Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
more expensive house at retirement ... bad idea???
Old 04-29-2019, 04:59 AM   #1
Recycles dryer sheets
 
Join Date: Sep 2017
Location: exeter
Posts: 392
more expensive house at retirement ... bad idea???

I am about 1 yr from retirement and we have been house hunting. We just sold our home and am looking for the right house to live in until CCRC time. .... low maintenance, 1st floor master berm, etc.

We have found that homes that meet this description are few and pricey.
We have found new construction which we love and great location. But, it is really stretching our budgets. It would mean taking a chunk out of our retirement savings to do it.
Just put down a refundable small deposit. Will also mean carrying a mortgage.
Are we crazy??

I am going back and forth on it and losing some sleep. Will spend the next few days running all the calculators on it. It might mean having to put off retirement for 6mo to a year to handle it.
__________________

__________________
What the heck is going on ???
albireo13 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-29-2019, 05:39 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,754
Only reason we went up to a much larger home is because we found a great foreclosure in really good shape. And since I had the funds to pay cash and do an immediate purchase, I bought it for much, much les than it was worth from a credit union.

New construction today will not be inexpensive anywhere, and the resale value in most locales will probably not rise as fast as a carefully purchased existing home. If you're intending to go into a CCRC later, we've found it's best to remain very liquid. There again, I'm very conservative and don't care for substantial mortgages for retirees.
__________________

Bamaman is online now   Reply With Quote
Old 04-29-2019, 06:31 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 3,066
We just went down this road. We were going to build. The price per sq ft in our area was in the $300-$350 range. Nice existing homes with everything we wanted were in the $200-$220 range. We bought an existing home, paid cash, put about $15,000 into refreshing the interior and we still came out thousands ahead.
Personally I would rather have the funds in our brokerage rather than in house equity.
COcheesehead is offline   Reply With Quote
Old 04-29-2019, 06:32 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 3,508
Quote:
Originally Posted by albireo13 View Post
I am about 1 yr from retirement and we have been house hunting. We just sold our home and am looking for the right house to live in until CCRC time. .... low maintenance, 1st floor master berm, etc.

We have found that homes that meet this description are few and pricey.
We have found new construction which we love and great location. But, it is really stretching our budgets. It would mean taking a chunk out of our retirement savings to do it.
Just put down a refundable small deposit. Will also mean carrying a mortgage.
Are we crazy??

I am going back and forth on it and losing some sleep. Will spend the next few days running all the calculators on it. It might mean having to put off retirement for 6mo to a year to handle it.
I'm not a fan of really stretching a budget when entering retirement. Carrying a mortgage isn't at all a problem. Not having sufficient budget is a huge problem.

If it were me, I'd look for a different solution.
joeea is offline   Reply With Quote
Old 04-29-2019, 06:34 AM   #5
Full time employment: Posting here.
racy's Avatar
 
Join Date: May 2007
Posts: 584
If I had 33X what I needed to withdraw from our portfolio for living expenses (i.e. 3% withdrawal rate), then I'd do it.
__________________
The Big Lebowski: Are you employed, sir?
The Dude: Employed?
racy is offline   Reply With Quote
Old 04-29-2019, 06:45 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 8,344
Quote:
Originally Posted by racy View Post
If I had 33X what I needed to withdraw from our portfolio for living expenses (i.e. 3% withdrawal rate), then I'd do it.
This. I wonder what 'pushing the budget' means for the OP? If my numbers stayed at 100% success rate with Firecalc, I wouldn't have a problem doing it. That was the deciding factor when I made my upgrade purchase.
__________________
Retired 3/31/2007@52
Investing style: Full time wuss.
Dawg52 is offline   Reply With Quote
Old 04-29-2019, 07:50 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 8,581
Quote:
Originally Posted by albireo13 View Post
I am about 1 yr from retirement and we have been house hunting. We just sold our home and am looking for the right house to live in until CCRC time. .... low maintenance, 1st floor master berm, etc.

We have found that homes that meet this description are few and pricey.
We have found new construction which we love and great location. But, it is really stretching our budgets. It would mean taking a chunk out of our retirement savings to do it.
Just put down a refundable small deposit. Will also mean carrying a mortgage.
Are we crazy??

I am going back and forth on it and losing some sleep. Will spend the next few days running all the calculators on it. It might mean having to put off retirement for 6mo to a year to handle it.
I assume "berm" is a type for "bdrm. Hard to believe they are that few. Doesn't a ranch fit that? Or maybe it's not a typo and "berm" is something unique?

What is your definition of "low maintenance"? Are there houses you like that do not quite fit that definition, and would it be cheaper to hire someone to help you maintain rather than pay extra?

Does "etc" cover something unique?

Or is it just high real estate prices in general that are throwing you off? Are you in a high cost area? Can you move?
RunningBum is offline   Reply With Quote
Old 04-29-2019, 07:56 AM   #8
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 2,149
If it will cause you worry and stress, and a perceived stretching of the budget, I would not do it. Retirement is a time for less stress and worry about money, not more.
__________________
FIREd date: June 26, 2018 - wwwwwwhat a rush!
jollystomper is offline   Reply With Quote
Old 04-29-2019, 08:09 AM   #9
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 4,529
ab13 new construction in a "great location" is always going to be the most expensive option. A lot of time great location can translate into higher property taxes..Have you accounted for that number, remember every little goodie you add into your new home will cost more in your RE tax number.

Where are you living now that your home is sold? Is it possible to stay in place there while you diligently search for a used home or slightly widen your target living area?

I'd have a different answer if you said that you had always planned for a new home and it was little higher then you expected. It looks like the aggravation of finding the "right" house coupled with the seduction and staging of a beautiful new home made you pull out your checkbook.
ivinsfan is offline   Reply With Quote
Old 04-29-2019, 08:24 AM   #10
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 2,256
I agree new build will be the most costly. What is not known is what OP says is the stretch in budget and how that affects the numbers. If OP can't sleep well, then best to not buy new and keep looking for the used house.


Are there no ranch type single story houses in OP's search area? I think there are, may just need to evaluate the search criteria and also require some patience.


Carrying a mortgage is a personal choice, if it works for your budget numbers there is not any major problem with having one in retirement. But a lot of people also prefer to be mortgage-free in retirement and like that better. There is not a single right answer that works for all.
__________________
The advice we're giving you is invaluable, that's why it's free
Experience is a good teacher, but the tuition can get expensive real fast

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Old 04-29-2019, 08:36 AM   #11
Recycles dryer sheets
jimandthom's Avatar
 
Join Date: Nov 2014
Location: Beautiful UP
Posts: 232
You are already having sleepless nights-- presumably about the $$ near and long term.

You say that working 6months to a year longer, makes everything work out OK.

Must be a ton of cash to be made in such a short period of time to go from sleepless to no worries.
jimandthom is offline   Reply With Quote
Old 04-29-2019, 08:36 AM   #12
Thinks s/he gets paid by the post
SumDay's Avatar
 
Join Date: Aug 2012
Posts: 1,565
We did this a few years ago. We live in a LCOL area, and our new house was twice what we got for our old, much larger house. We put 75% down and got a <4% loan with lower payments than most people pay for their car payments. No PMI, so that helps too. This is our only debt and while I wasn't completely comfortable with it initially, I am now. It was the right move for us. Having the yard work and snow removal done for us has been a big load off DH who has some residual issues from health issues a few years ago.

If we have extra $$ left from our IRA withdrawals each year, I may start throwing it at the mortgage. Otherwise, I'll just keep plugging away at it.

Every circumstance is unique.
__________________
FIRE Class of 2018 @ 61

Old men and women sit in the shade of trees they planted long ago
SumDay is offline   Reply With Quote
Old 04-29-2019, 09:10 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 14,199
Quote:
Originally Posted by racy View Post
If I had 33X what I needed to withdraw from our portfolio for living expenses (i.e. 3% withdrawal rate), then I'd do it.
Best answer IMO. If you were house rich, you can probably afford a more expensive retirement house. If you were house poor, maybe/probably not. We’re actively trying to buy our “forever home” now, and our next house is going to cost about double our present house (we’ve lived in a modest house in a LCOL area for over 25 years).
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 45% equity funds / 30% bond funds / 25% cash - radically changed Nov 2018
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 04-29-2019, 09:34 AM   #14
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 3,868
Not sure what drove the OP to sell now, but personally this is either something you do before you bake in your retirement date and expenses (ie, time to adjust), or a couple years after (ie, time for reality to sink in).

With a new home, you'll have new expenses. Taking on a mortgage at 1 year to ER, unless you have a LOT of buffer in your SWR, is not something most of us would do. Ideally, it's something you do a few years beforehand so the dust can settle, and expenses be measured and factored into your plans.

Or, retire, sit tight for a year or so and make sure that 3.5% WD doesn't really mean 4%, let things simmer a bit, and then move, when you have a more realistic idea of your wiggle room.

Given the OP here has already sold, I would not be making a purchase of a new place that required a mortgage, and would look for something in just a small margin of the current sale, since this extra cost was not already planned. I would not be holding that ER date firm...
Aerides is offline   Reply With Quote
Old 04-29-2019, 10:01 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 8,581
Quote:
Originally Posted by jimandthom View Post
You are already having sleepless nights-- presumably about the $$ near and long term.

You say that working 6months to a year longer, makes everything work out OK.

Must be a ton of cash to be made in such a short period of time to go from sleepless to no worries.
"losing some sleep" is not the same as "sleepless nights".
"to handle it" is not the same as "no worries".

It's best not to overstate a poster's situation.
RunningBum is offline   Reply With Quote
Old 04-29-2019, 10:49 AM   #16
Recycles dryer sheets
 
Join Date: Sep 2017
Location: exeter
Posts: 392
I will be running Firecalc, etc over the next 2 days, at night. Working full time so no time to run numbers during the day.


We are selling now, before retirement because we would like to have that big move behind us before we enter full retirement. I plan to retire next year but, my wife plans to work another 3 yrs beyond me. We have the option of just renting for awhile and take our time for a house.
Why sell now?? We had some impending expenses that we can avoid (replacing front and back decks). Also, we will be in a strong position to buy. We will not have contingencies on selling a house to get in the way of a P&S.


BTW ... berm was a typo .. should be bdrm.
__________________
What the heck is going on ???
albireo13 is offline   Reply With Quote
Old 04-29-2019, 11:14 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 23,427
Take your baseline FIRECalc with assets including the net proceeds from the sale of you current home less a down payment on your new home. Then include your annual mortgage payments as fixed off-chart spending beginning at retirement with a corresponding fixed pension on the same amount when the mortgage is done. How does it change your success rate? IMO if you can live with the change in success rate then you're all set (assumes that spending level can cover and differences in property taxes, insurance, etc).
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is offline   Reply With Quote
Old 04-29-2019, 12:27 PM   #18
Recycles dryer sheets
 
Join Date: Sep 2017
Location: exeter
Posts: 392
I'll try doing that tonight with Firecalc. Will also be running FRP as well.
__________________
What the heck is going on ???
albireo13 is offline   Reply With Quote
Old 04-29-2019, 12:38 PM   #19
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 42,695
Pardon this rambling post, but here are a few thoughts that came to mind.

I guess I was lucky because I did not find my (more expensive) Dream Home until 5-6 years after I retired. By that time, I was well settled into retirement, knew I could easily afford the new home, and did not have to worry so much about possible Sequence of Returns problems.

You are smart to get a house that is suitable for you as you age. You would probably want/need to do that at some point anyway. Also, I doubt that such houses will be getting any cheaper in the next five years or so. But like you, I would be a little unnerved at the thought of doing this right before retirement.

Another factor is that what I thought I would want out of life during retirement, and what I actually wanted once I was retired, were different. Before retirement we were absolutely sure that we wanted to move to Springfield. After retirement we changed our minds and decided to stay here.
W2R is offline   Reply With Quote
Old 04-29-2019, 12:51 PM   #20
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 4,173
Last year we bought a house that was a little more expensive than the house we sold but the mortgage is larger. The house we sold had a lot of equity and we had taken a mortgage on it at the bottom of interest rates. The new mortgage is at a higher rate and does have quite a bit of equity in it.

The new house is actually smaller and older than the house we sold? Why is it more money? Far better location. The new house is in a location where we will always be close to amenities even if we were to get to a point where we couldn't drive. Lots of grocery stores nearby deliver so we could manage pretty well if we couldn't drive at some future point.

After I sold my mom's house after she died, I could have recast my mortgage and gotten the mortgage payment down to about what it was at the old house (which was just a little over $800 a month so not a huge amount. Current mortgage payment is around $1440 a month).

But, after thinking about, I decided not to recast the mortgage and to invest the money I would have spent on recasting. The main reason was I recognized that my mortgage payment is a fixed rate mortgage. When using Firecalc I don't include the mortgage payment in the regular spending. I do it separately as non-inflation adjusted. We do have quite a bit of equity in the current house so if we had to sell it (only situation where that would likely happen is when one of us dies if we don't want to keep the house). While in a way it would make me feel better to have a small mortgage like the last one, I just didn't really think it made sense to recast the current mortgage to get there. I could always do it in the future if I wanted to, though.

The thing for us was that we wanted a house that we could live in even if we got to a point where we couldn't drive. The old house we couldn't do it. This house is in a perfect location to allow that. Perfect locations cost more money.
__________________

Katsmeow is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Is it a bad idea to take on a 2nd mortgage when nearing retirement? Barry Darsow FIRE and Money 20 05-24-2017 10:04 AM
Planning for a More Expensive Retirement dixonge FIRE and Money 38 03-12-2017 03:57 PM
Des Moines Most Expensive House In Foreclosure Gpond FIRE and Money 17 02-23-2009 10:16 AM
How expensive of a house spike Young Dreamers 12 04-27-2007 08:50 PM

» Quick Links

 
All times are GMT -6. The time now is 03:39 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×