How to Buy a Home for Your Retirement Years

While retirement planning can be extremely complex and demanding, deciding where to live in retirement is one of the biggest decisions you must make, since it carries both financial and lifestyle implications.

Financially, the home is often a retiree’s largest asset and, at the same time, housing costs tend to be a retiree’s largest expense. On the flip side, where you live will also significantly impact your retirement lifestyle and ability to age in place. So, regardless of whether you plan to relocate and buy a new retirement home or stay where you are, there are a lot of factors to consider.

Many retirees have not thought about where they want to live in retirement before they retire, which is unfortunate because it can have a significant impact on your retirement costs.

How Will You Pay for It?

When thinking about purchasing that retirement dream home, consider how you will finance the purchase. For most people, this starts with selling your current home and using equity freed up from the sale to help close on the new home.

But you will also need to consider whether you will take out a mortgage and find out if you will even qualify for a mortgage. Mortgage rates and qualification are largely based on employment status and income, so it often comes as a surprise to retirees who no longer work and have lower income when they get a high rate or struggle to even qualify for certain mortgages.

Retirees often turn to one of two plans:
  1. Set up a new 15- or 30-year mortgage
  2. Pay off the new house entirely in cash

While both strategies work, both have their downsides. By taking on a new mortgage payment, you’ll need to make sure you have the cash flow to support the new payments. On the other side, completely paying off the new house can tie up a large portion of your wealth in an illiquid asset.

Business professional using his tablet to check his financial numbers

401(k) Calculator

Determine how your retirement account compares to what you may need in retirement.

Get Started

Get in Touch

In just minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Find an Advisor