If you and your “significant other” are starting to look ahead to retirement, it’s likely you’ve spent some time daydreaming about where you might live. While most retirees say they hope to age in their own home, close to family and friends, there are still plenty of folks out there who dream of retiring in new surroundings. But before you take the plunge and commit yourself to buying or building that home of your dreams, make sure you ask yourself the right questions ahead of time, and avoid making an expensive and heart-breaking mistake.
In Contemplating Your Dream Retirement Home, Think Before You Leap
This helpful article about this topic was just published by Kiplinger, and we share it in case you or someone close to you is considering that “dream retirement home.” In the article, author and financial planner Lisa Brown advises, “Think before you leap. The wrong home, or the wrong place, can undo a lot of the retirement saving and planning you’ve worked so hard to achieve.” As Brown relates the story, many of her clients “return from a spectacular vacation and tell me they’ve found their dream retirement home” after a week at the beach or up at the lake. “While some have visited their idyllic spot over several years and mapped out a plan, others become enamored after only a single visit,” she adds. “They had the time of their lives over a week-long vacation and are now ready to plunk down a large amount of their retirement nest egg on this new home.”
As a financial planner, Brown sometimes has to talk her clients down a bit from the peak of their excitement. “Before jumping into the numbers,” she says, “I like to ask several questions to make certain this is the right move. While I share their enthusiasm for the future, I want to make certain their emotions are not undoing several years of sound financial planning.” In other words, just because you have the financial ability to handle buying or building this so-called dream home, there are a host of questions to consider before you make a leap that might be hard to undo by committing a large amount of retirement cash into a new home.
Evaluate Your Dream Retirement Home with These Four Questions
Here are Brown’s house-related questions. These might be good catalysts to start a conversation with your loved ones if a move to a “special place” is on your retirement horizon.
- Why Is This Place So Special? We know the feeling: you’ve just returned from a terrific vacation spot and you find yourselves saying, “Why not retire here?” But vacation time isn’t reality. “Will this really be what it’s like to live there all year?” asks Lisa Brown. “Have we spent several weeks or months in this destination to know we won’t get tired of it?” What about the winter dampness or summer heat? What about the neighbors, the community, the amenities? And if you’re married or in a long-term relationship, does the lifestyle fit each person’s needs? “To help reality fit the dream,” Brown advises, “consider visiting the area during other seasons of the year and even renting a small place for a few months to experience daily life.”
- Are You Buying Because It’s a Good Investment? As a financial advisor, Lisa Brown hears this a lot, but often she feels her clients are using the “good investment” angle just to talk themselves into the purchase. You need to do your homework (no pun intended) and find out why the seller of the house you have in mind is so eager to sell. “As a starting point,” she writes, “to determine if property values may rise or fall in the future, check on the inventory of homes available in the surrounding area and how long they’ve been for sale. If many homes have been sitting on the market for 12 months or more, and that’s been the trend for a few years, it’s an indication the neighborhood isn’t an up-and-coming area.” If you decide to sell in a few years, you don’t want to get stuck with a house you can’t unload.
- Will You Be Near Adult Children and Grandchildren? “Many retirees view their dream home as the ‘go to’ location for family gatherings,” Brown says. “But, in reality, it’s often hard for family members to travel and spend several days at your new home more than once or twice a year.” After all, your family members have lives of their own, and their time off is limited – not to mention their travel budget. If being close to family is a high priority in your retirement vision, you may want to think twice about moving very far away.
- Does the Cost Affect Your Financial Plan? Mortgage debt can be a major drain for retirees. “I advise my clients to retire and remain debt-free in retirement,” Brown says, “and to have plenty of cash and other liquid assets. If there’s a need to withdraw money in retirement — whether for daily living needs or an emergency medical bill — you don’t want a large monthly mortgage payment on a big house to get in the way.” She adds, “Retirees have worked a lifetime to build their wealth, and it’s important they enjoy it. But take the time to plan carefully and make certain the dream doesn’t turn into a headache that will cause frustration and regret.”
Your Dream Retirement Home is Only a Part of a Much Bigger Plan
Housing is an extremely important facet of retirement planning, but it’s only one element. As a financial planner, Lisa Brown is trying to get us to ask the right questions about our housing choices to ensure greater peace of mind in the future – but we suggest that her questions don’t go far enough, because your choice of where you live is part of a much larger picture. At AgingOptions, we take a far more comprehensive view of retirement planning, and that is why Rajiv Nagaich pioneered the comprehensive planning process called LifePlanning. “No matter how old you are or what your circumstances,” he emphasizes, “a solid retirement plan is the answer to dispelling fear of the unknown. A LifePlan can show you the way forward toward a better retirement than you thought possible.” Only a LifePlan from AgingOptions weaves together, not just your long-term housing strategy, but all the essential elements that matter most, including legal protection, financial planning, health preservation and family communication. With a LifePlan prepared, fear of the future can be replaced with confidence and a sense of security.
If you’re ready to find out more, we invite you to join Rajiv at an upcoming LifePlanning Seminar – a great way to begin the retirement planning journey. To see a calendar of these popular free events, visit our Live Events page and register for the location that works for you. It will be our pleasure to greet you and to share with you and your loved ones the power of an AgingOptions LifePlan. Age on!
(originally reported at www.kiplinger.com)