I recall my grandparents taking an unconventional retirement path. As soon as their youngest offspring turned 18, they bid farewell to their family residence, invested in a trailer in the sun-kissed state of Florida, and made it their home base for seven months annually. For the remaining five months, they resided in a 5th wheel trailer.
Their choice to trade in their house for trailers streamlined their retirement finances considerably.
With their house entirely paid off, the profits from its sale, post trailer purchase, were redirected towards bolstering their retirement nest egg.
Remarkably, their retirement savings saw them through their golden years. A quarter of a century after their retirement and decision to sell their home, they left behind a modest legacy for each of their nine children.
Yet, for a majority contemplating retirement, parting with the cherished family home is a daunting decision. Emotional ties to their homes run deep, so much so that according to Forbes, a whopping 83% would rather grow old in their current homes. Nonetheless, the practical choice might be to let go.
The Financial Upside to Home Selling in Retirement
From a purely monetary standpoint, there’s a strong case for those approaching or in retirement to consider putting their house on the market.
Clearing Mortgage Debts & Amplifying Investments
Debt-free retirement is a dream many strive for but, unfortunately, fewer seem to attain it. Statistics from The New York Times reveal that the percentage of homeowners aged above 65 with housing debt climbed from 23.9% in 1998 to 35% in 2012.
Setting emotions aside, if there’s an outstanding mortgage on your house, retaining it might be a financial misstep. Beyond the monthly mortgage, there’s considerable equity trapped in an asset that’s not readily liquid. Liquidating that asset could be a drawn-out process.
However, if you opt to sell and shift to a more affordable home, paying in full, you’re relieved of monthly mortgage obligations. This can often liberate more than $1,000 from your monthly expenses. Moreover, the equity from the house sale can bolster your retirement corpus.
Trimming Down Other Outgoings
Large houses often cater to the needs of bustling families, filled with children, their companions, and a universe of belongings. Once the children embark on their own journeys, the parents might find the house overwhelming. Downsizing can lead to reduced utility bills, property taxes, and upkeep costs – potentially saving upwards of $500 monthly.
An Earlier Retirement Beckons
Eliminating monthly mortgage, maintenance, and utility bills, combined with the luxury of investing home equity into retirement savings, might just fast-track your retirement. Those additional years can be an opportunity to relish the retirement you’ve worked hard for, especially while in good health.
The Adventure of a New Beginning
While the thought of parting with your home might be unsettling, it might also be the silver lining you didn’t expect. Not being tethered to a home can unveil a world of possibilities, from travel adventures to relocating or even settling in a retirement community, free from the hassles of home maintenance.
It’s natural for our homes to hold sentimental value. They’ve witnessed families growing, years of laughter, tears, and countless cherished memories.
Yet, if you manage to look beyond these sentiments, you might discover that selling your house could be the catalyst to a retirement more fulfilling than you ever imagined.
Are you leaning towards selling your home as you approach retirement, or is the emotional bond too strong to break?
