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Old 11-21-2022, 11:08 AM   #21
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What is your standard monthly budget and Is is covered by your pension?
Does the 1.6 million include the money from your house sale?
Cash is probably wiser with the mortgage rate where it is, but you could consider an ARM and refinance when rates go lower.

Run firecalc and see how you fare.
Personally, spending almost half of my retirement savings to pay 700k for a house would make me nervous.
I would look for something less expensive, if I could.

Best wishes in your search, enjoy your time with your elderly Dad.
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Old 11-21-2022, 12:32 PM   #22
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Not a big traveler but I have a dog so a condo isn't ideal. Maybe a smaller townhome with a small yard.
In my condo association there are lots of dog owners of both large and small dogs and they are constantly walking them around the neighborhood. In fact, the maintenance guy puts out a dish of water by the clubhouse for the dogs to drink and keeps a stash of dog treats in his office and in his golf cart.
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Old 11-21-2022, 12:35 PM   #23
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Our condos have lots of dogs. We have a potty area with poop bags. Since my 2 dogs are only 5 and 6lbs they are pad trained. I love condo living. I would spend up to 500k and pay cash.
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Old 11-21-2022, 06:36 PM   #24
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I know the area. We are halfway between downtown DC and downtown B’more. There are some good values in less popular, less developed areas throughout the area and the far reaches. Charles Town and Harper’s Ferry are more convenient than DE and PA.

Downsizing around here usually means giving up all your equity and trading into a Townhouse or similar, 55+, etc. It’s like the developer’s have nailed the profile for many retirees looking to “downsize”. Smaller home, fewer chores, same money. We decided if we downsize we won’t dip into retirement savings so it depends on what we clear on sale of current home. Otherwise I’d try to go with a max of 30% of income w/ 20% down which I think is a traditional guideline. .
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Old 11-21-2022, 07:02 PM   #25
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What percentage of your savings and retirement accounts can be withdrawn tax-free, or close to it? In the year before my ER, we decided to buy a $1M house with 50% down, before selling our condo (real estate market was very tight, and we didn't want to lose out on the house, or the interest rate). We put down the most we could without incurring a huge tax bill; we used the $ from the condo sale to later refill the cash bucket. Given today's higher interest rates, I'd tend to want to put down as large of a percentage as possible. This reminds me of the 'Should I pay off the mortgage?' threads! Comes down to priorities, spending, and desired lifestyle, as well as how important a home is to you versus other priorities (travel, boat, etc.).
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Old 11-21-2022, 07:11 PM   #26
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We built a $770,000 house the year after we retired in a town we enjoyed with a view that we loved. We got a low interest rate loan and never looked back. The house has appreciated and now represents only 12% of our net worth. I have zero motivation to pay off the mortgage - we’re making almost 2.5X the mortgage interest rate in our bond ladder.

As to the OP, all that worked for us has changed today. I would not build a house in today’s environment. I certainly would not devote more than 15%-20% MAX of our net worth to a house.
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Old 11-21-2022, 07:41 PM   #27
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Lots of great info. Looking at the current properties on the market, I will most likely have to pay in the 500s. Should be able to pay cash from after-tax savings and cover most of the cost. I should be able to live off my 5k/month pension and not have to tap to much into my retirement. Buying a little nicer property now will hopefully payoff when I ultimately sell.
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Old 11-21-2022, 10:45 PM   #28
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For me, condo would be a tough choice especially at retirement age. Because I lived in SFH for a while and got used to nice feeling that I do not have neighbors above, below and on sides. In a condo, you pretty much depend on your neighbors, their character and life style.
Would I buy a house at retirement age? May be if I decide to move to less expensive area.
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Old 11-22-2022, 07:17 AM   #29
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Retired last year and just sold my single family house and am looking to downsize into my retirement house. My question is how much is too much for my retirement house. I am 58, divorced, no kids and no debt. I have about $1.6 million in savings and retirement accounts. I also receive a 5k per month Federal government pension. Ideally I would like to pay all cash for the house but wonder if its wise to sink 700k in a house. Any thoughts or advice?

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Should be fine - I would try to find something worth $600k, then u still have $1 million left + your pension
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Old 11-22-2022, 07:58 AM   #30
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Our retirement home was 5% of our NW, I wouldn’t be comfortable with much more. But our retirement spending is entirely self funded, other than a small amount from SSA when we turn 70. There is no right amount, depends on how SI you are, your risk tolerance, etc.
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Old 11-22-2022, 09:03 AM   #31
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If you have 55+ communities in the area, look into those. Most have 2 bedroom homes with small yards and many include lawn maintenance in the HOA fees. The best thing about these communities is access to all kinds of activities and amenities. Prices are often less than communities where things like schools are important.
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Old 11-22-2022, 12:07 PM   #32
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Just make sure you can modify it to live on one level.

Here our two-story townhouses have the laundry room downstairs in the finished basement.

Several older neighbors have remodeled the large master bath to remove the oversized "garden tub" replacing it with a walk-in, curb-less shower.

And replaced the freestanding corner shower with washer & dryer so they no longer need to go downstairs to do laundry.
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Old 11-22-2022, 08:59 PM   #33
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Thanks for your perspective. I am definitely a homebody and just enjoy working out and going on long bike rides. That's why I am looking to stay near the nice bike trail here in Northern Virginia.
We're all different and, for a home body, a home is not just money. If you consider your home to be critical to your well being and happiness, then spend spend more on it. It seems that the $5000/month can meet your expenses. So, I don't see it a problem if you spend more.
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Old 11-23-2022, 07:56 AM   #34
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Retired last year and just sold my single family house and am looking to downsize into my retirement house. My question is how much is too much for my retirement house. I am 58, divorced, no kids and no debt. I have about $1.6 million in savings and retirement accounts. I also receive a 5k per month Federal government pension. Ideally I would like to pay all cash for the house but wonder if its wise to sink 700k in a house. Any thoughts or advice?
Thanks



When we did this almost 3 years ago, I was adamant that all the proceeds we received from the sale of our paid off home would have to cover not only our downsized house but all the expenses involved in the move itself plus anything extra we had to do in the house.


I'm talking not just the new home purchase, but moving twice (moving company bills), 5 month home rental cost until the new home was completed and my husband retired, all the atty and real estate fees and closing costs for both homes, things needed in the new home like a radon mitigation system, a whole house generator, medicine cabinets, etc etc.(that alone totaled $25, 000) I could go on and on. But I refused to spend one more dime over what we received for our former home.



This was no small feet, especially since we were moving to New England from Hudson Valley, NY. But we pulled it off!


Sale price of first home was $317,000. Purchase price of brand new tiny cottage $274,400. Money put into new home ($25,000) All other expenses related to the move $17,600.00.


(We are in a small HOA community in a vacation area.)
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Old 11-25-2022, 05:11 PM   #35
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I look at the house itself as more of an investment. You’re not spending the money away, you’re just investing it elsewhere. The big question for me would be how much the tax bill would increase. That is spent money.
700k in my area would have a significant tax burden.
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Old 11-25-2022, 05:39 PM   #36
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Our experience (YMMV)

We downsized 4 yrs ago.
Sold 5 BR home 4 $300K.
Bought 1800 sq ft 3 BR townhome 4 $225K (selling for $300K now…our home would sell for $425K+ now)
It’s just right for us—no lawn work, rooms for DD when in town, space for ourselves, not much to maintain
Have looked at pricier options but don’t want to lock up so much in a house.
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Old 11-25-2022, 07:19 PM   #37
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If I was a single gentleman, I would certainly think twice about spending $700K on any residence. The only reason to spend that much is if the price was substantially lower than market value and if I could quickly double my money on a resale.

But what scares me is the fast appreciation of houses. With increasing interest rates, inflation on building supplies and expensive labor costs, many commentators on business television are looking for a really big downturn in home demand and prices. And rents are simply out of sight for renters with normal incomes.

My primary goal in 1992 was downsizing to a home we could quickly payoff and be mortgage free. And that plan was executed. I honestly don't know how I could afford the quality of life we have with a mortgage payment. And for that position we are very thankful. And with the current economic climate, we remain very, very conservative in our financial matters.
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Old 11-25-2022, 07:24 PM   #38
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When I retired we downsized from a SFH to a condo. We pocketed 500K and also pay 5K less in annual property taxes. The condo meets our needs and gives us the flexibility to lock and leave for extended trips. Communal living (condos and townhomes) has some downsides, with noise being an irritant for us, but the downsides are more of an annoyance (versus disruptive) and have no significant impact on our quality of living. The money we pocketed generates 25K in annual investment income (plus the additional savings in annual property tax). Even though our SFH was mortgage free, the ‘cost’ of staying in the home was significant compared to buying the condo and investing the difference. Of course money is only one of many considerations when it comes to choosing a place to live. We each have our own priorities, needs and wants. Good luck with your decision!
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Old 11-25-2022, 11:18 PM   #39
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Retired last year and just sold my single family house and am looking to downsize into my retirement house. My question is how much is too much for my retirement house. I am 58, divorced, no kids and no debt. I have about $1.6 million in savings and retirement accounts. I also receive a 5k per month Federal government pension. Ideally I would like to pay all cash for the house but wonder if its wise to sink 700k in a house. Any thoughts or advice?
Thanks
I am in a somewhat similar circumstance. I just sold my house in NOVA last year. Still have not bought a place yet. After 30 years in the DC area, we’ve had it. It’s not just the high price of housing (with Amazon HQ2, and AWS HQ and Facebook, Google, VA Tech campus going in and Capital One all making huge personnel investments) I wouldn’t depend on prices dropping in NOVA. Aside from that gas and food prices are at a premium in NoVA and always will be. Traffic will never get better. Taxes are higher and the list goes on. Bottom line, it’s a place that you’ll get the least for your money.

I don’t know if this will provide any insight, but since selling my house I’ve been renting a house in Richmond, VA. In town, my wife and I can walk everywhere. Lots of bike-able areas and trails and more on the way. Prices are a bit more moderate compared to NOVA. Prices for food, gas etc. are comparable with outlying counties in NOVA. It’s no more expensive to live in town than in the suburbs around here, except city taxes and meal taxes are considerable and property taxes in the city have been moving up considerably in the last couple years. That said, you are a 2 hour drive from NOVA if you want to go or a similar time for train ride. I haven’t retired yet, my company has a large office complex going in here and I can just hang around until the economy figures itself out (don’t have a bad boss). I was scheduled to retire in the spring but pushed it a year. Good luck!
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Old Yesterday, 11:02 AM   #40
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I look at the house itself as more of an investment. You’re not spending the money away, you’re just investing it elsewhere. The big question for me would be how much the tax bill would increase. That is spent money.
700k in my area would have a significant tax burden.
If this were the case, wouldn't spending more on a retirement house be prudent if you look at it as an investment and based on the premise that a more expensive modern property will appreciate more?
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