By Rick Bloom, J.D., CPA
Bloom Asset Management

16250_442I read an article recently about a retired couple who is now home free. They sold their home and their possessions and they now travel the world living a month or so here and a month or so there. They have found that their cost of living is no different than when they owned a home; however, now they can travel the world. Obviously, that is not for everyone; however, something that everyone who is retired or thinking about retirement needs to spend some time thinking about is housing options. It’s not like the old days where when you retired you had very few options. That’s not the case today. There are an abundant number of housing options that retirees can choose from. Whether it’s being home free, living in a senior residential complex or whatever, you have options. The key is that you don’t rush into anything; that you take your time and select the right option for your situation.

Should you wait until you’re retired to begin looking at housing options or should you start exploring those options as you approach retirement? As far as I’m concerned, it is something that you should think about a few years away from actually retiring. Why, because it may make a difference in what you do with your home today. For example, I recently met with someone who will be retired in three years and at that point in time their plan is to sell their home and move down south. Currently, they have about 18 years left on their mortgage at a little over five percent. What I recommended to them was a three-year adjustable rate mortgage. The rate they’re receiving is just a little more than half of what they are currently paying. My strategy was that they can continue to make the same payment they are now, which means at the much lower interest rate more and more of their money will go to pay down principal, not interest. This is just one situation where knowing your housing options can help you make better decisions today. Another example, if you were planning to move in a couple years it would not necessarily make sense to put large sums of money into redoing your home. The bottom line is that you can make better decisions and keep more money in your pocket, where it belongs, by thinking about issues such as housing in advance.

Another benefit of thinking about housing options before you retire is that it will give you sufficient amounts of time to explore different options. I have found that when someone has the time to make a decision they have a better chance of making the right decision as opposed to waiting until the last minute.

One last note to keep in mind, that if you’re retiring in your 60s, that doesn’t mean that you have to look for housing option that will last you the rest of your life. After all, we don’t know what 10 and 20 years down the road will bring. What you need to do is at least decide where you want to be for the foreseeable future. Always remember, there’s no one right answer for everyone and you shouldn’t focus on what your friends are doing. What you should focus on is your individual situation, your finances and your needs.

Good luck!