×

Warning

JUser: :_load: Unable to load user with ID: 746656

When Buying A Home Hurts Your Retirement Plans

Written by Posted On Monday, 14 August 2017 09:48

When I first got into real estate one of my first clients and friends (now) is a Financial Planner. His name is Beau Henderson and he explained to me about the retirement years and the needs of his clients.   One such area was our differring opinions on "the paid off house."  At the time I was a huge Dave Ramsey fan and believed that everyone should have a paid off home.   However, there's a danger in buying a home particularly as you start to think about retirment and it's not one size fits all. 

One potential risk is buying too much of a home.  While this does not have to make you house poor, it can limit savings in earlier years. Most American's don't seriously start saving for retirement until their 50's. Buying a large home in your 30's can limit or eliminate your savings plan all together. If you were looking at Florida Islands to retire to, you might have to ratchet it back to a home inland and look at homes in Davenport if you buy too big of a home initially.  In addition, buying a larger home requires more maintenance, more maintenance usually means eating into your emergency fund. Dave Ramsey recommends 3 or more months as an emergency fund. These can get eaten up real quick if your water heater breaks or one of your 3 air condition units goes out on a larger home.  

Other things to think about is do you want to be debt free or have a mortgage.  Beau opened my eyes here in particular.  To be debt free you can live off of your income and in theory reduce your needed income. If you pay off your home you can potentially retire earlier. The down side of this is that your money is all tied up in the home and you could come to a situation where you need to get the money out, leaving selling your home or the aggressive reverse mortgage as your only option if you were not prepared for emergencies properly. This just happened with my Grandmother who had a home in Alpharetta, GA..  She had to get a reverse mortgage and while it increased her income it was sad to sell the home.Basically you have to look at your situation, would you rather have a few hundred thousand dollars tied up in a home (that you could give to your heirs), or sitting somewhere earning income for you to live.   

 

Rate this item
(0 votes)
Joshua Jarvis

Joshua Jarvis is a recognized leader in the Atlanta real estate market, leveraging his extensive knowledge and experience to help clients navigate the dynamic landscape of buying and selling homes. His expertise extends beyond traditional real estate transactions, as he has successfully run a real estate company, providing comprehensive services for those seeking Atlanta homes for sale or looking to understand the broader Atlanta real estate market. In addition to his real estate acumen, Joshua is a pioneer in the field of Enterprise SEO, or Search Engine Optimization. His leadership in this domain has been instrumental in driving digital marketing success for his clients, positioning their businesses for greater online visibility and growth. Joshua is also an accomplished author, having penned the leadership book, Kingdom Driven Leader, and a popular blog post titled, "I Am Affirmations". This unique blend of real estate expertise, SEO leadership, and authorship sets Joshua apart as a multifaceted professional in today's digital age.

https://search4.homes

Agent Resource

Limited time offer - 50% off - click here

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.