Searching for your dream home for aging in place is one of the biggest steps you’ll take in life, and it involves a number of important decisions. Will you relocate from your current community? What features must your new home have? How much are you willing to spend?
Without a plan, your ideal aging-in-place home can end up as a costly regret. Here are three of the most egregious — and most avoidable — mistakes people make when buying a home for retirement, and some tips for avoiding them through proper planning.
1. Depending on Your Current Income
If you count on your current income when determining how much home you can afford, you may find yourself painted into a financial corner in the future. Many circumstances can change in retirement, and your income can change with them.
Things happen. Companies cash out pensions instead of paying annuities in perpetuity. The stock market rises and falls. Savings-depleting health crises pop up out of nowhere. Adult children lose jobs and need help.
If one spouse passes away, you want to be assured that the other spouse won’t suddenly have to pull up roots and move. Your dream home for aging in place should be forever, and you need a financial plan that can support your retirement lifestyle no matter what.
2. Failing to Accurately Estimate Expenses
As you’ve likely learned from owning previous homes, it’s easy to underestimate expenses. Creating a written plan for home-related expenses is essential. Start with state and federal taxes you’ll owe if you pull funds out of retirement accounts, and set aside any additional penalties you may pay at tax time.
In addition, put together a realistic budget for all the ongoing expenses you can expect, including:
- Changes and improvements you’ll make before moving in
- Ongoing maintenance and upgrades
- Landscaping and lawn care
Don’t forget to budget for periodic, large expenditures such as roof replacement, foundation repair and new HVAC components. Even if you’re moving into a condo or a 55-plus community, don’t assume you’ll be free from all home-related expenses.
3. Your Dream Home Away From Loved Ones
You may have spent your working years dreaming of a time you can permanently move where your heart desires. However, consider the downsides of packing up house and home to head for the beach, the mountains or anywhere else far from your current locale.
If you’ll be moving away from family, don’t underestimate the emotional impact the distance may create. You may already have grandchildren; will chatting online suffice? Or, will you regret the choice to move when you’re missing holidays, birthdays and other family events? What about grandchildren who have yet to arrive? Will traveling for a birth be an option — and will you be OK if it’s not?
Leaving your current community also means separating yourself from friends, places and activities that may mean more to you than you realize. There’s also the possibility that the new area won’t live up to your expectations. A move to your dream location may well be worth leaving your current life, but consider all the implications before deciding.
Pause to Smell the Coffee
Retirement is an opportunity to pursue your dreams — including the potential for living in any location you choose. Before you settle on your ideal aging-in-place home, consider the possible impact of moving to a new area, buying based on your current income, and failing to accurately estimate future expenses. These factors are often overlooked, and they can lead to much higher costs down the line.