Clients often ask how housing fits into retirement plans. From downsizing to rental properties to interest rates, let’s explore some of the top retirement questions about housing.
The Reality of the Matter:
A home is usually your biggest asset, so it makes sense that clients have a lot of questions about how housing fits into retirement plans. Should you downsize? Refinance? Pay off your mortgage? What about interest rates?
On this episode of the Retirement Reality Podcast, Mike Kojonen dives into those questions.
Should you pay off the house early or enjoy the low interest rate and pay it off slowly?
“It all depends on where you are in retirement,” said Mike. “I’m a big fan of being debt free. So if you can have the mortgage paid off by the time you retire or maybe the first couple of years into retirement, I think that’s the best plan.”
But it’s OK if you aren’t able or don’t want to do that. If you need more cash flow, you can refinance into a low-interest rate to get an affordable payment so you can enjoy retirement.
Is it wise to downsize to a smaller home at retirement?
About two-thirds of our clients want to downsize in retirement, or “right size” as a realtor we know prefers to call it.
Some clients want less space because their kids are out of the house. Others want a smaller home so they can buy a vacation property as well.
Is rental property a good idea for creating income in retirement?
A rental property can be a good revenue source, but some people in retirement don’t want to deal with the hassle.
“They get kind of burnt out being that landlord,” said Mike.
What complications, if any, have you seen with handling real estate when it comes to estate and legacy plans?
We’ve seen a lot of people make errors with estate planning documents or lack of documents.
Also, some adult children of our clients are not interested in owning their parents’ property. The prices can be high and out of reach for them.
If you do decide to transfer property to your children, make sure you get a proper real estate plan done. We are big fans of using revocable living trusts or transfer and death deeds.
Listen to the full episode or use the timestamps below to find a specific segment, including two mailbag questions from listeners.
4:00 – Pay off the house early or slowly?
6:28 – Downsize to a smaller home at retirement?
8:55 – Is rental property a good idea for creating income?
10:37 – Complications with real estate legacy plans?
14:47 – Contact Mike
15:34 – Mailbag: How much money will I spend in retirement?
17:15 – Mailbag: Can I overcome a divorce this late in life?
Thanks for checking out the Retirement Reality Podcast. We’ll talk to you again next week.