Nearing retirement often means a time of several changes and decisions. One important and significant decision faced before or soon after retirement is the decision between selling your home or continuing your golden years in the same place. Furthermore, if you choose to sell your home you’ll need to decide if you’ll buy again or rent. If a retiree has a lot of equity in their home or even owns it outright, selling may result in significant funds for retirement. Each retiree has slightly different priorities. Some may prioritize relocating to a different country with a more desirable climate while others may be interested in relocating to the other side of town to be closer to their grandchildren. Some retirees may meet their priorities best by staying in their current home and altering it to suit their changing lifestyle. Whatever the priorities are of a retiree, the goal is to ensure the possible reduced income of retiring is able to cover the demands of your new retirement lifestyle.
The changes and decisions that come with retirement needn’t surprise you. If you play your cards right, you can be in a position where you have a clear and lucrative plan for retirement. The following are important factors to consider when deciding when may be the right time to sell for retirement and what to do after you sell.
Reasons to stay in your current home after retiring
Not all reasons to stay in a home are financial. At retirement, some retirees may have years or even decades of memories within the walls of their home. Perhaps you have a true sense of community in the neighborhood you’ve been in for years, which can keep you active and social. It can be reasonable to remain in your current home once you retire if the financial resources are available to comfortably do so. Perhaps you’ve already taken the time and spent the money to modify your current home so that you’re comfortable and safe moving forward after retirement. You may have upgraded your showers and baths for ease of use or modified stairs for safety as the years pass. If you have all you need and want in your home, you’re able to do the things you’ve planned for your retirement years and you have the income to support it, staying put can be the right choice.
Reasons to sell your home after retiring
Whether you’re retiring or not, when the upkeep of a home becomes too challenging to manage, it’s usually a sign that it’s time to sell. As well, often times retirees live on a lesser income than they did when working, therefore the general maintenance and repairs may not only be a physical challenge, the cost of them may be too much to carry. Retirees may find the size of their home is starting to be a hindrance whereas it used to be an asset. With the free time you receive in retirement, you may find travelling and other activities become more important than owning a sizeable home or owning a home at all. Downsizing or even selling to rent might be suitable as your lifestyle and income changes during retirement.
If you can no longer afford the home you live in based on your retirement income, selling can become the solution to prevent crucial retirement funds being wasted on a home that may not even suit your needs anymore. Downsizing or selling to rent can not only put you in a financial situation that makes sense for your income, it can give you the chance to make new choices that suit your needs better like a retirement community with a ton of amenities, a smaller home closer to your in-laws or a one level bungalow in a pedestrian-friendly neighborhood.
If you sell at retirement, do you own again or rent?
Choosing between owning or renting after you sell your home is much more than just a financial decision. There can be significant differences in the freedom and responsibility you’ll have based on if you own or rent. As well, the amount of equity you have in the home you’re selling is an important factor in deciding what to do with the money from your sale.
Renting
Renting after selling your home during retirement can be a good option if the equity in the home you sold was low and you’re looking to avoid high mortgage payments, maintenance, repairs and possibly the utilities. The aforementioned costs can be avoided if you find a place to rent which meets all your needs and has all or most of these costs included in the rent. Renting can also mean less responsibility as the owner is responsible for much of the building’s upkeep. Renting can give you additional freedom because, though you may be required to sign a one or 2 or 3 year lease at first, thereafter you can rent month to month giving you the freedom to leave if you choose to.
If your retirement income is low or keeps you in a budget you’re not used to, moving into a rental can free up the equity from your home sale which could fund your monthly expenses during retirement. Some retirees will take part of the equity from the sale of their home and invest in another type of investment with a decent return while still being available should you need access to it.
Keep in mind that while renting an apartment, a condo or a unit in a retirement community can alleviate you from maintenance and give you a great sense of community, it also comes with restrictions over things like renovations, pets and decorating. As well, it’s important to financial plan properly when looking for a rental as some come with hefty condo fees and may require you to consider things such as paying for parking.
Buying
Some retiree’s priorities align best with downsizing to a different home after they sell their home in retirement. If you have a good amount of equity in your home, it may be worth selling to release that equity and downsize to a smaller more manageable home with a smaller price tag. You may even have enough equity in your home to pay cash for a smaller home, leaving you with no mortgage. Downsizing can lower your monthly costs on things such as maintenance, property taxes, utility bills, and even furnishings.
If you’re not quite ready for a retirement community and still feel confident in maintaining your own property, a new more appropriately sized home with the right requirements can be the perfect option early in retirement. Bungalows are desirable as they have little to no steps for people looking for a more accessible home. It’s important to work with a real estate agent you trust who will help you plan your next home purchase to accommodate all your changing needs post-retirement to keep your enjoyment of retirement at its fullest.
If you’re looking to or thinking of downsizing, Call Sylvain Bourgon and he will be more then happy to help you plan for the next chapter in your life!
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If you are seeking advice on selling a home in the Ottawa area, or have more questions for us, we are happy to provide you with helpful guidance and support. Email us at info@buyandsellottawa.ca or call us at 613-590-3036.