how housing plays into planning for a longer retirement

In my work as a Certified Financial Planner, I always discuss the topic of housing with my clients as they plan for retirement. Since, according to the U.S. Bureau of Labor Statistics, housing costs are the single largest expense for every age group – whether you’re 50, 60, 70 or older, we need to consider what makes sense as we approach, or are already in, the retirement years.

Evaluating housing costs is especially important given the fact that we are living longer and we may need to support an extended retirement. In Westchester County, we are also subject to the higher insurance costs, maintenance costs, and property taxes that come with higher home values. Certainly, if you’re still in your working years, paying off any remaining mortgage debt should be a priority.

Most people want to stay in their homes throughout retirement, but haven’t thought about all the costs involved. We may need to renovate to maintain our home’s value, household tasks may become more difficult – requiring the need to hire outside help, and we also have to consider modifications to keep our homes safe and compatible with our changing needs as we age.

Reevaluating your priorities may help you create the means to support a more fulfilling retirement. If you’re concerned about maintaining your lifestyle in retirement, given the potentially increasing costs of staying in your home, the rest of this article is for you.

The good news is there are plenty of options, especially when you consider that lowering your monthly expenses in retirement can be just as effective as an increase in income. One possibility, which may be difficult – but necessary – to consider is selling the family home.

For most of us, it’s not an easy decision to sell the home where we’ve created a lifetime of memories. But if you can get past that, the financial benefits could be considerable. Start with trading in those heating and lawn maintenance bills…and how about property taxes!

Selling your home and downsizing to a smaller one may not only lower your expenses, but could actually increase your income: the added liquidity from the home sale could be reinvested into a portfolio that could provide additional income.

Another option that may enable you to better afford your housing costs is to rent out extra space.
Also, consider that home ownership is not always the best option for empty nesters. Housing decisions should take into account other factors: perhaps a move to a better climate or being closer to adult children and grandkids. Renting, for instance, allows you to test out a new community before you decide to purchase, and can save you unwanted costs in the future if you realize you made the wrong choice.

Whether you decide to buy or rent your next home, your objective should be to do it on your own terms: before a financial situation dictates the move. When choosing your next home, consider how you will maintain or build a strong social network and be able to do the things you enjoy. Having easy access to health care, dining, and the activities you enjoy are all important considerations. If a car is a necessity, what will you do if driving is no longer an option? The Westchester County legislature’s recent decision to allow ride hailing services, like Uber and Lyft, may make getting around easier and less expensive.

Being able to envision what will be important to you in a home during retirement and having a better idea of what your housing expenses might be is an important first step in planning for a successful retirement. Take the initiative and speak with a qualified professional who can assist you with your plan.

(Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SPIC, a Registered Investment Adviser.)

Paul Tramontozzi, CFP

Paul Tramontozzi, CFP

Paul Tramontozzi is a Certified Financial Planner™ (CFP) professional with Lob Planning Group, located at 2900 Westchester Avenue, Suite 308, Purchase, NY 10577. Paul is a Westchester resident and available to meet for a complimentary financial consultation. He can be reached at 914-428-6440 or Paul.Tramontozzi@lobplanning.com.
Paul Tramontozzi, CFP

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