Ah. The retirement home. Every one of us has our own idea of what we would like to have in our perfect retirement house.
Unfortunately, what we want and what we should have are often dramatically different, if not diametrically opposed. We need to think about it, not as the 50- or 60-something we are today, but in the context of where we will be 10, 20, 30 years down the road.
This requires a bit of imagination, as well as some hard-headed proactive thinking. So what are the things that people approaching retirement should consider when buying your retirement home?
The logical first consideration for anyone thinking about their retirement home should be this:
If your house is paid for, you have family and friends close by, and are comfortable, maybe you are already in the perfect “retirement home” and don’t even know it.
Let’s say you live in Orange County, CA and all your relatives and friends are there. Maybe moving to Las Vegas isn’t the best idea.
“Hey, it’s only a 45 minute flight!” sounds good, but a 45 minute flight still requires foresight, planning, and budgeting. Not to mention, the travel day logistics of a 45 minute flight are much more involved than even a 4-hour drive.
In other words, you’re not as close as you think.
Is it better to think of your current domicile as your retirement “base,” and that travelling might be a better option?
Don’t dismiss your current situation out-of-hand.
If you believe “a rolling stone gathers no moss,” and know that you’ll be ready for new digs to go along with the new chapter in your life, then think about buying sooner rather than later.
A great way to approach the “buying early” strategy is to use the home as a vacation home for a few years. There are a number of advantages of buying early and using it as a vacation home:
The only way you’d know is to actually live there.
At a certain point, nobody wants to have a mortgage. The perception is that a mortgage limits your flexibility and adds an expense many retirees would prefer to do without.
Here, it’s important to meet with your financial advisor and take a look at the totality of your retirement assets. Just because you can buy your house with cash doesn’t mean you should. The last thing you want is to be “cash poor, land rich.”
Keep in mind, you can always rent the house to help defray the mortgage costs until you retire and sell your existing home.
Remember that in retirement cash equals flexibility.
There are a couple of things that retirement home buyers need to consider, in terms of location and function:
Again, be proactive in your thinking – plan for contingencies.
All of these are important reasons why those who are actively considering their post-retirement living arrangements should strongly consider buying that property sooner rather than later.
As noted above, there’s a lot to consider, so meet with your Certified Financial Planner™ to come up with a strategy.