Real Estate Tips for Planning for Retirement
Planning for your retirement is all about investing, and, if you’re like most people, your biggest investments are in real estate. Your golden years should be marked by a fully paid-off mortgage loan on your primary residence, and possibly a few additional properties to generate income. Unfortunately, many people make some fairly costly mistakes when planning their real estate nest eggs. Here are a few of the bigger pitfalls you should avoid:
- Think Twice Before Buying Multiple Homes: Some people like to purchase a second property with the idea that they are going to retire to it at some future point. They are frequently motivated by the economy, reasoning that they can save money by buying at today’s prices. All too often, though, these savings dry up quickly in the form of property taxes and maintenance costs.
- Don’t Wait Too Long to Downsize: Maybe you started out with a large home to bring up your family, and then planned to sell it for a smaller home later on. This is a good way to cash in some equity. Don’t wait longer than you need to, though; the longer you stay in the larger property, the more you’re losing in increased property taxes, increased maintenance bills, and costlier utilities.
- Invest Your Downsizing Money Wisely: It’s easy to fall into the trap of taking the money you make off of relocating to a smaller home and thinking of it as “found money”. When you do this, you are parted from this money quickly. Instead, consider living off of these funds so that you can leave your retirement accounts untouched for a little while longer.
- Try to Avoid Taking Out a New Mortgage: If you retire at 55, you could very well be paying off your house when you’re 85.
