Things Retired Couples Need to Consider Before Buying a Property

(You Have Choices in Retirement)

Your choices for a home are wide open when you begin retirement. You could invest most of your money in your dream home to live happily ever after or you could downsize for more affordability to travel happily and do other things that you want to do.

Let’s get a few basics taken care of right away. Unless you have a specific reason for a two story house, a single level without stairs will work for you today and in the future whether your mobility becomes an issue or not. Picking a location can be a little more difficult.  You can choose to be in city living with all the amenities and conveniences that city living has to offer or you can choose to live in a more rural setting and have the piece and quite from all the hustle and bustle of city living. Beside where you want to live, your current and expected future health is another important consideration. You want to consider if living on your own will remain feasible for many years to come or if you should be looking at planned communities that make transitioning from full independence to assisted living easy.

Besides health, your finances are often a driving force that deserves careful consideration…  

Retirement Finances are Often at the Top of the List

Unless you are among the exceptionally well off in retirement, you have a limited amount of money and income the make the most out of your retirement. Careful planning and knowing your options is important. Aging in place is certainly an option but if it is an older family home that has to much space and will soon need expensive repairs or renovations that might not be the best choice.  Also consider that your already paid for or nearly paid for home can be your largest source of cash to finance your retirement life.

You could use all of the cash from selling the house to possibly pay cash for a smaller home or you could make a small down payment on your next home and use the cash for many other things.  Of course, you can also do anything in-between. It’s always a good idea to talk with a trusted financial planner to fully understand all of your options.

It’s not only the cost of your home that affects you financially in retirement. Without a regular paycheck, your income will be changing and you need to take a fresh look at your budget. You may want to use some cash from the house sale to pay off installment payments such as cars and credit cards. That can make it easier to live more comfortably on your retirement income. 

Budgeting also involves the unwanted but inevitable. Be sure to ask yourself the fundamental questions – what happens financially if my spouse dies? What happens if we have large medical costs? Having a solid financial plan in place is always wise.  

Mortgages and Your Retirement

Legally, lenders can’t refuse you a mortgage based on age. However, lenders will pull your credit report and take a careful look at your income sources. Your debt-to-income ratio will probably change substantially in retirement. Before you make a sell or buy decision, make sure you understand how much of a mortgage you will qualify for. 

There may be several mortgage types now available that weren’t common the last time you shopped for a mortgage. The type of mortgage that makes good sense on your retirement income might also be very different from what made sense on your pre-retirement income. 

Consider the mortgage length that makes the most sense for your situation. A 30-year mortgage will have a smaller monthly payment than a 10-year mortgage. That leaves you more money in your retirement years. On the other hand, a short-term mortgage means your available monthly income will increase in 10 years when it might be needed for higher medical expenses. Of course, a Home Equity Conversion mortgage have become a popular option that you also want to at least consider. This option does not work for everyone.  You should talk with a lender that specializes in a Home Equity Conversion Mortgage. You have plenty of choices, but these aren’t always easy choices.

Living Essentials to Consider

It’s not all about your finances. Besides considering where you want to live and how you want to spend your money, consider what else you might need going forward. Whether it’s a condo, new construction, planned community, or fully independent living, your mobility needs to be considered. This includes everything from public transportation, if you can no longer drive, to no-step showers for easy wheelchair access. This is the generation of aging baby boomers, which is again redefining our social structure. New and recent construction is now designed with wide pathways in hallways, entryways, and bathrooms. Current houses also emphasize open and spacious rooms, which makes mobility much easier.

Please check out these other resources as you work through your choices. 

Senior Housing: There are Lots of Options

Is Now the Time for Downsizing from the Family Home?

Tips for Buying a Condo

Aging In Place: Will Your Home Work for You?

Downsizing is a Step-By-Step Approach

Space Planning When Downsizing

Top 10 Tips for Downsizing

Homestead and Senior Tax Exemptions

I wish you all of the best and happiness in your retirement. I encourage you to continue reading our blogs. If you need more information or have questions, please contact us. You can also  reach us by calling at (678) 570-8123. We'll be glad to help you!