Oct 2022 Kiplinger’s Personal Finance has some very relevant articles in this issue.
One is about shopping for mortgage - this is helpful to me as a parent of future home owners. Article says ARM applications are at highest share since 2008 (at 10% of mortgage applications). Gave a good point about a 5 year ARM - if you know you are going to move, or maybe pay off the mortgage, can save an average of $260/mo. or average of $15,582 over five years. Also talked about average savings by getting more quotes. Underwriting requirements for different lenders may vary. Generally, consumers need a FICO score of 760 or higher to be eligible for lowest mortgage rates on a conforming loan. One of our participating credit unions gave us the best rate Jan 2022 when we pulled money out of our home (as our prior 10 year mortgage at 2.5% was getting paid off - and we also locked in a day before rates went up, also getting 2.5% interest rate). We have that money invested but it can get pulled out easily once one of DDs is ready to purchase a home and we can assist with down payment easily with our accessibility. Perhaps someone is wanting to retire in an area and watching for available properties - can consider a 5 year ARM.
A lot of information about Retirement - 10 pages, including one page “Regrets? Retirees Have a Few”.
Always has at least something of value for me, info wise.
There are many benefits to downsizing your home, some of which you not have considered.
Many people when they’re younger dream of owning a huge home complete with all the bells and whistle. However, as time goes on, it’s not uncommon to start yearning for a more modest life. A life that may include owning a smaller home that better suits your needs and changing lifestyle.
Deciding to downsize has a number of benefits such as lower housing costs and less housekeeping. There are however, some hidden benefits of owning a smaller home.
Below are 5 unexpected advantages of downsizing your home in retirement.
1. You become more organized
If you’re going to downsize then you’ll inevitably have to eliminate some clutter. Retirees that live in big houses normally only use a few rooms like their bedroom, living room and kitchen.
But what about the other areas of their home?
Well, other rooms typically wind up collecting clutter. The unused rooms start to take up too much time to maintain, and so they start to become unorganized and over time filled with items that are no longer used.
By downsizing, you won’t have the extra space to store your unused possessions, so you’ll have no choice but to decide what’s really important to you and what you’re willing to leave behind.
2. Life becomes less stressful
After becoming more organized, you’ll realize how much more comfortable your new home is. You’ll no longer have the stress of not being able to find things or have items in the way of others making some of your possessions inaccessible.
3. Your home may become more accessible
As people grow older, climbing stairs often becomes a hassle or even quite a challenging task. This is especially problematic if they live in a two story home. Their stairs can actually start to act as a barrier that prevents them from enjoying the full use of their home.
Stairs can also lead to falls and other injuries, meaning the home you moved into 20 years ago may no longer be suitable to live in.
Mobility issues can be addressed by downsizing into a home that offers greater accessibility. This means you’ll be able to live in your house for longer and can grow older at home instead of moving into aged care.
4. You may not have to drive so much
If you live in the suburbs, it’s easy to feel isolated with most things requiring a drive to get to. On the other hand, moving into a retirement village for instance could bring you closer to things like shops, restaurants and cafes, as well as people in your age bracket in a similar phase in life.
By being so close to everything, you probably won’t have to drive so often, with many retirement villages offering plenty of things to do that are walking distance with ample public transport available too.
5. You have more time for yourself
By downsizing to a home with smaller spaces and fewer rooms, you’ll have fewer things to clean and maintain. This means you’ll have plenty more time to spend doing what you love – hobbies, spending time with family, travel, or just plain relaxing.
Agree with the advantages of downsizing. As I have mentioned before, we got rid of a LOT of stuff when we moved/downsized and I don’t miss any of it. The house is easier to clean and lawn is easier to maintain. We deliberately chose a walkable area (with public transportation and Uber/Lyft options).
I think that part of downsizing should be lifestyle changes. Consider these things when moving - different transportation options (walkable, near public transit), places with activities you would enjoy (library, yoga, senior center), making your hobbies easier (if you like gardening then it must have a garden), and making chores easier (no lawn if you don’t like to mow, house that is easier to clean).
I think people also underestimate the maintenance costs of ownership when making housing decisions. It is easy to forget things like outdoor property maintenance (trees, lawn, snow, etc.) As homes age things break and you do more basic repairs. Also, moving to a home/condo will have costs to make the home fit your needs (these little things like adding a closet shelf or replacing a light fixture can add up)
We having been renting an apartment as a second home (as a trial to see where we want to live long term) and are leaning towards not owning something again. Seems like every time we go back to the house something needs fixing. In the apartment, we have no maintenance costs or the associated headaches (getting repair estimates, choosing who to hire, etc.)
I like the idea of the calculator provided in a link above. When I do the math, the rental vs. the current home, the rental is a little more each month, but I would have a pot of money from our home sale to pay that difference over several years.
We’ve done the opposite. We’ve moved from walking distance to shops and to a bigger house rather than a smaller one. However, I have never been happier in any house, even before our renovation is completed.
I look out on nature every morning. I work at home (though I will begin flying some more). We have Muscovy ducks who come to get fed, Great Blue Herons, Bald Eagles (actually I have only seen one), river otters, muskrats, beavers, foxes, deer, coyotes (never seen but hear regularly), fishers (only saw one once), etc. No people, except for occasionally with the horses at the farm next door and currently all of the tradespeople doing the renovation…
In our renovation, we shifted the MBR to the ground floor so we will have one floor living. The only room I will use up stairs is my office, and I can move that down if needed. ShawWife’s studio is an an adjacent building 20 feet away and is one floor also.
I’m guessing that by the time we should stop driving, autonomous cars will work and be available.
House maintenance will be serious. No question about it. One possibility is that as we need to downsize, one of our children and family will move in to the main house and we will be happy in the in-law suite. That is what the previous owners did (and the main house is getting a glorious renovation). If not, we have plenty of rooms for help to live in.
I have been eligible to take my small pension from a long-ago employer for several years (right now, it would amount to about $6k annually after taxes). Dh retired a year ago, and the original plan was for me to not take it until it maxed out at 65 as we don’t NEED the money. I am reconsidering taking it next year, once I am 60.
After a year of “retirement” (dh still has a part-time job) I am starting to appreciate the idea of spending more in these early years while we are healthy, you now? I always have been so tight with our money that, truthfully, this feels like a healthy change of mindset. I’ve done the math, and by taking the lower amount now as opposed to waiting until 65, I wouldn’t start to “lose” money until I’m 79. I know this isn’t a huge amount of money to most people, but it’s not NOTHING for us. I mean, take care of the pennies and the dollars will take care of themselves, right? Anyway, if I get hit by a bus, dh will get half the amount each month.
Having said all that: Is there anything I should know or questions I should be asking about taking a pension?
Many places are not well built - so you run into maintenance issues, high energy costs, etc. Watch enough shows on HGTV.
We participated a lot with the construction of our home (the 4th one we owned) that we had built 30 years ago - designed for the lot by our architecture along with his design based on concept and floorplan we liked (we hired a retired contractor James that was interested in being a site supervisor - he hired all the subs and I paid the subs) - it was fortuitous that we found James across the back fence in his garden from the house we rented. He was so happy with this project, and DH and I either saw him at the home site or in the evening. DH who knows quite a lot about woodworking/construction, would go to the work site at lunch time and we often went in the evening. My dad was a contractor in another state (dad own a construction company and full cabinet shop).
Things done now are superficial sprucing up, or replacement of things (both HVAC units for example). For now we are retiring in place, but we are both just 66. Time will tell where DD1/family will land - Spring 2023 will be a move with SIL’s career - and will mean also more moves for them in the future. DD2 is single (has serious BF) and in a great city (Orlando) and not terribly far from us (we are in N AL).
When the time comes to move/downsize - that will be work, for sure, but the motivation to do so will stimulate the effort – along with hired help. For now, have some plans for sprucing up the place but also seeing about our financial reserves for DD2 getting into a home when she is ready - and right now her rental condo is under budget and a good value (her rent this year only went up $100/mo.) – she is now getting more disciplined on saving for a house.
I concur. If you are talking about taking $6K per year now rather than say $7K later and neither choice affects your ability to maintain the lifestyle you wish to lead, I see no reason to wait and lots of reasons to spend when you are still mobile and healthy.
I am largely a lurker on this thread but thought I’d share this podcast on “Getting More Out of Life”:
The key message that I took away is that we should not overly focus on accumulating wealth/savings because it can come at the expense of spending time with our children during their formative years, we might be less able to enjoy activities that we’ve dreamed of pursuing when we’re older, money we plan to give to our children and/or charities could be better used if bestowed sooner rather than later, etc.
Perkins also emphasized investing in experiences to build a richer, more fulfilling life because “we retire in our memories.”
Lastly, he spoke of keeping a list of life KPIs and making actual budgets for priority activities (charitable giving, travels, etc.) as a way to ensure that you act on your vision.
I’m in Costa Del Sol, this place is incredible, food is reasonably inexpensive, at least comparing to California. I was joking to my husband, this is where we would like to retire eventually. No wonder there are a lot of Brits here, also lots of Northern Europeans here too. Beautiful weather. I’m going for an Arabic bath and massage today. My husband is skipping the massage, he can’t stand it, but he has been eating gelato ice cream everyday, so silky smooth ice cream. What’s not to like. How easy to retire in Spain? I’m just throwing out there for you to consider.
Some places have an automatic visa if you buy property of a certain value, invest, own a business and some other things. Essentially, if you can invest in property and have a steady fairly good income, you’re probably able to do it. Countries vary a lot. Also, I’ve read that some places ( Portugal and Mexico) aren’t that happy about the number of Americans moving there.
We plan to live part of the year in Europe when our youngest leaves the nest in '26/30. We won’t live in an area with other expatriates. We actually enjoy being part of a local community and prefer not to impose our culture but rather be a part of another place. We’re both big travelers so love to absorb. There are lots of great places out there. And we’ve found that most places cost far less than the East Coast. We’re not looking for lots of sun so that also means we have more choices. But we are looking for a place where things run reasonable well, where food is good and where the people are friendly. The hardest part will be figuring out the best place. We’re finding that places have things to consider that we hadn’t thought of (like inheritance tax) etc. And as Americans we’d have to pay taxes even if we live outside the US for more than 180 days. Lots to think about.
I’m looking forward to watching this. I agree than many people work so much they miss the formative years. Not so sure about gifting money to kids ( I’m old school and think spending on education is the goal and gifting will come much later only after we pass).
I like to think of it as a balancing act. I often think back to a time when I was waiting for a medical report ( for an incurable cancer). It took a week. I thought a lot. If it comes back positive, would I have done things differently? No. Fortunately, It came back negative. Though I was incredibly relieved, it gave me great insight on my path. I often use that frame of mind to wonder if we are on track. Sometimes we do that extra thing even if it doesn’t seem easy.
I love to travel and love visiting Spain and a few other countries in Europe and Asia. There are many things to like but at the end of the day, I cannot imagine giving up all that I have here in NC/USA to move somewhere assuming I have that option when I retire.
Also, I am very biased because I live in a town that is voted as one of the best places to live in the USA time and again and I am very thankful for that. When I see what I get here and how the average Joe/Jane lives, I do not see a clear benefit. Frankly, the quality of life does not seem that great once I look past the architecture and history. Plus, I will miss my family and friends terribly.
True, I’m only half serious about considering retiring there. My whole extended family is here right in this county, no more than 20 miles away.
But my sister did have a roommate retired in Spain, she was renting a room from my sister, she’s dance teacher to some famous celebrity’s children. After she got a small inheritance from her father, she gave me her winter coat and moved to Spain.
Spain has very similar temperature/weather to my area, so it’s very tempting. Plus the seafood here is much better than my area.
Well, a lot of the folks I know that retire abroad do so for financial reasons. However, let me give you a counter example. I was in Valencia attending a meeting. One attendee fell and sprained her leg. One of the local attendee’s husband, a doctor, volunteered to go with her to the hospital to make sure she was going to get the right kind of care. At dinner that evening, I was chatting with another couple from Portugal. They said it “helps” to take a doctor friend along to make sure you get the right type of care at government hospitals. That right there told me everything I needed to know about not living in at least those two countries as an older adult.
