When to Buy a Retirement Home?

by Kelly McLain Treacy 02/09/2020

Photo by Harli Marten on Unsplash

Although it may seem like putting the cart before the horse, a strong case can be made for purchasing your retirement home before your golden years. In fact, with some deft financial planning, it may be worthwhile to buy your retirement home decades in advance. That may seem counterintuitive, but maybe other folks have been doing it backward. Whether you are a Millennial, Gen Xer, or Baby Boomer, the best time to plan ahead is right now. Consider these strategies.

Why Buying Now Saves Retirement Dollars

The Gen X crowd was born between 1965-1979, making them 40- and 50-somethings. Those are generally prime financial years. In many cases, they’re nearing the end of a mortgage and are probably enjoying the fruits of many years of savings. This means having equity and resources at their disposal to make a move on a property now.

The argument for paying off an existing home loan or doubling-up if it’s reasonably low rests on data that the home values continue to rise. Consider these incremental increases in median home sales pricing.

  • 1970: $23,400
  • 1980: $64,60
  • 1990: $122,90
  • 2000: $169,000
  • 2010: $221,800
  • The median price routinely topped $300,000 in 2019, and the robust economy, coupled with an inventory shortfall, is expected to drive prices upward. If you were to have purchased your retirement home just 10 years ago, your savings would have amounted to nearly $100,000, plus lower interest payments. Those are real retirement dollars.

    Why Buying Your Retirement Home First Makes Sense

    One of the strategies savvy Millennials are employing is to purchase an “investment property” rather than a primary residence first. That may seem like thinking way outside the box, but the math and lifestyle considerations can make it a smart play.

    This demographic runs between 23 and 38 years old, and they have grown up in a vastly different culture than their predecessors. Some are straight out of college struggling with student loan debt, and even the top end of the age bracket has members still evolving their careers in many cases. These factors tend to position Millennials for ongoing relocation as they take advantage of emerging opportunities. Rather than be burdened with buying and selling a home, it’s easier to rent.

    Financially sharp Millennials, among others, have purchased properties in culturally rich areas that lend themselves to college students and tourism. The strategy is to enlist the help of a real estate professional who oversees renting, upkeep, and allow the asset to pay for itself. In many cases, it may even yield a profit. When retirement age arrives, there can be ample revenue to do a full remodel and just pay the taxes while you collect a pension or social security.

    Although buying a retirement home prior to punching out for the last time may seem odd at first, it’s in your best interest to run the numbers both ways. Consider all the moving parts and detailed costs to make an informed decision about your best time to but a retirement home.

    About the Author
    Author

    Kelly McLain Treacy

    Prior to launching a career in real estate, Kelly was a financial professional, starting at KPMG in Miami, where she earned her CPA as a forensic accountant. She excelled in her field working with various equity trading businesses at leading investment banking firms such as Lehman Brothers, JP Morgan, and Deutsche Bank, while living in NYC, Zurich, and London. She also spent time working in Tokyo and Sydney. 

    With her vast experience, Kelly intimately understands the emotional and financial investment of selling or purchasing a home and will manage every detail of the process. She grew up in a family of real estate agents, general contractors, and property developers and has an appreciation for all aspects of the industry from start to finish. Combined with her determination, high integrity and strong work ethic, along with her professional skills highlighted below, she will go above and beyond your expectations to negotiate the best deal for you. 

    Professional Skills:

    Managing client relationships, negotiation skills, and diffusing difficult situations;

    Easily adapts to different cultures and backgrounds;

    High attention to detail and able to manage large amounts of financial data;

    Efficiently and effectively multi-task in a fast paced, high pressure environment;

    Determination and tenacity to finish whatever she starts, ensuring deliverables are completed and issues are resolved.

    Personal Highlights:

    Graduated from the University of Florida with a Masters in Accounting and BS in Business Administration (Management and Accounting);

    Lives in Mill Valley with her family where they take full advantage of the beautiful open space and outdoor opportunities that Marin county offers;

    She is an avid sports enthusiast participating in Ironman events, ultra-trail marathons, alpine climbing, paddle boarding, and yoga.

    She is passionate about various causes that have impacted her life and giving back to her community:

    American Foundation for Suicide Prevention

    ALS

    Financial Women of San Francisco

    PTSA - Mill Valley Middle School