For those whose retirement days are still somewhat far into the future, perhaps the only nod to retirement is a 401(k) program at work or contributing to an IRA every year. But retirement will come whether we want it or not and few have an exact date they’ll quit their jobs. There are those who work for larger employers or government jobs that provide a full pension after so many years of service but there are also so many more that will rely on their savings to take care of the bills once retired. For most, their home is their biggest asset. And as retirement arrives, how do you buy a home in retirement and what should you consider?
Where do you want to live and have you been there before? If you’re not familiar with the area and only so because you’ve heard a lot about it or traveled there before, it might ultimately be your best move. For instance, you’ve had it in your head you’d like to live in the mountains and northwest Colorado has always appealed to you. But is that a lifestyle change for you? Do you work downtown and are used to eating out, seeing shows and socializing with friends? You won’t have a lot of that in that mountain cabin of yours. If you move far away from where you are now, you’ll lose your old support group. For some, making new friends is an adventure while for others it’s hard to establish trusting relationships.
Are you going to finance your purchase or pay for it in cash with the sale of your home? Don’t make this decision on your own without speaking with a financial planner. If you make a sizable down payment where the mortgage payment each month is more comfortable, you won’t have access to that cash as easily as you would if the funds were in a retirement or cash account. Don’t drain your liquidity.
And speaking of monthly payments, will you be qualifying based upon you and your spouse’s income? If you need two incomes to qualify for a mortgage, take heed that at some point one of the spouses will pass away, leaving only one income. Look toward the future and be comfortable that you’ll be able to afford the mortgage, taxes, insurance and maintenance based upon one income.