The Finance Blogger


Can You Afford Your Home in Retirement

Can You Afford Your Home in RetirementYour home is paid off, your car is paid for, although it probably should be replaced in a few years since it is a few years old, but still in good condition. The house is older and will need routine maintenance, however there is nothing near term that is required at this time. Sounds pretty good doesn’t it. Retirement is just around the corner as well and you are wondering what your cash flow will be like and if you can do some of the things that you had planned on for many years with the money that you have saved and the income that will be generated from your pension?

Can You Afford Your Home in Retirement

You plan to retire and stay in your home and for most people this is probably the right long term strategy. Depending on your age and how close to your retirement there are a few things that you should plan and / or budget for. Items such as the roof replacement, furnace replacement, hot water tank and driveway are big ticket items that need to be budgeted for so that you have the money to pay for these items when it comes time. Some consumers will also consider window replacements as well if the windows are older or there are more efficient models available.

Should you down size or stay where you are will depend on a number of things. There are the costs that we just mentioned and how prepared you are for these expenses. Some people will sell there homes instead of spending the money, although they will take a hit in the sale value of their home when they do. Then there is the day to day operation of their home.

Regular operating costs such as heating and cooling, cleaning and maintenance are often much larger than they would be for a smaller home. A newer home with better insulation, efficient heating and cooling systems as well as lighting may appeal to someone who has an older bigger home.

Maintenance costs such as annual landscaping, painting, minor repairs is another area that is often troublesome for people.  If you let these things deteriorate, your home may not look as good when it comes time to sell and you will not get top dollar for your home. Never the less,  there is a cash flow to maintenance that cannot be ignored and should be factored into your decision regarding to stay or to sell.

Can You Afford Your Home in Retirement – Cash Flow

Confirm your cash flow in retirement after taking into account all of the above, your income and plans to travel along with health related issues. Look at several scenarios and verify the changes in cash flow for each. Don’t forget to factor in the cost of moving, real estate fees and legal fees as part of your decision.

Once you have analyzed all of the possibilities, you can then decide can you afford your home in retirement or need to make further adjustments! There may be an emotional element to the decision as well that should only be considered after you have reviewed all of the financial impacts.

For more posts about down sizing, click here.

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