Homeownership + Retirement Planning, Article 2

This is the second article in a two-part series on the impact homeownership may have on retirement planning. This article was originally published in the August 2018 edition of WILMA Magazine.

You just sold your house. You have downsized your furniture and belongings to the perfect, functional amount. You no longer have to worry about lawn maintenance or cleaning a multi-floor home. You have free time to visit family and friends and focus on activities that revitalize your soul.  Your life has less financial responsibility and more flexibility.  Sounds pretty great right? 

As we discussed in last month’s article, there are a lot of factors that weigh into the true cost of homeownership. At Pathfinder Wealth Consulting, our planning process looks at more than just the financial expenses of homeownership. As CERTIFIED FINANCIAL PLANNER™ professionals, we will take a comprehensive look at your goals and dreams to see not only what you can afford to do, but what you want to prioritize.

Flexibility in Renting

One of the reasons some of our clients have decided to forgo homeownership in retirement is the flexibility you are afforded when you are not tied to one physical location. Renting opens up a wide range of possibilities! We have clients who sold their home, bought a RV, and have been traveling the country for years.  We have clients who were feeling the pressure and increasing costs of maintaining a home, but also felt too active for an independent living facility and decided to rent instead. They now have the peace of mind that maintenance will be cared for, while still allowing them to remain completely independent, but for a fraction of the cost.  Are you excited about the opportunity to live near your grandchildren? Why not rent a house near them, giving you an opportunity to relocate with more flexibility?

Downsizing is Declining

Another issue we are seeing with our clients is the battle for home inventory between Baby Boomers and Millennials. A lot of our clients who are considering downsizing are surprised to see that a condo with views, or a smaller, updated home in their current neighborhood will cost them just as much, if not more, than their current home. The price gap between first-time homes and premium homes has widened, and while many Boomers would like to continue to stay in the same caliber of home, they are disappointed in the amount of space or finishings they can afford once condo fees and maintenance costs are factored into the equation.  Although, some individuals rent to get the services and lifestyle they want (such as a prime location, community pool, and/or low maintenance), many are deciding to stay put because it would cost too much to downsize. 

Aging in Place

Some of our senior clients express the desire to remain in their home throughout their lives; however, aging in place can become an issue if there is a major health issue.  In some situations, one spouse may maintain good health and the other may need additional care. The couple may feel like they can stay in their home longer, but they will need to make modifications. Although, many people are unable or unwilling to update and maintain their home as they age. Whether health issues slow them down or they simply do not care about the latest trends in housing, this can increase ongoing expenses or decrease the value relative to the rest of the neighborhood.

A Legacy Issue

We also encourage individuals to factor in homeownership in their legacy planning. Some clients like the idea of passing down a family home to their children, while others prefer the simplicity of transferring liquid assets to their heirs.

Whether or not homeownership is one of your primary goals, it is important to have a plan when it comes to your financial future and retirement.  At Pathfinder Wealth Consulting, we would be happy to speak with you about your path to or through retirement, and the goals and objectives you hope to accomplish. If you are ready to take a comprehensive look at your financial plan, we encourage you to give us a call at 910-793-0616 or visit our website at www.PWCpath.com for more information.