Choosing the right house for your retirement years depends on several factors. Many people downsize to a smaller home, either because their economic situation demands it or because they don’t want to deal with the maintenance and upkeep of a larger home. Others move to be closer to the amenities they now have time to enjoy, since their working days are over. Still others choose a new home (or renovate the one they have) so they can fully engage in hobbies or activities they love. Maybe the most common reason to choose a new home in retirement is proximity to children and grandchildren.
What about you? What should you do in retirement? To answer this question, the first step is to get a clear picture of what you can afford. Review your assets and income. If you can maintain a comfortable living in your current home, there’s no need to move.
If, on the other hand, you need to cut expenses, you can either downsize in your current neighborhood, or you can move to a less expensive location and maintain the square footage that allows you to host regular visits from family and friends or maybe to create a space to explore hobbies like wood turning or oil painting. If you’re not interested in taking care of a large house but you’d love enough property to have a big garden, you can do that by moving to a less expensive location, too.
The size of your house may not matter as much as its proximity to amenities like a golf course, hiking and biking trails, a university with free lectures, or a bustling downtown full of shops and cafés. With the recent adoption Proposition 19, California homeowners older than 55 can transfer their property tax base when they purchase a new primary residence, so moving won’t mean getting hit with a huge property tax bill. And if you’re thinking of buying a new home, now’s the time. Interest rates are incredibly low. Your Realtor can help you figure out what you can afford and where you can find the amenities you’re looking for.
If you decide not to move but instead to renovate your home, allow me to give a little advice. Whether you plan to do the work yourself or hire a contractor, I’d add about 30 percent to any cost estimate that seems realistic and reasonable. Mission creep is almost inescapable in home renovation. For example, let’s say you plan to do more cooking in retirement so you want to upgrade your kitchen. Be assured that minor upgrades will be hard to resist. If you’re already spending thousands of dollars on new cabinets, why not spend a few hundred more for self-closing drawer slides? It’s a rare person who can resist the opportunity to do just a little more when you’re already investing so much.
If you’re concerned about having enough income during retirement, you might consider a reverse mortgage. If you’re at least 62 years old and you own your home outright, you can borrow against it and never have to pay back the loan. It’s called a reverse mortgage and it allows you to convert some of your home’s equity into cash. Unlike traditional mortgages, the loan does not have to be repaid until you move out of the house or pass away.
For my retirement, I plan to stay right where I am, living in the house where I raised my children. I like the familiarity of my house, the view, and most importantly, the idea that my children will be able to bring their eventual spouses and my eventual grandchildren to the home where they grew up. I anticipate hearing the laughter of little voices and the pitter-patter of little feet running down the hall, likely punctuated by the occasional yells that occur when things haven’t gone someone’s way. I look forward to spoiling grandchildren in this wonderful house.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.
Dick Selzer is a real estate broker who has been in the business for more than 45 years.