Should You Sell Your Home When You Retire?

Retirement is staring you in the face. As you prepare to end this major chapter in your life, you may be wondering whether you should keep or sell your home. While there is no right or wrong answer, you should consider several things before making your decision.

What are Your Retirement Goals?

What is your life plan after retirement? Maybe you want to trade in your current home for an oceanfront condo in Myrtle Beach, enjoying a life of leisure, sun and sand. Maybe you want to stay in your current city and just enjoy a peaceful life with your family close by.

The first and most important thing to consider is your retirement goals. If you have no intention of leaving your current city, it may not be worth selling your home unless you want to downsize or will have trouble maintaining your lifestyle after retirement.

Take an Honest Look at Your Finances

A study from the National Association of Realtors found that about 54% of home sellers were 52 years of age or older. Why? Because many people choose to sell their homes and downsize in retirement.

But downsizing doesn’t necessarily mean that you have to purchase another home. Renting may be a smart option for you, especially if you’d like to leave the days of home and yard maintenance behind you.

To determine whether renting or buying is a good option for you, you need to take an honest look at your finances. That starts with determining how much money you’ll need to comfortably retire. AARP recommends saving 10-12 times your income, but everyone’s needs are different.

Take a look at how much you owe on your home compared to its value, and consider income from your other assets.

Consider the Cost of Homeownership

Your home may hold more equity than you think, and that equity can be used to fuel your retirement. Forbes says the average American has twice as much value in equity than their savings accounts.

But homes aren’t liquid assets. They don’t pay out dividends. And there are costs to maintaining a home, such as:

  • HOA fees
  • Unexpected repairs
  • Property taxes
  • Utilities

These expenses can eat into your income.

But if you were to sell your home and use the proceeds to invest in annuities or dividend-paying stocks, you may generate enough money to cover your rent and other expenses for years to come.

Renting offers a low-maintenance lifestyle and the freedom to pick up and leave whenever you please.

You’ll Lose an Appreciating Asset

When you purchase a home, you invest your income into an asset that you own. When you rent, you put your income into someone else’s pocket.

If you sell your home and decide not to rent, you lose an asset that could potentially bail you out of an emergency. A home’s equity could provide the funds for medical care or major home repairs.

Selling your home and putting that equity into income-producing investments may also impact your Social Security benefits. The more income you generate, the lower your Social Security benefits.

Ultimately, making the decision to sell your home in retirement is a personal one. Run the numbers and see which option makes the most financial sense.

Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.