When is The Best Time to Buy Your Retirement Home?

by Corey McCracken 02/09/2020

Photo by Harli Marten on Unsplash

Although it may seem like putting the cart before the horse, a strong case can be made for purchasing your retirement home before your golden years. In fact, with some deft financial planning, it may be worthwhile to buy your retirement home decades in advance. That may seem counterintuitive, but maybe other folks have been doing it backward. Whether you are a Millennial, Gen Xer, or Baby Boomer, the best time to plan ahead is right now. Consider these strategies.

Why Buying Now Saves Retirement Dollars

The Gen X crowd was born between 1965-1979, making them 40- and 50-somethings. Those are generally prime financial years. In many cases, they’re nearing the end of a mortgage and are probably enjoying the fruits of many years of savings. This means having equity and resources at their disposal to make a move on a property now.

The argument for paying off an existing home loan or doubling-up if it’s reasonably low rests on data that the home values continue to rise. Consider these incremental increases in median home sales pricing.

  • 1970: $23,400
  • 1980: $64,60
  • 1990: $122,90
  • 2000: $169,000
  • 2010: $221,800
  • The median price routinely topped $300,000 in 2019, and the robust economy, coupled with an inventory shortfall, is expected to drive prices upward. If you were to have purchased your retirement home just 10 years ago, your savings would have amounted to nearly $100,000, plus lower interest payments. Those are real retirement dollars.

    Why Buying Your Retirement Home First Makes Sense

    One of the strategies savvy Millennials are employing is to purchase an “investment property” rather than a primary residence first. That may seem like thinking way outside the box, but the math and lifestyle considerations can make it a smart play.

    This demographic runs between 23 and 38 years old, and they have grown up in a vastly different culture than their predecessors. Some are straight out of college struggling with student loan debt, and even the top end of the age bracket has members still evolving their careers in many cases. These factors tend to position Millennials for ongoing relocation as they take advantage of emerging opportunities. Rather than be burdened with buying and selling a home, it’s easier to rent.

    Financially sharp Millennials, among others, have purchased properties in culturally rich areas that lend themselves to college students and tourism. The strategy is to enlist the help of a real estate professional who oversees renting, upkeep, and allow the asset to pay for itself. In many cases, it may even yield a profit. When retirement age arrives, there can be ample revenue to do a full remodel and just pay the taxes while you collect a pension or social security.

    Although buying a retirement home prior to punching out for the last time may seem odd at first, it’s in your best interest to run the numbers both ways. Consider all the moving parts and detailed costs to make an informed decision about your best time to but a retirement home.

    About the Author
    Author

    Corey McCracken

    Hi, I'm Corey McCracken and I'd love to assist you. Whether you're in the research phase at the beginning of your real estate search or you know exactly what you're looking for, you'll benefit from having a real estate professional by your side. I'd be honored to put my real estate experience to work for you.

    Corey started his career in the real estate industry in 2001 working for a local real estate company that specialized in selling properties for couples going through a divorce. That lead to working with many local and national banks handling vacant and distressed properties. Working with these lenders & homeowners I was able to successfully manage, repair, price, and sell over 800 vacant homes for banks, lenders, & homeowners. Through this process, I was able to work on many probate cases and estates.

    I experience this process first hand when I lost my grandma who I was very close to. I was able to help my uncle the PR through the process. The team I had built help hand the process and was a great relief for my family. Having experienced this I understand what a tough time this can be for families.

    The service is a one-stop resource with experienced professionals ready to help others who, not by choice, must sell a loved one’s home and either don’t know where to start or maybe live out of state and need to trust someone to take care of the actions required.

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