I will retire in 10+ years and my retirement saving is on track. Due to job hops/relocations, I missed a chance to buy a house before the area home prices went stratosphere (CA). I have saved up what could have been my mortgage payments (minus rents) and its sum is large enough to buy a house all cash. If I buy (similar to the house I’m renting right now), the property tax alone would cost far more than my current rent. I’m afraid that owning a home can be a big money sucker.
I’m thinking about remaining to be a renter until I retire and keeping the house money in a well-diversified portfolio. Then, I may move to where houses are cheap, or buy one here if the area home prices come down.
Is this sound or workable retirement planning strategy? Or, is it dumb?
I recognize that I get no tax benefit and I worry a lot about inflation. Anything else I should worry? Thanks
P.S. My tax person says I won’t get any tax deduction benefit for property tax due to AMT, at least for now.
Thanks, guys.
To add, I would like to retire where I currently live if I could afford a house here. Only if that is not possible, I would consider retirement relocation to somewhere cheaper.
In addition, the area house prices have shown no signs of coming down. They are sill in the stratosphere.
As you can see from the current housing situation a house is not always a great investment. If I were in your shoes I’d not buy a house. As you pointed out right now its cheaper to rent and may always be cheaper to rent in a place like CA. Not only is there property tax, there is maintenance, insurance, plus risk.
Keep you money well invested in a good mutual fund and enjoy the freedom or renting. Someday it may make sense to own but I’d wait until retirement and then look at something like a condo. I own a small farm, in the past I’ve owned 4 different houses and don’t regret it but that was then and this is now.
If you’re not sure where you’ll be retiring, I would wait and not buy now. It only makes sense to buy now if you’ll stay in the house after retirement.
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As you can see from the current housing situation a house is not always a great investment. If I were in your shoes I’d not buy a house. As you pointed out right now its cheaper to rent and may always be cheaper to rent in a place like CA. Not only is there property tax, there is maintenance, insurance, plus risk.
Keep you money well invested in a good mutual fund and enjoy the freedom or renting. Someday it may make sense to own but I’d wait until retirement and then look at something like a condo. I own a small farm, in the past I’ve owned 4 different houses and don’t regret it but that was then and this is now.
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I am about to retire (in California) and have always been a renter. There is absolutely no reason to have a home before retiring.
In my case, I do plan on using a good proportion of my retirement savings to purchase a home. My Financial Advisor is of the opinion that a home purchase in the current ‘down market’ is perhaps the best investment one could make. Not to mention that the monthly home payments look like they would be just a little more than rent payments. Plus there is a substantial tax benefit. In my case it is fully beneficial economically to make the purchase.
I am planning to purchase a home in a 55+ restricted age community. This has certain benefits as well.
Right now it may be more beneficial to take money you have that is invested in stocks (etc) and make a real estate purchase. Then you could rent that out and have some income to offset the payments. I have two friends that have invested in rental properties and are doing quite well with that.
But your own income and tax situation may be completely different from my own and my friends. You should consult with your own financial advisor who has more information about your exact situation.
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