Nov 26, 2019

Should you sell your home in Retirement?

Every year, thousands of retirees ask themselves, “Should I sell my home?”

It’s a bit of a scary question. Your long-time home is full of memories and history, not to mention all that stuff you’ve accumulated over 30+ years. And yet, many retirees find themselves wondering if home sweet home is somewhere else (and often somewhere warmer.)

There are plenty of reasons you may want to sell your home in retirement and there are plenty of reasons you may want to hold off. Understanding both ends of the equation is essential for making your choice. We’ll run through the basics you should think about when considering getting on the market.

The Case for Selling

You’ve made it out of the workforce and the world is your oyster. What will you do? A big reason many retirees decide to sell their homes is to live a life more on-the-go, opting to rent in new locations and soak it all in while they still can.

While a life constantly on the go may be too much for some people, there are some solid cases for renting. Home maintenance – especially for larger houses or those with a considerable amount of land – can be both labor-intensive and expensive. With rented properties, much of this is included in the price of rent and there is usually a landlord ready to step in when larger repairs are in order. Whether you’ll save money on the renting route will depend on your financial situation, but it’s almost a sure thing that it will require less leg-work than owning your own home, which you will be thankful for as you get older.

Similarly, renting can help you accommodate for things like deteriorating mobility in your later years. For instance, if your duplex’s spiral staircase starts to give you pause, it’s only a matter of waiting until your lease is over to move somewhere more appropriate — no real estate brokers or home listings to worry about.

Of course, there is also a quality-of-life factor. Many of us will, after all our years of careful planning, forget that we’re supposed to enjoy retirement. If leaving your longtime home for something a bit less stationary reflects the sort of life you want to live, adapt your retirement plans accordingly.

The Case for Keeping

Owning a home can often be a hassle – but you also own a home, which means you could have an appreciating asset in your back pocket. Selling in retirement will mean you no longer reap any benefits of value appreciation, nor will you be able to pass down the asset in your estate.

How do you know if your home will grow in value? Well, you can’t know for certain, but you can make an educated guess. Check out your neighborhood real estate listings over the last few years – are values rising? You could also talk to a real estate specialist or, if they are local, your retirement advisor. If the outlook is good, you may want to sit tight for a bit.

Also, selling your house will mean you lose a valuable line of credit. Home equity loans can be a lifesaver when emergencies hit, so make sure you’re comfortable doing away with what could be a precious plan B.

If you’ve paid off your mortgage, you could rent out your home instead of selling it outright. You’d be able to turn the property into a money-maker while you enjoy your retirement elsewhere, and you’d still have the option to overnight “back home” when you need to.

Finally, look at the financial impact selling a house could have on you, namely your Social Security benefits. Though you receive benefits from SS regardless of whether you rent or own your home, your income is a deciding factor in how much you receive. Talk to a financial advisor and make sure selling your home won’t have any surprising consequences.

If Selling… Set your goals

Before you start calling up agents, ask yourself what you want to get out of a home sale and what your timeline looks like.  You’ll want your objectives laid out so you can move through the sales process with a clear understanding of where the goal-posts are. Ask yourself a few of these critical questions:

    • When do you need to sell by?
    • What’s your minimum selling price?
    • What can you do to boost your home’s value now?

From there, you’ll have a better foundation to get what you need, how you need it.

Make the Right Choice

Like most things in retirement, there’s no right or wrong choice here – only the option that works best for you. Figuring that out, however, can be tricky, and it often helps to have an expert’s eye. Here at Baird Retirement Management, we’ve been helping industrial professionals plan the retirements they want. Let’s see what we can do for yours.

 

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