Things You MUST Do If You're NOT Downsizing in Retirement

SeaBreeze

SeaBreeze

Endlessly Groovin'
Location
USA
We paid off our mortgage long before we retired and did some of these other things too, we don't plan to downsize and want to stay in our home in our 'golden' years. More HERE.

Don’t have more mortgage cost and living expenses than retirement income.

While most homeowners expect to pay off their mortgage prior to retirement, the truth is millions won’t. According to the U.S Census Bureau, 14 million homeowners over 65 years old had mortgages at the end of 2015. Meanwhile, the Census also reported that, on average, income declines about 20 percent between pre- and post-retirement.

That kind of income drop could blow a huge hole in your retirement budget if you're still paying a mortgage. If you have plans to stay in your home after retirement, actively look at ways to pay off your mortgage sooner. Some choices include adding a little extra each month to your mortgage payment, which will reduce the amount of principal owed dollar-for-dollar, helping you reach full payoff sooner. Work with a financial planner or housing counselor approved by the U.S. Department of Housing & Urban Development to identify which spending reductions most painlessly free up cash for the extra payments.

Pay for major repairs now, not when items are on their last legs.

"If it ain’t broke, don’t fix it" is a well-known mantra. However, when it comes to the major systems in your home and their effect on your retirement budget, it may make sense to pay for some things before you make plans to while away the days in your backyard or traveling.

Items that should be replaced while you’re still a few years from retirement and earning income at peak level include roofs, heating and cooling systems and water heaters. Every home is different, but the average cost to replace a roof is $7,000 to $10,000. That would be a significant expense for the average retiree.


The same thing applies to heating and cooling systems. It’s better to replace these quality-of-life items when you’re at your highest income, not when you may have to dip into retirement savings to make it through a sweltering summer or frigid winter.

Take advantage of property tax abatements.

Most states offer an opportunity for retirees to reduce their property tax bill. Remember, even if you have paid off your mortgage, the local jurisdiction continues to assess property taxes. In some communities the property tax bill can be thousands of dollars each year. By applying for an exemption from, or reduction in, property taxes, retirees can increase their discretionary income available in retirement.



Some jurisdictions that offer property tax exemptions require the homeowner to update their exemption status. One good way to review the status of your property tax exemption is to check in with the local government when filing income taxes, especially if you’re a homeowner who itemizes. That line currently on your federal income tax form accounting for local and state taxes is a great reminder to look again at your property tax status. As always, check with a professional licensed in your state for advice on preparing tax forms.
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Don M. said:
IMO, the Most important thing is to be Debt Free, second only perhaps to staying fit and healthy. Living on a fixed income, and having to make house payments, etc., is a sure drain on enjoying retirement.
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I couldn't agree more Don, if we had any debt we certainly wouldn't have retired early. Early retirement was a goal for us throughout our working years, and we saved for it to make it possible. Not having any children helped too, it's very expensive to raise a child these days. I think we'll be okay now moneywise unless one of us gets serious ill, then all is up in the air. Medical expenses and special care will chip away at savings very quickly.
 

I agree that the most important thing is to be debt free.

IMO debt is for the very young and the very wealthy.

Another important thing is to maintain some reserves and continue saving. IMO retirement is not a destination where we can drop our bags and breathe a sigh of relief. Retirement is a phase in our lives that will have its own unique surprises and expenses that we will need to pay for.

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"Ageing in place" is a popular concept, but never again will you be as young as you are right this minute. The stairs in that 2 story house that are good exercise today may be an ordeal in 10 years. It is prudent to plan ahead.
 
We solved a lot of our problems before they happened. We lived (and still do) in the house that was previously built and owned by my grandfather, passed on to my folks when gramps died, then to me when my folks passed back in the mid-60's. Except for the first years when it was built, it was a home always shared by 2 generations. In 1995, when our youngest daughter and husband (living with us at the time) were about to have their first child and were looking to build a home, we offered to give them the family homestead, and in return, retained a life-lease for the remainder of our lives.

It's been a wonderful experience and although I used to shovel snow, mow the grass, etc., as the years have caught up with me, all of the chores have passed onto my SIL and their young adult children. We were able to spend our winters in Florida for 20 years and still spend a month each in spring and fall in Maine without any concerns regarding the house. No taxes, heat, water bills and/or general upkeep. It was a perfect solution to the problems that everyone faces as they age.

It goes without saying, that you need a truly loving family that enjoys each other's company for anything like this to work. Having a large and local family, we also get the benefit of seeing much of our 4 generational family on a regular basis. Worked for us, but when I read the section on "family relationships", I'm afraid that I wouldn't recommend it to the majority of older folks. It might be a recipe for disaster!!
 
Thank you for this information, SeaBreeze...and those responding. Thankfully, I'm debt free and have found a way to live on my income without touching my investments (yet) but it's good to know that I should go ahead and not wait to fix some things around the house that should be fixed, and should ask my financial advisor about the possible property tax reduction for retirees in my jurisdiction. Now, if I could just learn how to stop typing write-on sentences lol.
 
Lara said:
Thank you for this information, SeaBreeze...and those responding. Thankfully, I'm debt free and have found a way to live on my income without touching my investments (yet) but it's good to know that I should go ahead and not wait to fix some things around the house that should be fixed, and should ask my financial advisor about the possible property tax reduction for retirees in my jurisdiction. Now, if I could just learn how to stop typing write-on sentences lol.
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I think you have to live there for at least ten years Lara. https://www.seniorforums.com/showth...-Tax-Exemption-for-Seniors?highlight=property Run on sentences are better than run on paragraphs. :p
 
But you most probably shouldn't pay off your mortgage. Current mortgage rates are lower than the average return on index investments.
And the mortgage is just one piece of the cost of your home. You still need to pay insurance, property tax, maintenance.
Refinance if it make sense, ride out the low rate and invest the net gain.
 
Great advice for those who have homes to maintain. I didn't have any of those concerns before retirement since I live in a co-op that takes care of any major issue affecting an entire building or buildings. Our mortgage was included in our carrying charges and have always been about 36% of what comparable housing is in this area. I had excellent health insurance coverage and was debt free upon retirement. Since I retired early, I lost 12% of my pension but because of the above factors, it was never a problem.
 
I totally disagree with the fix things before they break idea. If you don't put on a new roof at $15K you still have that money in your account making money for you. If you're retired and not getting a paycheck you'll already have that money saved. Now of course, you have to save that money, which is no problem for me. If you know you'd just blow that extra money that's a different story. But spending money now just because you'll have to eventually replace things is stupid, imo. Who knows how long that water heater might last? Why replace it 5 years early?
 
garyt1957 said:
I totally disagree with the fix things before they break idea. If you don't put on a new roof at $15K you still have that money in your account making money for you. If you're retired and not getting a paycheck you'll already have that money saved. Now of course, you have to save that money, which is no problem for me. If you know you'd just blow that extra money that's a different story. But spending money now just because you'll have to eventually replace things is stupid, imo. Who knows how long that water heater might last? Why replace it 5 years early?
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I think it depends on what it is and the two examples you mentioned, roof and water heater, are not the things you want to wait until they fail because of the consequences of what often happens when they do fail; like serious water damage.

I get that we might not live there when they do fail but how do you know they are being replaced 5 years early versus 5 days early? I can inspect or have my roof inspected and I can open the drain at the bottom of my hot water heater and let some water into a bucket to inspect for rust and get a better idea.
 
Great idea from SB and others... also on a smaller scale, before you get too infirm potentially,. try to ensure you have some safety things installed. Shower instead of a Shower over bath, so no climbing over . . Safety grab handles in the bath and toilets.... Bannister rails where needed on the stairs and in the hallway... there's a few more I'm sure, but basic installation of safety items before you get to infirm is a good idea .

I've only just recently taken early retirement , and my husband who is 5 years younger is still working full time, so we're financially stable *knock on wood*.. We're 'young' retirees and pretty active.... but because I have a back problem, as does he, he's already installed a grab handle in the shower, and also a new bannister rail on the stairs opposite the original one.. it makes a huge difference when my back is playing up, to steady myself on the stairs.. .
 
We downsized from a very large 5 bedroom home (we had 4 rugrats) that was finished on all three levels. It was way more house than we needed (or could afford after I retired). Loved the place...but.

So we downsized to a bungalow less than half the size with a finished basement. We do all of our living on one floor and the only time I go downstairs is to workout in small gym in the utility room. If the kids come over there's two spare rooms in the basement if they want to stay.

More importantly we were also able to get rid of our mortgage, cut our taxes in half along with our utility costs.
 
Instead of replacing things before they break, I would suggest putting the money in a reserve account, easily accessible, and to be used ONLY as needed for replacement. No, it won't earn much interest but it won't have been spent unnecessarily.
 
helenbacque said:
Instead of replacing things before they break, I would suggest putting the money in a reserve account, easily accessible, and to be used ONLY as needed for replacement. No, it won't earn much interest but it won't have been spent unnecessarily.
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I agree!

I've established many little reserves over the years and none of the things that I thought would go wrong ever did, but plenty of other things did and the extra cash came in handy.
 
dpwspringer said:
I think it depends on what it is and the two examples you mentioned, roof and water heater, are not the things you want to wait until they fail because of the consequences of what often happens when they do fail; like serious water damage.

I get that we might not live there when they do fail but how do you know they are being replaced 5 years early versus 5 days early? I can inspect or have my roof inspected and I can open the drain at the bottom of my hot water heater and let some water into a bucket to inspect for rust and get a better idea.
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The point though was replace them before you retire while you still have income. So if I'm retiring in the next few months (and I am) that means likely replacing something that really doesn't need it. That would be just plain stupid to me. But maybe it's just me.
 
Well....if I'd replaced our 26-yr old water heater BEFORE it failed, I wouldn't have ended up with a $23K Master bedroom remodel, LOL.

Having to replace the flooring meant everything had to be taken out. Since our MBR was also my spouse's office as well as holding 13 bookcases full of our books, we 'bit the bullet' and finally redid the room the way we had always wanted. We'd already done the rest of the house, so the MBR was a very 'poor cousin' in comparison. Now it's star quality and we absolutely love it.

We could have gotten away with just replacing the flooring, however. That was only $4K plus $1500 for the movers to come twice: first to take everything out and store it in three different areas, and then to come and move selected items back in!

Agree with those who say for certain things, fix/replace beforehand. My DW is dying as is our upright freezer. I don't want to risk losing hundreds of $$$ worth of frozen food. We're also in near-drought conditions, and a DW cleans with much less water than hand-washing.
 
garyt1957 said:
The point though was replace them before you retire while you still have income. So if I'm retiring in the next few months (and I am) that means likely replacing something that really doesn't need it. That would be just plain stupid to me. But maybe it's just me.
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The question is how do you know when something is on it's last legs or still has some life left in it? It reminds me of when they decided to make the traffic lanes narrower and especially make the inside emergency shoulder too narrow to be safely used so we could have more lanes of traffic in metro Atlanta... some official made the comment that if your car is going to break down stay out of the inside lanes. LOL
 
dpwspringer said:
The question is how do you know when something is on it's last legs or still has some life left in it?
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It's true sometimes it's hard to tell. A WH doesn't really give any warning. But many "big ticket items" do.

DW: it doesn't clean as well. Small amounts of grit get left on bowls or glasses in the top rack. It means the water pump is slowly failing.

Freezer: the compressor starts making noise. Now, it can do that for years, even, (and has) before actually failing. But the noise slowly gets louder over time. The 'off' period (it's an auto defrost) makes the freezer actually shudder; you can hear that too. The freezer is old enough that the insulation, as one repairman told me, has "probably turned to powder by now". It's cheap and old: I've more than gotten our money's worth out of it - over two decades. Why take a chance when the food inside costs almost as much as a new freezer would?

A roof: You can tell when a roof needs replacing, if it's composite shingles. They curl upwards along the edges. If you've got a stain on your ceiling, you're kidding yourself if you think it won't get worse over time. Plus, a roof is mostly labor costs, and those only go up over time. Get it done when it should be done. We started to have shingles fly off our roof in a rainstorm; we were lucky to not experience any real water damage to the joists or insulation.
 
Lethe200 said:
It's true sometimes it's hard to tell. A WH doesn't really give any warning. But many "big ticket items" do.
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A water heater can give a warning that it is rusting out. You might notice your water starts looking a little brown in your everyday use... but what I try to do is check it at each turn of the season (every 3 months) by opening the drain valve on the bottom of the tank and looking at the water in a bucket to see if any rust is settled at the bottom of the tank.

And while we are covering things that can cause a lot of damage when they fail; the water hoses connecting your washing machine need to be replaced every few years before they fail as well.
 
Here in Canada, retirement is affordable as government pensions are quite adequate for living expenses. That is as long as one contributed through the Canada Pension Plan. Also our health care is provided as are prescription coverage for those over 65.

But still you have to go into retirement with no debt, live within your means, it's not luxurious but certainly affordable.
 
We are going to go down to one car shortly. For the most part it's nothing more than a paperweight...an expensive paperweight at that. With insurance and repairs alone we would save about $100 a month.
 

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