Home Ownership in Retirement versus renting, There’s a wealth of financial information suggesting that retirees should own their home. In many instances, this is correct, but not always. Here are five key considerations that are often overlooked but are crucial in many circumstances.
1. Stability of Cash Flow in Home Ownership before Retirement
Over 50% of retirees carry debt into Retirement, with mortgage debt being a significant component. If you have a mortgage payment, at least you know that the payment won’t change in most circumstances. Additionally, your taxes are unlikely to change significantly over the course of your time in that home.
2. Location Stability
When a retiree leaves the workforce, they leave a lot behind: work friends, contacts, their network, and the loss of a daily routine. Minimizing change in a retiree’s life is often beneficial for their mental health.
3. Forced Savings Through Home Ownership Retirement
Owning a home in retirement means that you have forced savings, especially if you have a mortgage. When you make a mortgage payment, a portion goes to interest and the other portion goes to principal. The longer you stay in the home, the more principal gets paid down, and the less interest gets paid. This builds equity in the home, which becomes something of value when you sell the home later in life.
4. A Home Ownership is a Gathering Place
Your home typically becomes the place where everyone gathers: for Sunday night dinners or birthday parties, for example. The matriarch or patriarch of the family is regularly the place people go when they’re looking for a place to go. I remember my grandmother’s house quite vividly. Every summer, we’d make the trek to her hometown. All the cousins, uncles, aunts, etc., would get together, and it became the reason that they all got together.
5. A Place for Displaced Family
The world is a much different place today than it was during our parents’ or grandparents’ era. Kids get married, they get divorced, they lose their jobs, and they need a place of safety at points in their life. Home Ownership before Retirement, a bigger home, offers that safety for the displaced family. This generation is living at home longer. They have other reasons for coming home: sometimes they are in transition from one house to another, sometimes they just require the TLC of mom and dad. Having a home available to them is a very good reason to own versus renting something smaller.
Decision on Home Ownership in Retirement
This is a big decision, of course. The decision to own versus rent has both financial and non-financial consequences. It’s something you need to give a lot of thought to before you move forward. Retirement information is changing fast, we try to stay updated and present you with valuable insights.