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How much to spend on retirement house
Old 11-21-2022, 05:10 AM   #1
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How much to spend on retirement house

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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Old 11-21-2022, 05:25 AM   #2
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I don't think I would take almost half of my investable assets and put them into a retirement house, even with a $5k per month govt pension. I would rent. And renting gives you more flexibility if you decide to move.
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Old 11-21-2022, 05:30 AM   #3
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No right answer and it depends on how much you are into houses... is it simply a place to live or is it your pride and joy?

We have more $$$$ and I would never think of buying a $700k home, though I'll concede that our two homes are probably worth more than $700k combined.

Perhaps a good guideline for a maximum would be if you financed it that the PITI - principal, interest, taxes and insurance (and HOA fees where applicable)- is less than 30% of your income or spending budget and could be applied whether you finance or pay cash.

Using that 30% guideline, a 4% WR and your pension I'm guessing your maximum house would be $400k or so. That would leave you with $1.2m at 4% is $48k and $60k pension is $108k of income and 30% would be $2,700/mo PITI. A $400k house with 20% down and a 30-year mortgage at 6.7%, 2.5% of home value for property taxes and $1,000 annually for insurance would be about that.

But if it were me I probably wouldn't go that much.
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Old 11-21-2022, 05:41 AM   #4
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I would try for more like $300K.
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Old 11-21-2022, 05:53 AM   #5
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It all depends on where you want to live, what kind of home you'd be happy in, and your expenses.

Our home was never a $700k house until these past two years. I would not be able to find a single family home in my county or nearby for $300k today that I'd feel comfortable to live in. Maybe a condo, or a very small townhouse.
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Old 11-21-2022, 05:58 AM   #6
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I am looking in the Northern Virginia area in order to be close to family and friends. Unfortunately houses here are still pricey. I am going to look a little further out in order to afford something nicer. May have to consider condos as well. I am hoping that prices come down next year as many are predicting. Renting is an option but want to pay cash to avoid having a mortgage.
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Old 11-21-2022, 06:09 AM   #7
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If you plan to do much traveling in retirement then consider a condo. We have a single family home and a condo and I prefer the condo. Turn off the water, lock it and leave. As long as you are prepared for condo living but it is really like renting an apartment but with more freedom to do what you want within reason inside.
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Old 11-21-2022, 06:13 AM   #8
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If you plan to do much traveling in retirement then consider a condo. We have a single family home and a condo and I prefer the condo. Turn off the water, lock it and leave. As long as you are prepared for condo living but it is really like renting an apartment but with more freedom to do what you want within reason inside.
Not a big traveler but I have a dog so a condo isn't ideal. Maybe a smaller townhome with a small yard.
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Old 11-21-2022, 06:21 AM   #9
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I am looking in the Northern Virginia area in order to be close to family and friends. Unfortunately houses here are still pricey. I am going to look a little further out in order to afford something nicer. May have to consider condos as well. I am hoping that prices come down next year as many are predicting. Renting is an option but want to pay cash to avoid having a mortgage.
When you say "Northern Virginia area" are you thinking the whole DelMarVa? I live in Southern MD about 70 miles from downtown DC. Many decent houses in our area for the 3-4 hundred thousand range. I can get to Dulles (no or very light traffic) in 1:45. Maybe go out to southern PA and get a cheaper place. Also over the bay bridge to the eastern shore of Delaware. I would be honest with myself about being too close to family. Most/many people say that and in reality they rarely see of spend much time with family. We have DD and SIL about 25 minutes away and DS and DIL in San Diego. I vote for the rent option and then fully evaluate your family time, budget, etc...

Good luck and congrat's on retirement.
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Old 11-21-2022, 06:35 AM   #10
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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
As others have said, a personal decision relative to how you view/use it. Some may look at their home as a "shelter" to launch from a do life. Others may be more nesters/"home-bodies" and/or be integrated into their neighborhood activities/relationships (i.e. think the Villages).

In our case, we went through the downsize exercise, but in the end made the decision to keep the "big house". With 4 kids relatively close and a growing count of Gkids (about to have 5), the basement and pool are getting new life!

That said, you want to be careful not to sink to many $$ into your home if it starts to subtract from your desired retirement spend.

Good luck!
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Old 11-21-2022, 06:39 AM   #11
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When you say "Northern Virginia area" are you thinking the whole DelMarVa? I live in Southern MD about 70 miles from downtown DC. Many decent houses in our area for the 3-4 hundred thousand range. I can get to Dulles (no or very light traffic) in 1:45. Maybe go out to southern PA and get a cheaper place. Also over the bay bridge to the eastern shore of Delaware. I would be honest with myself about being too close to family. Most/many people say that and in reality they rarely see of spend much time with family. We have DD and SIL about 25 minutes away and DS and DIL in San Diego. I vote for the rent option and then fully evaluate your family time, budget, etc...

Good luck and congrat's on retirement.
Im referring to London County/Leesburg area. I looked down at the Delaware beach area but decided against it because of traffic issues and lack of medical facilities. I have a heart issue that requires monitoring. Probably should have worked a few extra years but couldn't take it anymore (terrible boss). Good thing is I am staying with my elderly father rent free so I have some time to look for the right deal.
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Old 11-21-2022, 06:42 AM   #12
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As others have said, a personal decision relative to how you view/use it. Some may look at their home as a "shelter" to launch from a do life. Others may be more nesters/"home-bodies" and/or be integrated into their neighborhood activities/relationships (i.e. think the Villages).

In our case, we went through the downsize exercise, but in the end made the decision to keep the "big house". With 4 kids relatively close and a growing count of Gkids (about to have 5), the basement and pool are getting new life!

That said, you want to be careful not to sink to many $$ into your home if it starts to subtract from your desired retirement spend.

Good luck!
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.
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Old 11-21-2022, 06:58 AM   #13
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Whether to pay cash or have a mortgage is a personal decision, but if it were me, I wouldn't be me paying all cash for that $700K house. I'd put a fairly large down payment on it, take out a mortgage for the rest, and then if/when rates finally come down, refinance.

But, even if you did pay cash for the whole thing, you'd still have about $900K left over, plus your $5k/mo pension. That doesn't sound like a bad setup to me.
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Old 11-21-2022, 07:09 AM   #14
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Whether to pay cash or have a mortgage is a personal decision, but if it were me, I wouldn't be me paying all cash for that $700K house. I'd put a fairly large down payment on it, take out a mortgage for the rest, and then if/when rates finally come down, refinance.

But, even if you did pay cash for the whole thing, you'd still have about $900K left over, plus your $5k/mo pension. That doesn't sound like a bad setup to me.
I'm going to try to get something around 500k or lower. Prices are coming down so I thinks it's doable as I am fine with a smallish townhouse/house and a small yard.
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Old 11-21-2022, 07:19 AM   #15
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Im referring to London County/Leesburg area. I looked down at the Delaware beach area but decided against it because of traffic issues and lack of medical facilities. I have a heart issue that requires monitoring. Probably should have worked a few extra years but couldn't take it anymore (terrible boss). Good thing is I am staying with my elderly father rent free so I have some time to look for the right deal.
And how is that going (living with your father)? I'm not trying to pry, but perhaps that setup benefits both of you, and gives you more time together?

While I have different #'s, I'm also struggling with the same question as you, i.e. how much house to buy when I finally retire (again). I could certainly stay here (upstate NY) in a paid off house, but want to move (either closer to family or to a warmer location). I find myself looking at way-t0o-wide a range of house prices, types, closeness to city, etc. I could perhaps "afford" a house 2-3x the cost (value) of my current place, but to what end?
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Old 11-21-2022, 07:28 AM   #16
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And how is that going (living with your father)? I'm not trying to pry, but perhaps that setup benefits both of you, and gives you more time together?

While I have different #'s, I'm also struggling with the same question as you, i.e. how much house to buy when I finally retire (again). I could certainly stay here (upstate NY) in a paid off house, but want to move (either closer to family or to a warmer location). I find myself looking at way-t0o-wide a range of house prices, types, closeness to city, etc. I could perhaps "afford" a house 2-3x the cost (value) of my current place, but to what end?
Been with him a week and its fine, but he has no yard, so it a bit of a challenge with the dog.

While a newer fancy big house is nice, It's just me, so I could go with something smaller and more affordable. After enjoying the retirement life for a year I definitely dont want to have to go back to work.
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Old 11-21-2022, 09:26 AM   #17
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No way to answer, not enough info.

For example, if your $60K pension covers all expenses (plus SS in the future?), then why not?

Run it in FIRECalc, with a good estimate of future expenses (including taxes). No one here can tell you.

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Old 11-21-2022, 10:27 AM   #18
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No right answer and it depends on how much you are into houses... is it simply a place to live or is it your pride and joy?
Good point. I view house as place to sleep and get ready for next trip.

However MANY people are "house worshipers" spending majority of their waking hours beautifying.

So if you're a "house puppy" and you live in NOVA - maybe $700k, half your net worth, is worth it to you.
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Old 11-21-2022, 10:42 AM   #19
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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 see you live in Falls Church, where housing is quite expensive, IIRC. So, I'm not surprised that you are thinking of spending so much on a house.

If it was me I'd be highly motivated to spend considerably less on my house, even if it meant moving someplace cheaper. I'd shoot for something about half that price, and pay all cash for it.
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I'm going to try to get something around 500k or lower. Prices are coming down so I thinks it's doable as I am fine with a smallish townhouse/house and a small yard.
Now 500K, that's more reasonable! And often, the smaller the house and yard, the less maintenance required.
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Old 11-21-2022, 11:06 AM   #20
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I'll be the oddball suggestion, move south to nicer weather and then your relatives can come visit you, or you go visit them if you want. South will give you year-round better weather for being outside for long bike rides or walking your dog. However, I would probably wait until you are sure that your father doesn't need you closer. While staying at father's place isn't ideal, it is great for flexibility now while you decide what to do.

I couldn't stand being around the DC area myself, which may alter my feelings on staying there. Some work trips were enough for me. I declined a DC offsite assignment for work because I did not want to move there, even for a 2-3 year term with company paid housing benefits. So take my advice as what it is, my opinion.
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