So, you are ready to retire from your full-time job. While you don’t have your retirement all planned out, you are thinking about moving south to a warmer climate. Even if you stay in the same area, you hope to travel. In either case, you must decide whether you should sell your home and buy something smaller, locate elsewhere, or consider renting.
Parting With The Canadian Dream Of Home ownership
Home ownership rates in Canada hover near 70%; property ownership rates are among the highest in the world. People love their homes for reasons that may have more to do with feeling the pride of ownership and the joys of providing a home for the family than economics.
For someone ready to retire, owning a home may be somewhat of a burden:
- Ongoing costs. Even if your mortgage is paid off, maintenance costs continue to soar as the property ages, which can cut into a lessened retirement income, especially as costs can be unpredictable. Property taxes, homeowners’ insurance, and other costs continue as well.
- Opportunity costs. Homes do appreciate in value, but many financial analysts suggest that the amount of appreciation is less than what you could earn on investments on comparable money you had in a taxable account. For many retired people, renting is an excellent option as rent and other costs are fixed, even though the rent will increase over time.
- Smaller not cheaper. Some retirees find themselves in houses that are too big or not laid out conveniently as mobility diminishes. Downsizing to a smaller, one floor house may decrease available space and reduce maintenance costs, but smaller does not always mean more economical. If you buy a newer home, you may still pay a higher price to offset the need for maintenance.
- Vacation hassles. In addition, buying a smaller house in the same area still leaves you with property you must vacate when you travel. When you rent, you can safely leave your property for longer periods of time with the knowledge that management or nearby neighbors will notify you.
- Poor liquidity. Relocating to a different area where you think you may like to live may not be as permanent as you hope. Some retirees find that they miss home and family or discover that they don’t enjoy living in Florida or another location they thought might be their dream. Buying a home involves costs that take about five years to get back, while making you less liquid. If you find that you want to return home or that you quickly need the money to relocate into assisted living earlier than expected, you may take a loss on your sale or find it takes a long time to sell your home.
What Is Your Future?
Some seniors find that continued home ownership is the best financial decision for themselves, but it pays to carefully consider whether renting would serve you better in retirement. Before you make a housing decision that will affect your future, consider your goals, talk to your financial advisor, and then give me a call about selling your home or buying a new one.
If you are ready to sell your home for maximum value, the best place to start is by clicking here and scheduling an appointment.
Roy Thomas SRES is a Senior’s Real Estate Specialist and a REALTOR® with Sutton Group-Professional Realty. Licensed since 1991, much of Roy’s practice is helping retirees with their later in life moves. Roy can be reached at 902-497-3031, by email: RoyThomas@RoyThomas.ca or read other articles online at www.HalifaxSeniorLiving.ca
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|Roy Thomas SRES® (Senior’s Real Estate Specialist) is a REALTOR® with Sutton Group Professional Realty. Since 1991 Roy specializes in helping retirees with their later in life real estate transactions. If you are contemplating a move and would like a complimentary copy of Roy’s guide to downsizing entitled “Preparing to Downsize” please click here|