What Housing Needs Will You Have in Retirement?

What Housing Needs Will You Have in Retirement?

By Nancy Jackson

As you plan for retirement, you’re probably thinking about managing your income, Social Security, and the type of lifestyle you’ll be able to maintain. But have you planned where you’ll live or calculated how much you’d be paying for housing expenses?

Housing is a frequently overlooked expense when planning for retirement costs, but it’s a significant component of your expenses and often presents unexpected challenges. Planning for housing in retirement can be challenging, but taking the time to think it through can help prepare you for a smooth, fulfilling retirement.

Develop a Plan for Retirement Housing

Start by creating a basic plan for your housing hopes or expectations in retirement. For most people, the crucial decision to make is whether you’ll stay where you are or relocate.

Below are a few considerations when developing your plan:

  • Your finances
  • Your family situation and responsibilities
  • Personal preferences in retirement lifestyle - Do you want to downsize? Live in a different climate or type of community?
  • Rent or mortgage status - Will your home be paid off when you retire? Will you still need to pay off your mortgage? Will you be renting? 

Once you assess the considerations above, you’ll have a great starting point for your retirement housing plan.

Consider Potential Disruptors

The best-laid plans can go awry, and potential disruptors may affect your plans for housing in retirement. For example, more than one-third of young adults in the United States live with their parents, according to Pew Research. Having an adult child returning to live with you would definitely impact your housing plan.

Many retirees may feel a responsibility to care for their aging parents or help care for their children or grandchildren—responsibilities would affect your overall housing needs and affordability.

Additionally, financial concerns can play an essential role in housing plans—considerations could include expensive home repairs or unexpected healthcare costs.

Prepare for Housing Missteps

Preparing in advance can help avoid the impact of unexpected housing mishaps during retirement.

As you plan for your golden years, consider taking these steps to protect your housing plan:

  1. Work to pay off your mortgage before you retire. If you own your home outright, you don’t have to worry about coming up with a monthly payment. And, if you choose to downsize or relocate, you can sell the property to generate cash.
     
  2. Consider downsizing to reduce housing expenses. In most cases, smaller home costs mean less to maintain. Even if your home is paid for, selling it and moving to a smaller place can allow you to keep cash from the sale of your larger home and save money each month on utilities and maintenance.
     
  3. Include housing in your budget just as you do now, adjusting for potential changes. As you build your budget, start with essential and nonessential expenses—remember, housing is essential. But after the age of 65, you may no longer have to pay property taxes, depending on where you live, but you will still have to pay for home insurance, maintenance, and repairs.

Current home expenses may increase, depending on the area where you live or plan to relocate. Consider the cost of utilities, as they are affected by the cost of fuel and the weather. If you plan to move to a warmer climate, research the cost of utilities in the area. If you think the cost of maintaining your current home will increase due to weather changes, energy costs, or rising taxes.

  1. Save for unexpected health expenses. Make contributions to a health savings account (HSA). The funds in a HSA can be used tax-free for qualified healthcare expenses at any time of your life. But if you don’t have to use those funds now and save them for retirement, you’ll be able to use them, tax-free, for any need after the age of 65.
     
  2. Consider sharing living arrangements. If you think adult children will live with you during retirement, develop a financial agreement that works for you and them. For instance, even though they’re your children, you may consider charging rent and utilities or dividing the management of household chores in exchange for living with you. Put it in writing, so everyone is on the same page!

On the other hand, if housing expenses might be difficult for you (or you and your partner) to manage in retirement, consider living with an adult child, other relative or friend to cut costs. In that case, you also need to create an arrangement that works for all parties involved.

  1. Seek help in planning for retirement. Talk to your peers, tap into your financial advisor, and leverage the tools in your Voya retirement account to learn more about how to prepare for retirement housing.

To learn more and be better prepared for retirement, log in to your Voya Retirement Account to access our Financial Wellness Resource Center for additional tips and tools.


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