jd2005
Established Member
Joined: Mar 15, 2011 14:16:37 GMT -5
Posts: 411
|
Post by jd2005 on May 2, 2011 9:36:01 GMT -5
The "what is your retirement number" thread go me thinking...to own a home or not to own a home? This question, 5 years ago, was very clear in my head - yes. But now, after relocating for work, and having my house 65% underwater on the other side of the country, I'm not so sure.
For those who do not own a home, how do you calculate your housing expenses for retirement? I mean, rent will not always be the same as you are paying now. Also, won't you need more $ during retirement to pay for rent as compared to being able to pay off your home and live in it rent free?
|
|
Deleted
Joined: May 3, 2024 2:43:15 GMT -5
Posts: 0
|
Post by Deleted on May 2, 2011 9:56:10 GMT -5
We plan to own during retirement, but to seriously downsize. Right now we're in a 3200 sf house on 15 acres. The plan is to get a small cabin, starter home, or a condo after retirement. We want to own, but we don't want all that money tied up in our home equity either.
|
|
phil5185
Junior Associate
Joined: Dec 26, 2010 15:45:49 GMT -5
Posts: 6,409
|
Post by phil5185 on May 2, 2011 10:02:08 GMT -5
The plan is to get a small cabin, starter home, or a condo after retirement. So where will that pretty Paint gelding live?
|
|
Deleted
Joined: May 3, 2024 2:43:15 GMT -5
Posts: 0
|
Post by Deleted on May 2, 2011 10:20:56 GMT -5
I wish that one was mine! But yeah...might need to find a place that I can keep horses. Not sure I'd be happy without at least one around.
|
|
Deleted
Joined: May 3, 2024 2:43:15 GMT -5
Posts: 0
|
Post by Deleted on May 2, 2011 10:24:39 GMT -5
We currently rent but we do intend to own eventually. Currently makes more sense to rent since with my job I might have to move at the drop of a hat.
It is easier to brake a lease than sell a home.
|
|
Havoc
Junior Member
Joined: Dec 21, 2010 22:38:52 GMT -5
Posts: 221
|
Post by Havoc on May 2, 2011 10:25:25 GMT -5
We own what we hope will be either our "forever" or our "helluva-long-time" home, in part because of the feeling of security it brings - we aren't dependent on landlords, don't have to worry about escalating rents driving us out of where we want to live, and since we plan on having it paid off by the time we retire we shouldn't have housing expenses outside the prop taxes and upkeep expenses.
I know that there is a strong school of thought among some of the MS Money refugees that mortgages aren't bad and that "dead equity" should be put to work making that annual 11% return (and we do have/will prolly keep mortgages on our rentals), but with regards to our home it is more of a mental security thing - we like knowing that it is ours.
|
|
cronewitch
Junior Associate
Joined: Dec 20, 2010 21:44:20 GMT -5
Posts: 5,974
|
Post by cronewitch on May 2, 2011 10:42:58 GMT -5
I will always own. For retirement I want to move to a house without stairs, a simple ranch style home on maybe 1 acre with outbuildings like a barn. Then as I want to do less with age I can get rid of the toys and leave the buildings empty of boats, campers and other things.
One advantage is you will never be forced to move if you can pay the taxes and other cost of living. Our county gives low income elderly breaks on taxes and many charity type things help people stay in a home. A house is more indoor and outdoor space so you can move in help easier and don't need permission. So I could get more roommates if needed, rent out the empty barn or other outbuildings as storage or other methods of making the payments.
Ownership is also lifestyle as a renter you can't put in trees or fences and if you develop the soil for a wonderful garden you might not get to enjoy it.
Renting a house is much more expensive over 30 years than owning and you have nothing left at the end. Also the number of houses to choose from is smaller.
|
|
dancinmama
Senior Associate
LIVIN' THE DREAM!!
Joined: Dec 18, 2010 20:49:45 GMT -5
Posts: 10,659
|
Post by dancinmama on May 2, 2011 10:50:20 GMT -5
We plan to own during retirement, but to seriously downsize. Right now we're in a 3200 sf house on 15 acres. The plan is to get a small cabin, starter home, or a condo after retirement. We want to own, but we don't want all that money tied up in our home equity either. It's a good plan unless the economy takes a right before you plan to retire. My DH works with many people who were planning on doing this exact same thing, but cannot do so as their houses have dropped too much in value.
|
|
dancinmama
Senior Associate
LIVIN' THE DREAM!!
Joined: Dec 18, 2010 20:49:45 GMT -5
Posts: 10,659
|
Post by dancinmama on May 2, 2011 10:52:42 GMT -5
The "what is your retirement number" thread go me thinking...to own a home or not to own a home? This question, 5 years ago, was very clear in my head - yes. But now, after relocating for work, and having my house 65% underwater on the other side of the country, I'm not so sure. For those who do not own a home, how do you calculate your housing expenses for retirement? I mean, rent will not always be the same as you are paying now. Also, won't you need more $ during retirement to pay for rent as compared to being able to pay off your home and live in it rent free? For anyone who plans to rent in retirement, I would think that you could apply some type of inflation factor to the rent to calculate how much renting might cost you two, ten, or fifteen years out.
|
|
tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
Posts: 6,831
|
Post by tskeeter on May 2, 2011 11:05:51 GMT -5
The primary long term advantages of owning a home are that your housing costs are less impacted by inflation and that over time you acquire a valuable asset that can be sold.
If you rent, your monthly rent payment will probably cover all of the landlord's costs, plus provide the landlord a profit on their investment. If you own, you get to keep what would be the profit portion of the rent.
If you rent, it is very likely that your rent will increase to keep pace with increasing home prices and comparable rents in the area. A mortgage payment can be arranged to lock in the amount of the payment for decades.
If you rent, your landlord will be very unhappy if you sell your rental unit to fund your retirement. If you own, selling your home is always an option. You may not get as much money as you want, but a home with equity always has some value.
|
|
Kung Fu Panda
Junior Member
Joined: Dec 20, 2010 11:41:07 GMT -5
Posts: 142
|
Post by Kung Fu Panda on May 2, 2011 13:08:11 GMT -5
Someone on the boards posted this link. It is a really well done calculator for the Rent V Buy question. IMO it all comes down to how long will you stay in the house. I have found that I have an 8 year break-even. After That the financial benefits to a home are obvious. I state that in texas, we have not seen the type of Housing Price bubbles that some parts of the country have seen, so 60% underwater is not really a concern. www.nytimes.com/interactive/business/buy-rent-calculator.html
|
|
|
Post by BeenThere...DoneThat... on May 2, 2011 13:11:07 GMT -5
<<< I mean, rent will not always be the same as you are paying now. >>> ...nor will taxes...
|
|
|
Post by BeenThere...DoneThat... on May 2, 2011 13:12:30 GMT -5
<<< Renting a house is much more expensive over 30 years than owning >>> ...why?
|
|
|
Post by BeenThere...DoneThat... on May 2, 2011 13:14:13 GMT -5
We currently rent but we do intend to own eventually. Currently makes more sense to rent since with my job I might have to move at the drop of a hat. It is easier to brake a lease than sell a home. ...agreed... although we may never own, since we may never slow down...
|
|
|
Post by ty on May 2, 2011 13:16:30 GMT -5
I think owning a home is better then renting these days, and it depends on where you own it as well. In CA owning a home is a lot more expensive than some states back east. It really depends on where you live.
|
|
Havoc
Junior Member
Joined: Dec 21, 2010 22:38:52 GMT -5
Posts: 221
|
Post by Havoc on May 2, 2011 14:26:13 GMT -5
<<< I mean, rent will not always be the same as you are paying now. >>> ...nor will taxes... True, but if you are renting, you are STILL paying someone else's high property taxes (plus their mortgage, their property maintenance fund, their monthly Mickey D runs, etc.)....
|
|
sil
Established Member
Joined: Jan 7, 2011 18:56:29 GMT -5
Posts: 396
|
Post by sil on May 2, 2011 15:27:00 GMT -5
Our new plan is to invest in an index-fund for now, gradually moving to more conservative vehicles, with an intent of buying a house with cash right when we retire. We'll buy a retirement-friendly house in a retirement-friendly state when the time comes. Until then, we rent.
Beauty of this plan is, if real estate values take off again or if rental rates rocket skyward, we can always toss this plan out the window, cash in our investments and buy.
|
|
jd2005
Established Member
Joined: Mar 15, 2011 14:16:37 GMT -5
Posts: 411
|
Post by jd2005 on May 2, 2011 15:29:33 GMT -5
Beauty of this plan is, if real estate values take off again or if rental rates rocket skyward, we can always toss this plan out the window, cash in our investments and buy. This makes me feel better. I like this plan, and will adopt it to my own.
|
|
Deleted
Joined: May 3, 2024 2:43:15 GMT -5
Posts: 0
|
Post by Deleted on May 2, 2011 15:38:20 GMT -5
We are building a 2400sq/ft ranch house right now. Being a ranch house with no steps, I expect it to be our "forever" home (we are in our mid-30's).. I couldn't imagine not owning a house.
|
|
cronewitch
Junior Associate
Joined: Dec 20, 2010 21:44:20 GMT -5
Posts: 5,974
|
Post by cronewitch on May 2, 2011 15:38:21 GMT -5
<<< Renting a house is much more expensive over 30 years than owning >>> ...why? Because you are paying for what the landlord can currently rent for all the time. Thirty years ago was 1981 and a house I bought was 80K. We were paying 14.5% interest and had a payment of 930 for a big house. If I had still owned the house the payment would have gone down since I would have refinanced and the property taxes would have gone up. This year it would have been paid off and worth about 250K. I could sell it and go rent something or keep living there but my profit would be mine. So total cost of owning for 30 years is about 360K less sales price of 250K so owning is around 90K net plus the cost of selling and maintaining a house. Rent would have started at about 1K and currently be 2K so cost maybe 480K to rent for 360 months and you have nothing when you move out. Most people buy more house than they will rent so compare a house to a small apartment. Going from a 400 apartment to a 930 house is more expensive but it isn't the same thing.
|
|
Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
|
Post by Sum Dum Gai on May 2, 2011 15:50:18 GMT -5
This question, 5 years ago, was very clear in my head - yes. But now, after relocating for work, and having my house 65% underwater on the other side of the country, I'm not so sure. Be careful with how you look at this. You bought at the peak, and now that houses are low, you don't like them. Which means you might wait too long and buy another one when they're expensive again. Imagine if you're situation was reversed, i.e. you bought when houses were cheap and when you needed to move for a job your house was worth 65% more than you paid for it. Would you still be poo pooing home ownership, or would you think it was the greatest thing since the invention of the index fund? In case anyone wondered, index funds are so vastly superior to sliced bread that it's not even worth discussing, so from now on I'm using that as my benchmark for awesome. I mean really, how freaking lazy have we gotten that slicing our own bread is really that big of a deal?
|
|
❤ mollymouser ❤
Senior Associate
Sarcasm is my Superpower
Crazy Cat Lady
Joined: Dec 18, 2010 16:09:58 GMT -5
Posts: 12,857
Today's Mood: Gen X ... so I'm sarcastic and annoyed
Location: Central California
Favorite Drink: Diet Mountain Dew
|
Post by ❤ mollymouser ❤ on May 2, 2011 16:22:48 GMT -5
Also, won't you need more $ during retirement to pay for rent as compared to being able to pay off your home and live in it rent free? Keep in mind that there are more costs to home ownership than JUST the mortgage. A paid-off mortgage, once achieved, doesn't really equate to "rent free living." For example, we pay approximately $300 per month in property taxes, $100 per month in homeowner's insurance, $60 per month in earthquake insurance, $40 per month in flood insurance, $100 per month for water, sewer, and trash ... totalling $600 per month. And that doesn't include what we pay for pest control services, lawn maintenance, pool maintenance/chemicals/electricity to run the pool pump..... that's another $400 or so per month. So, in our case, not counting a mortgage, we pay $1000 per month for our home. Granted, we could trim some of those costs if we needed to ... but I think some of these costs still need to be factored in to any budget.
|
|
Phoenix84
Senior Associate
Joined: Feb 17, 2011 21:42:35 GMT -5
Posts: 10,056
|
Post by Phoenix84 on May 2, 2011 18:13:11 GMT -5
I'm in a similar situation as the OP and agree that renting is the best option for some people.
I ended up buying a house in 2009 but ended up moving for work a little more than 1.5 years later. I'll end up taking a loss on the place, so I'm not too keen on buying again unless I'm SURE I'm staying in an area for at least 7-8 years. Owning is great for retirement but not great if you can't be tied down to a particular area.
Plus I hate to spend my weekends doing housework. Having a big house with a big yard with lots of home improvement projects makes my skin crawl. One of the nice things about renting is you can call the landlord if something breaks.
|
|
|
Post by BeenThere...DoneThat... on May 2, 2011 19:15:08 GMT -5
<<< I'm in a similar situation as the OP and agree that renting is the best option for some people. >>> ...it sure helps when you can rent for around the cost of expensing a house...
|
|
|
Post by BeenThere...DoneThat... on May 2, 2011 19:16:58 GMT -5
<<< Plus I hate to spend my weekends doing housework. Having a big house with a big yard with lots of home improvement projects makes my skin crawl. >>>
...we say "to-mah-to" and they say "to-may-to," I suppose... ;D
|
|
|
Post by gsbrq on May 2, 2011 19:56:23 GMT -5
I own now, and plan to own in retirement. I don't like renting or sharing walls with my neighbors. And I think generally speaking, Crone is right; owning is a better deal. If it weren't, who would invest in rental property? The house I'm in now is unsuitable for "aging in place", so at some point I need to buy a home for my retirement. I'd like one around the same size or smaller than my current house (1200 sq ft), but with a swimming pool. I can't afford a pool yet....but someday
|
|
TheOtherMe
Distinguished Associate
Joined: Dec 24, 2010 14:40:52 GMT -5
Posts: 27,199
Mini-Profile Name Color: e619e6
|
Post by TheOtherMe on May 2, 2011 21:21:14 GMT -5
I bought this house in July 2009. I made sure that all the necessities on on one level with no steps. Laundry just inside attached garage, then kitchen, dining room, living room, 3 bedrooms and 1 bathroom. Being all on one level was one of my requirements.
I do have a basement with a finished and empty laundry room and a bathroom. Rest is unfinished. I will never finish it as I don't need it.
I bought the house with the idea of it being my forever home. I'm 59. It was either pay a mortgage or pay rent for the rest of my life. I do hire the lawn mowing and snow removal. It's a very small town and if I should get to where I need services like Meals on Wheels, I may have to sell it and move to town.
Right now we do have a small grocery store. They deliver to the elderly and homebound. Don't know their financial situation but am sure it's hard for them to stay open. I haven't gone so far as making inquiries in to the bus that comes out here from town for seniors as I can drive myself. I wouldn't need to do that more than once every two weeks unless I was seriously ill.
If I do have to sell this house, it would have to be at least 10-15 years from now unless things really change in the housing market. There are a lot of senior apartments in town and I'd move in to one of those.
|
|
Deleted
Joined: May 3, 2024 2:43:15 GMT -5
Posts: 0
|
Post by Deleted on May 3, 2011 2:48:16 GMT -5
"I'd like one around the same size or smaller than my current house (1200 sq ft), but with a swimming pool. I can't afford a pool yet....but someday" Buy into a subdivision that has a community pool. Much, much cheaper and easier . "I bought this house in July 2009. I made sure that all the necessities on on one level with no steps. Laundry just inside attached garage, then kitchen, dining room, living room, 3 bedrooms and 1 bathroom. Being all on one level was one of my requirements. I do have a basement with a finished and empty laundry room and a bathroom. Rest is unfinished. I will never finish it as I don't need it." Now is a good time to evaluate whether it can be converted into a supplemental unit. In CA nearly every city passed an ordinance to allow "granny flats" so an additional unit can be approved for SFR neighborhoods. The thinking was that either the "granny" could live in the additional unit and collect rent from the main house, or rent out the additional unit for supplemental income. In my MIL's case, she has had a series of caregivers stay while she has undergone several different operations over the last 6 years. She's 76 and I think she's had at least one operation every year. She has long term care insurance so if she needs a live in attendant, the long term care will pay for that attendant (but not housing housing costs). It's a real benefit to a care giver in HCOLA areas. As part of our retirement journey which starts next year, we will be doing some remodeling. Since we'll be tearing apart the house anyway, we will be adding/remodeling a bath in each house with an eye to the aging process. Also we are looking at making a room in each house more amenable to a caregiver/older parent unit. It will add 5% to 10% to the remodeling cost but I think well worth the investment so we are prepared when it happens.
|
|
zibazinski
Community Leader
Joined: Dec 24, 2010 16:12:50 GMT -5
Posts: 47,866
|
Post by zibazinski on May 3, 2011 6:46:38 GMT -5
Because of DF's health issues I insisted on a one level house. Master, one and a half baths, kitchen, laundry, great room, and den all on one floor. Basement is finished and has 2 bedrooms and a full bath but no walkout basement. Could make it one if desired. He wants to but other than cosmetic things I want to sink no more money into a house in Michigan, of all places. But it is small and has a HOA for maintenance which is a good thing. I didn't want to buy in a HOA but the single family homes the size I wanted were in bad areas. I wanted small. Small yard and backyard because we BOTH hate yardwork.
|
|
|
Post by gsbrq on May 3, 2011 7:11:52 GMT -5
"I'd like one around the same size or smaller than my current house (1200 sq ft), but with a swimming pool. I can't afford a pool yet....but someday" Buy into a subdivision that has a community pool. Much, much cheaper and easier . . Cheaper, yes, but not what I want. I don't want to share a huge pool with other people; I want a small pool in my own backyard where I can swim, exercise, and relax in peace and quiet.
|
|