8 Important Questions to Ask Yourself Before Moving Home in Retirement
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3. Can You Downsize and Save Money?
If you’re moving home because you want to downsize, there are two ways that you can profit from this. A smaller house will reduce your living costs, like utility bills as you’ll have a smaller space to heat or cool. A condo or townhouse might reduce the cost of home maintenance, too, especially when you get too old to do odd jobs by yourself.
By purchasing a less expensive home, you can grow your retirement savings, tax-free. There is a tax break of $500,000 of capital gains for married couples, or $250,000 for individuals. To make good of this tax break, the home you are putting on the market must have been your primary residence for at least 2 of the past 5 years. With the left-over capital, you can invest in your retirement fund and live comfortably for many years to come.
4. Should You Rent Instead of Buying a Home?
There are lots of benefits of owning your own home. And, if you can lock down today’s low-interest rates with a 15 or 30-year fixed rate mortgage, even better. Additionally, when house prices rise you can even make money.
But, after you factor in your down payment, closing costs, taxes, insurance, and many years of home maintenance, is it really cheaper than renting? If something in your home breaks, all you need to do is make a call to your landlord. In your later years, this could be more beneficial than footing the cost of plumbers, electricians, and dishwasher repair services yourself.
It’s something you should weigh up, depending on which area you plan to move to. Metropolitan areas often become victim to soaring rent prices, which can derail an otherwise solid retirement plan. You’ll need to decide if a brand-new mortgage or a rental agreement best fits your financial situation.
5. Should You Move Closer to Family Members?
The thought of Sunday dinner with the family and taking your grandchildren to the park sounds fantastic. But, is it practical? Sometimes, it is more beneficial for retirees to stay in their own home and community. If your current state offers amazing medical care, retiree tax breaks, and affordable transportation is it wise to leave the community?
Instead, you can set up a “family travel fund” as part of your retirement scheme. This can be used to cover the cost of air travel, hotels, and spending money for when you visit family. Or, use it when they come to visit you.
