMENT: WHY YOU SHOULDN'T WAIT
Even if retirement is far off in the future for you, there’s no better time than the present to arrange your retirement housing. This is especially true if you plan to take out a mortgage to finance your purchase. Buying a home early, rather than after you retire, brings about a myriad of benefits. First, applicants generally have an easier time getting approved for a mortgage while they’re still fully employed. Taking out a mortgage now allows you to lock in a low interest rate and get a head start on paying off your mortgage. Going through the process of buying a retirement home early also gives you plenty of time to save up for any renovations or updates that you might need in the future. Finally, there are ample benefits to reap from an investment standpoint, to be discussed later on.
BUYING YOUR DREAM RETIREMENT HOME: 10 TIPS FOR SUCCESS
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Regardless of whether you’re considering buying a retirement home in Costa Rica, Arizona, or Colorado, you’ll want to make sure that you have a plan in place. So many retirees make the mistake of buying what they think is their dream home, only to find that it doesn’t fit their new lifestyle at all. Follow these ten steps to make sure that buying a home after retirement does, in fact, feel like a dream.
TALK TO YOUR SIGNIFICANT OTHER
If you have a significant other, it’s important to have a conversation about your desires. Don’t assume that you’re both on the same page. Have several talks about what kind of home and lifestyle you desire. This may require some compromise, but make sure to reach an agreement where you can both be happy.
TEST IT OUT
Whether you plan to move across the country or into a retirement community, make sure to test out your vision. Someone who likes the idea of living in a community might find that they don’t enjoy abiding by rules. Subsequently, someone who wants to move to Arizona may discover they don’t enjoy hot weather. Spend time visiting different retirement communities or vacationing in various destinations to find out what environment suits you best.
TAKE MOBILITY INTO CONSIDERATION
Make sure to factor in mobility when picking out a place to live. Assuming that you’ll always be able to drive is a mistake. Instead, be sure to measure walkability and the availability of public transportation. Ensure that you’ll be able to get to important places, such as the hospital or the grocery store, even without a car.
PAY ATTENTION TO ACCESSIBILITY
In addition to mobility, be sure to pay attention to accessibility when looking at properties. Single-story properties are a popular choice amongst retirees, as they cut out the need for stairs. Other features to look for include wide entryways and hallways, step-in showers, and rooms that provide enough space to move around in a walker or wheelchair. Even if accessibility is not a current concern, keep in mind that retrofitting a property to become wheelchair accessible can be very expensive.
REMEMBER YOUR FRIENDS AND FAMILY
Many people dream of retiring to a faraway destination, such as a beach town or even abroad. However, before you leave your old life behind, be sure to consider how big of an impact leaving your support network can have.
WORK OUT A POST-RETIREMENT BUDGET
Sit down with a financial advisor and work out a realistic post-retirement budget. Getting an idea of your monthly retirement income and expenses now can help you identify areas that need more preparation. This can also be a great time to look into passive income opportunities to help boost your post-retirement income.
BUY BASED ON YOUR FUTURE INCOME
For those buying a retirement home early, be sure to calculate how much house you can afford based on your post-retirement budget and not on your current income. Even if your monthly income were to stay roughly the same, the amount you can afford to spend on home-related expenses might change significantly.
ASSESS THE IMPACT ON YOUR TAXES
Be sure to take a look at the possible financial implications when planning to move to a new state or country. Some states have high property taxes, making your investment that much more expensive. Also, look into how your retirement income taxes and exemptions will be impacted based on your move.
BE REALISTIC ABOUT HOME-RELATED EXPENSES
Be sure to factor in home-related expenses when calculating your home-buying budget. Costs may increase or decrease based on the age and condition of the property, severity of the weather, or whether or not your future home is part of an HOA or retirement community.
MAKE A DOWN PAYMENT WISELY
Some individuals are tempted to put their life savings toward a down payment to lower their monthly mortgage payments. However, this strategy can lead you to be house rich and cash poor, leaving little wiggle room for unexpected expenses or emergencies. Sit down with your lender and financial advisor to choose the right mortgage option and debt structure that best suit your needs.
For more, visit: fortunebuilders.com
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