When retirement is on the horizon, one of the biggest decisions you need to make is deciding to stay in your home or sell it and relocate. If you’re still on the fence, here are three financial reasons to sell.
Your Mortgage Payments Are High
When your mortgage payments are high and you still owe a lot on your home loan, selling may be the best move. In addition to the expense of your monthly payment, you have to consider the rising cost of property taxes, insurance and upkeep. If your retirement income will be less than you’re making right now, it may not be enough to cover costs related to owning a home in addition to all of your other living expenses.
If you’re also carrying high-interest credit cards into retirement, your total debt load can put a huge strain on your income. A sudden emergency or health crisis could put you at risk of wiping out your Thrift Savings Plan (TSP) to avoid losing your home. If you sell your home you can use the proceeds to pay off debt and live comfortably on your retirement income.
“If your home has a high amount of equity, selling may provide the money you need to ensure your financial security in retirement.”
It’s A Seller’s Market & You Have A High Amount Of Home Equity
Data from the National Association of Realtors shows that the COVID-19 pandemic increased the median home price by more than 40%. And though the housing market has stabilized since the pandemic ended, the 2024 medium price of a home in the U.S. is just shy of $400,000. Even though mortgage interest rates are higher than they were in recent years, it’s still considered a seller’s market. If your home has a high amount of equity, selling may provide the money you need to ensure your financial security in retirement.
The Rising Cost Of Owning A Home
As the value of your home increases, the cost of property taxes and homeowner’s insurance also rise. And with inflation driving up the cost of utilities and home maintenance, staying in your home over a 20-to-30-year retirement may cost far more than you’ve anticipated.
Keep in mind that the older your home is when you retire, the more likely it will need a new roof and HVAC system in addition to other types of repairs and upgrades. Then again, if you have chronic health issues that may eventually render you physically unable to maintain your home, selling may be inevitable.
Before you decide, connect with an FRC® trained advisor who can give you a second opinion on whether or not you should sell your home.
