Housing is often your main expense in retirement. Before retiring, it may be a good idea to think through some cost-cutting alternatives to staying in your current home. Below are some ways you can reduce your housing costs in retirement.
When all your children are grown, a large house and expansive yard isn’t needed. Downsizing to a smaller home may add money to your retirement savings. It may also free up the time you would have spent with yard work and cleaning additional bedrooms. This move could also reduce your mortgage, utilities and property taxes.
Pay off your mortgage
Paying off your mortgage will eliminate one of your largest monthly bills. You will still need to pay for insurance, taxes, and maintenance but those are likely a fraction of your mortgage costs. If you don’t have the means to pay off your mortgage before retirement, you may be able to refinance and reduce your interest rate.
Once you’re retired, you don’t have to live in an expensive city that is close to your job or in a costly suburb that has a good school district. You could choose a place to live based on your hobbies or interests, or simply relocate to a town that has a low cost of living. You may even be able to buy a larger or newer home in your new town for less money.
Move in with family
Having multiple generations in a household can provide benefits to both you as a retiree and your adult children. You may be able to help take care of grandchildren and help out around the house. In return your children could provide you eldercare if it is needed.
Maintaining a home can be both a lot of work and expensive. By selling your home and renting, you free up the equity that was tied to your house, and you can invest it. It also makes someone else responsible for the upkeep of the property. Renting is more affordable because you don’t have to pay property taxes, maintenance, insurance and HOA fees.
It may be beneficial to think about your options ahead of time so you can make a plan. This allows you time to make any adjustments or improvements you might want to make on your house if you plan on selling it. You can research some areas you have interest in living that have a lower cost of living or affordable rents.
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