Unlike earlier generations of retirees, who paid off their mortgages and retired in their family home, today’s Baby Boomers are looking to capitalize on home equity to enhance their retirement savings. Below are a few points you might like to share at home in order to start a discussion about relocating, downsizing, or trading up:
Discussions You Should Have:
1. Speak with your spouse or partner first, even if you think you’re both of the same mind. Don’t just assume that you’re in agreement.
2. Consider the cost-of-living in a different part of the country. There’s a pretty big swing between rural Florida and urban San Francisco, for example.
3. Consider whether your plans are realistic. For example, could you really live in a 1-bedroom after spreading out for years in your present 4-bed/3-bath?
4. How much will the ease and pleasure of retirement depend on family and friends? What are the pros/cons of moving nearer/farther away?
5. Consider the potential impact of capital gains if you have substantial equity in your home– speak with a tax professional.
Relocating to a more affordable area as well as to a smaller home is a strong strategy. But real estate values and property taxes can vary immensely by locale, even within the same state. Research thoroughly. Also, you want to spend significant time in the location to make sure its compatible with your lifestyle, pace, and interests.