Does Your Current Monthly Budget Leave Any Room for Savings or Fun?
How have you planned on spending your days in retirement? Were you going to travel the world, spend more time with family, or perhaps take up a long since forgotten hobby? Regardless of what you have had in mind for yourself, chances are it is going to cost a bit of money right? Retirement typically means a lower fixed income and therefore we now have a bit of an impasse.
The federal government has been using the 30%figure all the way back into 1930?s as the standard for being affordable. This is also the figure that mortgage companies make sure to keep their client’s threshold when extending a loan to purchase a home.
Keep in mind that typically the longer you have been in your home the more repairs and maintenance will need to be accounted for as well unless of course, you have been diligent over the years.
The Merrill Lynch survey showed that 64%of downsizing retirees are making the transition to a smaller home to cut down on their housing expenses.
If you are just getting by, then it is definitely time to come to terms with what you are living for.
Downsizing can reduce your monthly mortgage payment. Chances are your finance rate is already considerably higher than what it could be with today’s rates (in the mid-three percent range currently) assuming you haven’t already done a refinance.
Property taxes have also risen considerably over the past few years and the prospects of it only continuing to rise don’t look better for your wallet over time.
Think back to your parents? home as they began to fully settle into their own retirement. Were you the one running over to make needed repairs, or help out with the annual maintenance? Were you tasked with getting them all packed up and moved because they had waited too long themselves? It can be easy to get caught up in all the memories your home may hold, but don’t let your heart dictate your wallet. The more time that slips by with a lack of maintenance the more likely you will be to have to either put a substantial amount of money prior to selling or reflect these issues.
Did you raise a family that has now grown up and moved off? Have you now converted the extra bedrooms to oversized closets, sewing rooms, or something else? Perhaps they are exactly the way there were left when little Johnny or Suzzie left or have been made over into guest suits that only see a visitor once a year. Was that big yard perfect for a dog and kids that are no longer there? Are you maintain a pool all summer that only ever sees a swimmer on the 4th of July? Is that long driveway that was once perfect for 4 cars or the basketball games now just a nightmare every time it snows? How much are you paying in energy costs for all this extra space that goes unused? Are you growing tired of stairs? Master bedroom on the second floor and laundry in the basement is never a good combination for anyone over 50.
Falling is the number one cause of serious injury in adults over 65. Is your home a ticking time bomb for you and/or your spouse as you get older? Would you have a problem living in your current home’s layout if your health were suddenly to be affected? Being proactive and downsizing while you are younger and healthier could make all the difference in a move.
If accessibility tops your list for a smaller home, you will want to start looking long before you?re ready to retire or move because there is a real shortage of single floor living, no-step entry homes.
Oftentimes people move into a particular area for the schools and community that a new home can provide. It was a great place to raise the kids, hang out with friends and really enjoy being in a family-friendly area. Are you one of the few homes on the street without kids? A neighborhood can actually start to feel a little depressing once the people you have grown up around have now moved off or passed away. Studies show that loneliness affects a staggering percentage of older Americans, thus the reason so many 55+ communities are popping up and have gained in popularity. Many of these communities offer so much more than a place to live. A healthier environment, full of activities and people of the same age with more in common can make your later years the golden years.
Perhaps by turning the proceeds from the sale of your more current home into income, you can enjoy all that these communities have to offer.
Recent studies have shown that only one in three retirees are very confident that they have enough money to live comfortably in retirement. Are you certain that you’ve saved enough to fund your retirement?
If you aren’t, you may be counting on the equity in your home for retirement income. Covering day-to-day expenses is the number one reason people give for refinancing or entering into a reverse. Take charge of your future now, don’t wait until you are burdened with expenses, suffer an injury, or just find yourself stuck because you have waited too long to capitalize. The housing market values are in a terrific place for you now as you look toward retirement. Continuing to just think about the idea of doing something and not taking steps to really thoroughly evaluate and take action on this current market it is one that could ultimately cost you a lot of money and time to just get on and enjoy your life.
To Improve or Not To Improve, That Is The Question
How handy are you? Do you have what it takes to run with Chip and Joanna Gaines?
If you are, then you could be way ahead of someone who hires a contractor to get the improvements done, and probably just aren?t worth doing if your plan is to sell anytime soon.
Here are the home improvement jobs as done by a professional and what the return would yield in the marketplace today. Obviously having to pay someone else to get the job done is night the ideal route if you want to not only make the money back, but also make a few extra bucks along the way.
For example, I took an unfinished basement of our home and turned it into “the pad” for my oldest son. He has his own gorgeous bathroom, with beautiful tile, an enormous carpeted bedroom King size sleigh bed and closet with built in shelving and racks. He also has a separate gaming / movie room with full size couch, drum set and 60?plasma for the Xbox all on nicely laid laminate wood that is hard to believe isn?t real wood. I did hire a few subs to help out along the way, an electrician to add a panel, some dry wall contractors to mud and sand (I can mud but not as fast as they can, and I hate the sanding).
All in all, my project complete was under $20,000 as compared to the average by a contractor of around $75,000. Doing it myself was a third of the price.
On the following page you will see a data set showing the pricing on things you might be considering doing to your own home and what the actual return on that cost looks like.