If you’re approaching retirement, you may be thinking about selling your home. But unless you need to move—such as for health issues—should you? While the main questions on your mind might be how close you live to your grandkids or a golf course, it’s essential to weigh what makes sense financially first.
Because let’s get real: Whether you dig the notion of baking away your golden years somewhere sunny or remaining in the family home to host Thanksgiving dinner every year, neither option will make much sense if you can’t afford it. Right?
So to help you get a handle on the pros and cons of aging in place versus making a new start for this next chapter of your life, ask yourself these questions.
Q: Are my property taxes through the roof?
A: Depending on where you live (*cough* New York and New Jersey), you may be paying a hefty sum in property taxes each year. If you’re willing to move to another state, you could save $10,000 to $15,000 a year on a midrange home, says Craig Jaffe, a financial planner at United Capital in Boca Raton, FL.
Annual property taxes on a $300,000 single-family home in New York, for example, run roughly $15,625, as opposed to $931 for the same home in West Virginia, according to RealtyTrac data. So it’s worth asking yourself whether you want to face those same fees indefinitely, or move to more tax-friendly digs. (Also worth asking: Do you want to live in West Virginia?)
Q: Is my home a money pit?
A: If you live in an older place and need to make frequent repairs, maintenance costs could be draining your retirement savings (and crouching and bending for DIY repairs might be getting wildly uncomfortable). In other words, the upkeep on your 19th-century Colonial may not be worth the hassle. Moreover, it’s no secret that newer homes are less expensive to maintain, yet you may be surprised by just how much you can save: 73% of new-home owners spend less than $25 a month on routine maintenance costs, according to a 2014 report by the National Association of Home Builders.
Q: Can I afford to leave?
A: The housing market’s in good shape—sales are off to a strong start this year. But depending on your financial situation, you may not pocket much money by selling your home.
“Between 2001 and 2006, there was rampant market appreciation,” says Todd Sheinin, mortgage lender and chief operating officer at New America Financial in Gaithersburg, MD. “People were buying more expensive homes, taking out larger mortgages, and refinancing left and right. Then, when the recession hit, kaboom.”
If you got hit and your property depreciated significantly, you may not have enough equity in your home where it makes sense to sell—meaning it would be advantageous to stay put at least a few more years to see if your housing market looks up later.
Q: Am I tired of being a homeowner?
A: If you own a single-family house, in addition to being responsible for repairs, you’ve got the routine maintenance of mowing the lawn, cleaning the gutters, and shoveling snow. If you’re tired of all that manual labor stuff, it may be time to sell and move into an apartment where a landlord or property management company is responsible for such tasks, says Jaffe.
Q: What do I want to do once I retire?
A: Think about what you want your retirement lifestyle to be like. If you want to travel more often, you’ll need money to pay for it—and selling your home is one way to free up cash. But before you post a “For Sale” sign, first calculate your living expenses, says Chicago financial planner Bridget Sullivan Mermel.
Review your account statements from the past 12 months to get an estimate of how much you’re currently spending, says Sullivan Mermel; then, factor in any additional expenses you’d assume in retirement. If you’re moving away from family but plan to return for visits during the holidays, consider those travel costs as well, says Marilyn Timbers, a financial planner and retirement coach at Voya Financial Advisors in Stamford, CT.
Q: Is now a great time to buy?
A: Even if you’re planning to downsize, you may need to take out a mortgage on your new home. And when interest rates are high, that’s a good reason to avoid paying these exorbitant fees by staying exactly where you are. Fortunately, though, current interest rates are low, at least for now.
“When interest rates are at record lows, like they are today, buyers can save a lot of money in the long term buying a new home,” says Sheinin. Which means if you’re hankering to move, this could be a good time to go for it.