“Should I consider selling my home when I finally retire?”
“Would it be a good move financially – or a bad one?”
“What are the benefits of selling my home to ensure I can just enjoy my retirement and not have to worry about anything else?”
These are typical questions asked by many homeowners all across the U.S. who are coming up to that time in their lives – their retirement age – or their “golden age,” if you like.
Many people who are approaching retirement, are often concerned about having (1). enough money to live on during their later years, and (2). enough money to really enjoy their work-free golden years, whether this means a yearly holiday abroad to their favorite destination or another item on their “wish list.”
What’s more, these are exactly the right questions to ask right now.
And the right answer to each of these is the same every time:
It all depends on your financial situation…
Regardless of how you wish to spend your retirement years (and the possibilities are endless), you need to know if you can afford to live as you want – and for as long as you want.
Whatever your idea or vision for your retirement – whether it’s a condo on the beach or perhaps a top-of-the-range RV in the driveway – being financially secure has to be one of your main priorities.
Realize Your Equity, Expand Your Retirement Goals
“To Sell or To Stay?…”
Because our homes are usually our most valuable asset, it makes perfect sense to decide soon whether or not you will continue to live in your current home. You will certainly need to weigh up each option’s “pros and cons”.
Many retirees choose to downsize. The Cambridge English Dictionary has this to say about downsizing a property:
“to move to a smaller home, usually because your home has become too large for you or as a way of saving money.”
Selling your home could very well free up valuable equity on your property, and allow you to even expand your retirement wish list.
Obviously, many homes, even with fewer growing kids living there, are still absolutely full of happy family memories, and with many other strong and emotional ties there.
However, looking after a large house perhaps isn’t really how you want to spend your hard-earned retirement, or, for that matter, how you want to spend hard-earned retirement funds on things like regular maintenance and cleaning costs.
It’s a big decision and one not to be taken lightly. You’ll have many points to consider.
The aim of this article – “Should I Consider Selling My Home When I Retire?” – is not to tell you that you should do this or you should do that.
On the contrary, our aim is to provide you with expert information to guide you through your options so your decision (whatever it might be) is a balanced and informed one.
You will have decided to make plans for your future retirement at some point in your life.
Retirement Planning Defined
“Determining your retirement income goals, and the necessary actions you need to take and the decisions you need to make to achieve those goals.”
In other words, ensuring you have enough available income to continue living as you want to during retirement.
Retirement planning includes specific steps to take, including
- Identifying your sources of income
- Sizing up potential expenses
- Implementing a savings program of some description, and
- Managing your assets
Everybody wants to enjoy their retirement. Retirement planning (definitely a little boring and not very enjoyable) is necessary to make it enjoyable.
Therefore, before your retirement begins, you need to work out where you will live (at least, initially). Will you stay in your home, or will you plan to move?
Retirement & Social Security in the U.S.
The latest estimate puts the average age of retirement in the U.S. at 64.6 years for men, and 62.3 years for women. Even though you become eligible for Social Security benefits at age 62, you don’t qualify for your full monthly benefit amount until a few years later.
- To receive full benefits if you were born between 1943 and 1954, you have to wait until 66 years of age.
- For anyone born in 1960 or later, the age increases in two-month increments up to the age of 67.
- However, depending on the year you were born, if you postpone taking your Social Security benefits until the age of 70, you can make your monthly benefit 32% larger than it would have been at your full retirement age.
- Lastly, and again depending on the year you were born, you won’t be eligible for Medicare until you reach age 65, so you will have to budget for your own health insurance.
Retiring in the U.S.: The Hard Truth
Although your retirement should be something to look forward to later in life, it has its fair share of potential drawbacks and financial problems, especially if you have done little or no retirement planning.
- You Could Be Forced Into Retirement Before You’re Ready
The most common reasons for retirement are actually poor health and job shifts, and not a personal choice, according to TD Ameritrade’s “Road to Retirement” survey. 50% of people retired before they would have liked for reasons that include layoffs, health issues, caregiving responsibilities, and an unexpected change in their financial situation.
- You Can’t Rely On Social Security
If you’re counting on Social Security to fund your entire post-retirement life, be aware that Social Security is currently only guaranteed to be funded through 2035, according to Business Insider, after which time it may only be funded up to 75%.
- Assisted Living is Expensive
According to the U.S. Department of Health and Human Services, there is a 70% chance that an American age 65 or older will need long-term living care at some point. Medicare does not cover an assisted living facility (ALF), whose costs can be incredibly high. It gets worse. A nursing home is normally twice the cost of an ALF, too. It is why many older adults have to pay for long-term care insurance during their ‘60s.
- Retirement Costs Much More Than You Think
In order to continue living the lifestyle that working has provided you, many experts estimate that your retirement fund needs to be somewhere between $500,000 and $1 million. This kind of amount requires not only excellent retirement planning, but starting to save at a young age.
Top 10 Benefits of Selling Your Home in Retirement
As people approach their impending retirement, it’s often the case that their existing priorities begin to change, and some of these priorities can even change considerably.
For example, many older people no longer have to be as concerned about others as they once were, such as children or other relatives, or their geographical location, which may well have been dictated by career moves and choices, and not their own personal ones.
In fact, many older people look upon retirement as the opportunity for a fresh start, a new way of life not governed by outside influences, but one that’s far more concerned with what they personally want – and want right now.
For those who choose to move away from their current area, either to move to much warmer climes, move closer to their favorite grandchildren, or move as the opportunity to downsize to a house that’s far more manageable, they need to decide what to do with their current home.
- Keep it for their children to later inherit, pay maintenance costs, and buy or rent a second home?
- Or do they sell it to realize the valuable equity it holds?
- Or sell it and rent something far more manageable, and in a location more suited to their personal choice and needs?
- Or do they decide to do something else?
Regardless of what decision you finally reach about your existing home in retirement, there is one undeniable fact…
Housing costs will always be a major part of your monthly retirement budget, whether you stay or move, and whether you rent or own.
Here are the main benefits available to you should you decide to sell:
Selling Your Home Before or In Retirement: Top 10 Benefits
Benefit to You
Description of Benefit
Releasing Equity & Increasing Liquidity
Unfortunately, it’s becoming more common that people go into retirement without enough savings. However, if you own your home (either outright or you have reasonable equity in it), and if the housing market is healthy (currently, it is very healthy), selling will increase your retirement fund considerably.
Furthermore, having these extra funds to hand ensures you have the financial strength to realize what perhaps were distant dreams.
Selling can also come with a considerable tax break. If you have lived in your home for the last 2 out of 5 years from the date of sale, you can exclude up to $250,000 of the capital gain from the sale of the house if you’re single. If you’re married, you can double that, and exclude up to $500,000.
No Maintenance Costs
Homes, of course, come with maintenance costs, which will be an ongoing drain on your retirement resources. Just like people, the older your home, the more maintenance it usually needs. Additionally, the larger the house, the higher the local property taxes.
Ownership can be costly in other areas, too. For example, a downward slide in the real estate market can potentially wipe thousands off your current equity level. There’s insurance deductibles to take care of, too.
Change of Location
Moving even a small distance could potentially dramatically lower your property taxes or put you far closer to the amenities you need in retirement.
Perfect Opportunity to Downsize
Your “ideal home” will now mean something completely different as a retiree, compared to what it meant when you were younger. You are likely to have different priorities now as a retiree.
Increases Your Options
If your home equity is low, selling is still an option – you can lower your monthly housing costs significantly by selling and then renting.
Renting provides more flexibility, and you’ll spend far less money (and time) on maintenance. Renting allows you to live where you want – when you want.
One word – stairs. Inevitably, as you age, you become less mobile. The staircase in your house can suddenly become a mountain, and then you would need to expensively remodel.
Renting Can Be Cheaper Than Owning
In many regions of the U.S., renting is actually cheaper per month than owning a house – at least in the short-term. If you are looking to cut housing costs in your retirement, selling your home, then renting a new place could well be the answer.
Alternative Benefits: Keeping Your Home
As you can see, there are many good advantages (and attached benefits) for renting in retirement. However, that is not to say that remaining as a homeowner doesn’t have benefits, too.
Whichever route you decide to ultimately go, you need to remember that housing costs will be one of your largest monthly expenses in retirement – if not, the largest.
Here are just a couple of the most important advantages of remaining as a homeowner during retirement:
Realize Your Equity, Expand Your Retirement Goals
If you are one of the thousands and thousands of Americans who retire every year without sufficient retirement funding, selling your home, and releasing the potential equity within, could be the perfect answer to the economic problem of your later years being the hardest years of your life.
No longer would you have to be relying on financial support and cash handouts from your grown-up children, or having to survive on insufficient social security payments, or watching as your life-long home (where you raised those grown-up kids) falls into further disrepair because you cannot pay its maintenance costs.
Selling your home will provide your depleted retirement funds with a huge boost and in the process, perhaps boost your hopes that your retirement is going to be the most enjoyable years of your life.
At Better Off Home Buyers, we can act quickly to release your equity in as little as 7 days by making you an obligation-free cash offer for your home. Our property investment strategy has helped hundreds of people like you release vital retirement funds, allowing them to enjoy planning their retirement.
Selling your home can allow you to downsize to a more manageable property, with less maintenance, less hassle, and located wherever you want it to be, such as closer to those grown-up children of yours and their own children – your grandkids.
Downsizing in retirement equals:
- More time to be able to spend with loved ones, and
- Lower monthly housing expenditure, whether it’s a mortgage or a rental payment
So why not get started today? Contact us to find out if your home is what we’re looking for, and allow us to make you an immediate equity-releasing cash offer to boost your retirement funds, and change the financial outlook for your all-important later years.