The 'Couv'

The 'Couv'

Tuesday, January 26, 2016

Planning and Strategies: Retirement House

Fairway Village
Many people as they begin the decade of their fifties start thinking about the inevitable downsize of their home. Sure some people stay in the big house till the bitter end, but most tend to seek smaller accommodations to retire in.

I am among those fifty-somethings making such considerations. I have one child off in the Army and another in his Junior year at college. My wife and I are getting a real taste of the empty nest. A large five bedroom home can feel vacant with just two people in it. Of course once we feel like the boys are established and relatively secure, we can feel comfortable making that down size move. But we could just as well utilize two of those bedrooms for other purposes and just stay put, right?

I read a report that people that live in homes with stairs live on average eight years longer. Just sayin'.

At 55 years old, the retirement adult communities open up. Buying in these developments at 55 has the perk of getting you settled for retirement while you are still employed and working. You can hammer at the mortgage or maybe even pay cash with the equity in the big house. The downside is that the average age in an over 55 community is deep into the geriatric range and that means a generation gap that could be difficult for all but the most socially gregarious of souls.

I am thinking about that moment where the resale value of my home hits a point where I can pull enough cash out of the sale to put half down on the smaller replacement home, borrow on a 15 year note, and still have a lower payment than I do right now. The idea of retiring with a free and clear property is one that my wife and I would like to pursue.

Listed on  local MLS
But we could stay put as well. Continuing to pound away at the mortgage and have the note retired by age 65 could work. These are tough decisions that many people find themselves pondering once the AARP solicitations start rolling in. One current market factor that has a strong influence on such decisions is the persistent low interest rates. Although I am sitting on a comfortably low rate, the current rates have been dancing around the mid to upper 3's on 30 year notes and that means buying the "retirement" house now can yield very low payments for the remainder. 15 year mortgages are in the 2s at times. There is no guarantee these low rates will continue and frankly,

it is unlikely. This low rate scenario puts a bit of pressure on as the uncertainty means waiting could be costly. In some cases waiting could make the decision for you. If rates climb high enough, it could be cheaper to stay put.

Those nearing or just recently in retirement that are convinced a smaller abode is the way to go, ought to seriously consider selling the big home right now and make that move while rates are low and modest home appreciation continues.