Have you thought about what you’re going to do after you retire? While we all have concerns about our finances, have you thought about moving to be closer to family members or downsizing to reduce your outgoings? You’re not alone if you’ve been considering this, according to Age Wave and Merrill Lynch, a study they conducted showed that 64% of retired people have moved or are considering moving. And while this may sound like a suitable option, you may need to put the stops on before you think about putting up that “for sale” sign. Here are some things to bear in mind.
How Are Your Finances?
Looking at your current earnings, whether you are 30, 40, 50, or beyond, are you putting enough away to secure a sustainable life after you finally give up work? While you can never underestimate the importance of pension plans, they have declined in recent years, so it’s up to you to do the math. What is your current earning situation? As people are increasingly taking the freelancer route for work as it is the option that gives them enough freedom, it does leave those earners lacking in a stable future after they give up work. There have been cases of people coming out of retirement to earn that little bit extra to keep them over the breadline, and if you really want to make the most out of your retirement as well as make the move to a different property, you’ll have to crunch the numbers. It also depends on how you plan to spend your retirement. Would you intend on traveling the globe, or just fishing on the weekend? If you’ve got a financial advisor, you can ask them for advice, or go through the retirement plan in your workplace, or you can use an online calculator like the AARP Retirement Calculator. To make sure you have considered every possible outcome, you should run a few different worst-case scenarios with your finances. From high inflation, low returns on investment, or even with people living a lot longer now, factoring in your life up to the age of 100. Does your financial plan go the distance?
Where Do You Want To Retire To?
Your location is the overriding factor in your dream retirement spot, but have you factored in how much it costs. The best approach to tackling this is to, very simply, do your research. Where you want to go, is there state income tax? But even if there is no state income tax, does the sales tax and property tax cost so much to actually make up for the lack of state income tax? Going back to the question of how you plan on spending your retirement, and looking at your finances, do you plan on going to an area that is out of the way and gives you the peace and quiet you need but is expensive? Or be in a place that is cheap but the quality of living leaves a lot to be desired? For retirees, owning a spot of land is a way to achieve that tranquility you would be looking for in retirement, while still retaining a plot of land that is lucrative should you feel the need to move on. There are country networks like Sports Afield Trophy Properties that provide listings offering properties of varying sizes in a countryside setting. Trophy properties are defined in real estate as being in the top 2% of a certain category so you can get an idea of the quality. The location is such an important part of the retirement process that you need to factor in the cost of living there, as well as weigh it up against where you are now. The amenities are another very simple thing that can ramp up your cost. If you decided to move to Hawaii, you would have the beach on your doorstep, but the groceries are that much more expensive. And even if a place is affordable on paper, it still might have a negative impact on your money source.
Is It Possible To Save Money?
When investing in a property, the topic of saving money doesn’t usually come up. But if you buy a smaller property and invest the money you save back into a future housing fund, does it save you money? Downsizing has a lot of things going for it, such as the cost of heating the home is a lot less, as well as tax breaks. For example, if you sell your current home, up to $500,000 of capital gain for married couples or $250,000 for individuals is tax-free, but this would only apply if you’ve used your home as your main residence for two of the last five years. The concept of saving money for a lot of us is a big headache, but by finding ways to prepare your bank account for selling up and making the most of your equity in the meantime, there aren’t many better options than to sell up. The other option is to apply for a reverse mortgage if you don’t want to move, where the borrower is responsible for the homeowner’s insurance and property taxes. This allows you to access the equity and defer the payment of the loan until you die, move out, or sell the home. Depending on where you live in the world, there are different rules on reverse mortgages, and there has been a criticism of these because it can potentially leave people open to fraud as well as being a difficult product to understand. Saving money is difficult in any situation, but by downsizing for a short period of time before retirement, the money you can accrue that would otherwise go to amenities or upkeep of the house is greatly reduced. Saving money can come in other forms too, such as renting. While owning your own home comes with many benefits, if you factor in the down payment, closing costs, maintenance, as well as taxes and insurance, it could cost you a pretty penny. By this logic, it would be wise to rent. Renting is a mixed bag, especially if it is something you are seriously thinking about as a retirement option. The landlord can easily give you 30-days’ notice to vacate, but on the other hand, the maintenance and big costs are not your responsibility. But is the area where you’re planning to rent primed for a hike in costs? This can seriously scupper any retirement fund.
Will You Be Able To Get Around Your Ideal Location?
While retiring is all about living out your golden years in a place you have dreamt about for so long, think about yourself at the age of 75, will you be able to get around easily, or will you have to rely on driving? This may not be feasible when crippled with arthritis, or you have a bad knee. The best thing to do is to do a trial run of your dream location and take all the public transport, is it easy enough to navigate? You would be doing this every day, so can you accomplish your essential tasks, like grocery shopping, without the use of a car? Public transportation might not be an option where you want to go. While we all think about our dream location, we need to think in practical terms too. It’s all well and good finally moving to a farmhouse in the middle of nowhere, but if you end up suffering an illness that limits your ability to get around much, will you enjoy your later years as much?
Will Moving Be Good For You?
While you may spend your days dreaming about the good life where you can put your feet up and relax in wonderful surroundings, will it be good for you in the long run? So many people decide to stay where they are in the end because moving to a new area can be a risk. It’s something that needs to be weighed up carefully, and whether you are planning on moving somewhere to be closer to the grandchildren, it might not be practical. And it would be nice to be a stone’s throw away from family members, but is it worth the effort? And many people use their retirement as a way to draw a line in the sand on their lives, and to start the next phase, you have to think about every single aspect that will benefit you now and in the future. We tend to think about our current needs, rather than envision ourselves in our 70s, and this is a risky move. Whether you want to move to Timbuktu or around the corner, there will be a degree of risk in any purchasing of a new property. We all have specific needs, but the finances need to be in place. So think about what you really want, because you need to spend your remaining years happy and content.