Join Early Retirement Today
Reply
 
Thread Tools Display Modes
How much to spend on retirement house
Old 11-21-2022, 04:10 AM   #1
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
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?
Thanks
jgman 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 11-21-2022, 04:25 AM   #2
Moderator Emeritus
Ronstar's Avatar
 
Join Date: Aug 2007
Location: Northern Illinois
Posts: 16,543
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.
Ronstar is offline   Reply With Quote
Old 11-21-2022, 04:30 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
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.
__________________
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
pb4uski is offline   Reply With Quote
Old 11-21-2022, 04:41 AM   #4
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 4,962
I would try for more like $300K.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 11-21-2022, 04:53 AM   #5
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 13,879
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.
Aerides is offline   Reply With Quote
Old 11-21-2022, 04:58 AM   #6
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
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.
jgman is offline   Reply With Quote
Old 11-21-2022, 05:09 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,264
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.
__________________
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
pb4uski is offline   Reply With Quote
Old 11-21-2022, 05:13 AM   #8
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
Quote:
Originally Posted by pb4uski View Post
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.
jgman is offline   Reply With Quote
Old 11-21-2022, 05:21 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Oct 2014
Posts: 1,537
Quote:
Originally Posted by jgman View Post
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.
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Old 11-21-2022, 05:35 AM   #10
Full time employment: Posting here.
 
Join Date: Oct 2015
Posts: 900
Quote:
Originally Posted by jgman View Post
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!
DawgMan is offline   Reply With Quote
Old 11-21-2022, 05:39 AM   #11
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
Quote:
Originally Posted by Bigdawg View Post
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.
jgman is offline   Reply With Quote
Old 11-21-2022, 05:42 AM   #12
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
Quote:
Originally Posted by DawgMan View Post
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.
jgman is offline   Reply With Quote
Old 11-21-2022, 05:58 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Location: Crownsville
Posts: 3,711
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.
Andre1969 is online now   Reply With Quote
Old 11-21-2022, 06:09 AM   #14
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
Quote:
Originally Posted by Andre1969 View Post
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.
jgman is offline   Reply With Quote
Old 11-21-2022, 06:19 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Location: Upstate
Posts: 2,948
Quote:
Originally Posted by jgman View Post
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?
copyright1997reloaded is offline   Reply With Quote
Old 11-21-2022, 06:28 AM   #16
Recycles dryer sheets
 
Join Date: Jan 2021
Location: Falls Church
Posts: 125
Quote:
Originally Posted by copyright1997reloaded View Post
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.
jgman is offline   Reply With Quote
Old 11-21-2022, 08:26 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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.

-ERD50
ERD50 is online now   Reply With Quote
Old 11-21-2022, 09:27 AM   #18
Full time employment: Posting here.
Delawaredave5's Avatar
 
Join Date: Dec 2004
Posts: 699
Quote:
Originally Posted by pb4uski View Post
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.
Delawaredave5 is offline   Reply With Quote
Old 11-21-2022, 09:42 AM   #19
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 47,473
Quote:
Originally Posted by jgman View Post
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.
Quote:
Originally Posted by jgman View Post
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.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.

Happily retired since 2009, at age 61. Best years of my life by far!
W2R is online now   Reply With Quote
Old 11-21-2022, 10:06 AM   #20
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 4,354
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.
__________________
The problem isn't artificial intelligence, it's natural stupidity.

You can't spend yourself to prosperity.

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 online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
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
How Much Can I Afford to Spend on a House (Anywhere but Portugal) Eric S Life after FIRE 23 10-24-2020 09:23 PM
How much you'll really spend in retirement RetireBy90 FIRE and Money 83 09-12-2018 07:12 PM
Book by Wade Pfau: "How Much can I spend in Retirement" walkinwood FIRE and Money 4 10-10-2017 07:19 PM
NEW Retirement home: how to figure out how much to spend on it? Orchidflower FIRE and Money 21 05-10-2013 07:40 PM
How much should you spend on . . . Midpack Other topics 9 01-08-2012 10:28 AM

» Quick Links

 
All times are GMT -6. The time now is 02:51 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.