There’s nothing quite like punching the time clock for the last time as you envision your golden years. People frequently start thinking about buying a home in retirement and/or relocating within their first few years of retirement.
However, you may overlook a number of frequent pitfalls that could make your real estate purchase a nightmare. Before you make that retirement real estate selection, consider the following factors.
YOUR FINANCIAL RESPONSIBILITY WILL BE MORE THAN YOUR MORTGAGE
The most desirable destinations for retirees also often have the greatest costs. Property taxes, maintenance fees, and homeowners association dues are examples of additional charges. Someone has to pay for that tennis court or golf course, and you can be sure it’s the residents.
Even if you’re downsizing to a condo, the grounds and common areas can come with costly fees. While this is a concern for any homeowner, it becomes even more dangerous for retirees on a fixed income.
If you plan to move, do your financial due research and learn about local taxes. Also, look into not only any costs linked with your home, but also whether there are any caps on how much they can climb.
IT’S POSSIBLE THAT YOUR FAVORITE VACATION SPOT DOESN’T OFFER THE BEST LIVING CONDITIONS
Many vacationers forget that part of what they enjoy about a certain area is that they are there for a reason. You’re less likely to care if there’s traffic, if service is slow, or if restaurants are pricey. You are, after all, on vacation. However, if you are trying to live in a tourist-heavy area, all of these tiny annoyances might become major roadblocks. Alternatively, you may discover that the establishment is virtually closed during the off-season, leaving you with few options for amusement or dining.
Spend a significant amount of time in your likely new place. You may even rent a long-term apartment to experience what it’s like to live in a city rather than a hotel. Even if you know where you want to go, renting for a bit can be a good idea.
YOUR AMENITIES REQUIREMENTS MIGHT CHANGE
You probably go to the doctor once a year, drive to the shop for groceries, and have a thriving social life centered on your coworkers. But as your demands change, you may find yourself relying on public transit because you can no longer drive. Or you may find yourself needing to see healthcare specialists more frequently than you would want.
Ask current retirees what services they utilize that you might not be aware of. And make sure your desired location has them. Determine whether you want a world-class healthcare system, convenient amenities and activities, or pleasant weather. Then look for a region that offers all of these things.
IT’S POSSIBLE THAT YOUR ABILITY TO NAVIGATE YOUR HOME WILL CHANGE AS WELL
According to the AARP, more than 90% of individuals want to age in place. This means that the vast majority of people aged 65 and up desire to spend their retirement years in their own homes and communities. Your ability to do so is determined by the state of your home.
After all, if you have a steep driveway or an upstairs bedroom, navigating the inclines may become more difficult as you age. And, as much as you enjoy gardening today, when you have less energy to dedicate to active gardening, those rose bushes may become a thorn in your side.
Examine the principles of “universal design,” which include things like a main-floor master suite, wider doorways, and step-free access. Consider how much gardening and home care you’ll want to perform in the future. In terms of space, less can be more.
IT’S IMPORTANT TO CONSIDER RESALE VALUE
Who cares about the school system now that your children are grown? Well, it appears like the next owner will. The same goes for any obsolete elements, such as a jumbled-up floor plan or massive built-in media cabinets.
Even if you don’t care about it, a solid school system and a growing neighborhood are always “must haves” when buying real estate. And, before you buy a house with an ugly or unusual feature that can’t be updated with a cosmetic fix, consider whether it will turn off the next buyer.
IT ISN’T ALWAYS BETTER TO BUY A HOUSE OUTRIGHT
Most retirees feel they don’t want to pay a mortgage, so they buy a house outright. However, because the assets are tethered to the residence, this turns them into “illiquid” assets. It would be wiser to take out a small mortgage with a low interest rate and invest the remainder of your money for a potentially better return.
Discuss your alternatives with a mortgage advisor and a financial planner. For both cash flow and tax reasons, a mortgage is sometimes the best option, but because everyone’s situation is different, these discussions should always be held with professionals who are familiar with your specific position.
What’s the bottom line? Keep in mind that you’re not just buying for today, but for a long time to come, and you want to be sure your home will be there to support you through the inevitable changes we all experience.
Summary: Buying A Home In Retirement
There’s nothing quite like punching the time clock for the last time as you envision your upcoming golden years. People frequently start thinking about downsizing and/or relocating within their first few years of retirement. However, in your haste, you may overlook a number of frequent pitfalls that could make your real estate purchase a nightmare.
If you have any questions about Buying A Home In Retirement contact me today.