Making the Right Housing Choice for Your Retirement Years
We partnered with a real estate company for this post. The opinions in the post are honest. All reviews and opinions expressed in this post are based on our personal views. We are excited because we know you will love it.
Investing in a retirement home is an important decision that will affect your lifestyle, financial security, and peace of mind. While you may be searching for ways to stay in your current location or seeking other opportunities, there are several factors that will influence your decision-making process.
Keep reading as this article will explore all you need to know, from factors to consider to pros and cons if you choose to rent or buy a property for retirement.
Factors to Consider When Choosing Your Retirement Home
Where you choose to live in retirement is crucial for your everyday experiences and overall long-term happiness. The following five items will assist you in evaluating prospective living locations and finding a place that best suits your needs.
1. Location and Proximity to Essentials
Consider how far away things that matter to you (family, hospitals, grocery stores, etc.) As we grow older, being near good quality health care is becoming a bigger factor than ever before.
Being able to get around without having to be concerned about getting from point "a" to point "b," and staying in touch with those who provide you emotional support are two big advantages of a conveniently located area.
2. Affordability and Ongoing Costs
Look at all the costs related to the house (or condo) you buy (and rent), as well as any costs for repairs and maintenance. As a homeowner, working with an Arlington property manager gives you access to trusted contractors and cost-effective repairs. With a property manager’s proactive help, you can be ahead of repair costs and other important factors, allowing you to plan early.
3. Maintenance Responsibilities
Be honest with yourself about how much work you are willing to do. With homeownership comes lawn care, leaky faucet fixes, and repairs. When renting, you have passed this responsibility to a landlord.
If you decide to buy, an Arlington property manager can assist with coordinating the maintenance of your home, allowing you to enjoy your new home without having to perform the physical labor to fix it yourself.
4. Accessibility and Aging in Place
Think about whether your house will work for you long-term. Consider a one-level design and include features such as wider doorways, no steps to enter, and bathroom designs that feature grab bars.
By planning, you can ensure you remain as comfortable as possible regardless of your future mobility limitations. It is also less expensive to plan ahead and make smart choices when purchasing a home versus the cost of retrofitting after you move into a new home.
5. Lifestyle and Community Fit
Your retirement home is a place where you can pursue your desired way of life. What type of neighborhood do you envision? Quiet suburban neighborhood? Walkable urban neighborhood? An active community with many opportunities to engage in hobbies and social events?
Your location will have an impact on your overall quality of life and daily experiences. Take time to visit the neighborhoods at different hours of the day to really experience the energy of the area.
Rent or Buy in Retirement: Pros and Cons Explained
Buying a home versus renting has financial implications for you in retirement. However, each choice provides different freedoms and a sense of peace in terms of your evolving lifestyle.
Here are the pros and cons of renting or buying a retirement home:
Pros and Cons of Buying in Retirement
Pros
Housing costs are fixed if you have a fixed-rate mortgage or have paid for your mortgage.
You can build equity and wealth from the value appreciation of your property.
You may receive tax deductions on your mortgage interest and property taxes.
You will have the ability to make modifications to your home as you see fit.
You will feel secure and at ease in your own surroundings and community.
Cons
Maintenance & repairs will be your responsibility.
Insurance & property taxes can be more expensive than expected.
Your wealth will be tied up in one less liquid asset.
If you need to move, selling a home is time-consuming and costly.
As you age, physical upkeep of the property may become challenging.
Pros and Cons of Renting in Retirement
What if you choose to rent a home during retirement instead of buying? Here are the benefits and disadvantages worth considering.
Pros
Maintenance is never a headache or a financial blow because of repairs.
You have the ability to relocate freely when your needs change
Your money will always be liquid and available for other things.
You will know exactly what your housing will cost annually (except annual rent increases).
Cons
Rent can go up every year, which makes budgeting difficult when you have the right amount you are paying every month.
You will never build equity or wealth while you rent.
If you rent and do not pay your rent, the landlord may proceed with the process of eviction.
There are many restrictions placed upon renters by landlords concerning changes made to their rental units.
Renting and buying can provide two different benefits, which are based on your needs and preferences. If you value having a stable place to live with the ability to customize it as you see fit, then owning a home is likely the best option for you.
If you value having the flexibility to move at any time without being tied down to a mortgage and prefer to avoid maintenance costs, then renting is likely the best option for you.
Understanding local housing options helps an Arlington property manager advise on whether to rent or buy in retirement.
Financial Planning Tips for a Comfortable Retirement Lifestyle
Smart financial planning is important to help your retirement years be comfortable and low-stress. The following will give you some ideas on how you can connect your housing decisions with the long-term financial picture.
1. Create a Realistic Retirement Budget
Determine what your retirement income will be by listing all of your expected income sources, then calculate what you expect to spend on housing, medical care, utility bills, groceries, and other items that you may want or need.
Creating a budget for your retirement will allow you to see if the housing you plan to purchase is affordable in the long run and will not require significant cutbacks in your standard of living as you age.
2. Factor in Healthcare and Long-Term Care
Medical costs are very likely to increase as we age. Review Medicare coverage and research possible supplemental insurance options. Assess whether your current home will meet your future mobility needs or determine what modifications may be required. Preparing for these expenses today reduces potential financial burdens that may occur when your health changes in ways you do not anticipate.
3. Pay Down Debt Before Retiring
Carrying a mortgage payment, a car loan, or credit cards into retirement significantly impacts your ability to cover essential expenses from a fixed income. The best time to pay down debt is while you are employed. Paying off debt on a regular basis creates more freedom to choose where you live and less financial burden when unforeseen expenses arise.
4. Consider Downsizing Strategically
Generally, a smaller house is going to have lower monthly utilities, property taxes, and maintenance costs. When you sell your family home, it will also provide money for you to retire on by using the equity from the sale of your home. If you are planning to keep the home in question, then hiring an experienced property manager may be the way to go.
5. Build a Professional Advisory Team
Before you decide on your housing options, consult with a financial planner to run all possible scenarios. A tax professional will explain how selling versus renting out your home may impact your taxes. Reviewing local market insights from a realtor and property manager can help you avoid costly mistakes and ensure that you are maximizing your retirement resources.
Conclusion
The decision to live in a retirement home will have a lasting impact on your day-to-day life as well as your financial situation. By considering where you want to live (location), how much maintenance is involved with your home, and how much it will cost, then by making a decision regarding rent or purchasing, you will be able to make an informed decision.
If you plan to buy a house for retirement, ensure to partner with a local property manager. These professionals understand both the legal requirements and operational necessities to make the home comfortable and even profitable, if you choose to rent.
