If you are ready to retire, you may wonder if what you have saved up over the years will cover all your costs. A 2018 report revealed that many Americans have less than 15 percent of the amount needed to retire comfortably; however, while this can be a troubling thought, there are a few ways you can boost your savings. One popular way for many people to fund their retirement is to sell their home, and if you are considering this course of action, there are a few factors you may want to think about before making a final decision.
Top 5 Things to Consider When Selling Your Home to Fund Retirement
1. The True Value of Your Home
If you have not had your home and property appraised lately, this may be the time to do so. Improvements, age, and your home’s features can all affect its value, but knowing an exact number can help you decide if the sale will bring enough of a profit. Preparation can be key, so it is a good idea to plan well in advance before you search for an appraiser.
You can avoid a low home appraisal by ensuring major systems are working properly, such as your HVAC and electrical ducts and circuits. If your home needs any serious repairs, this can lower the appraisal and cause you to lose potential profit, so consider having them made before you seek an appraisal.
2. Storage Costs
You may have accumulated many belongings over your lifetime, and if you plan to sell your home and move into an apartment or travel in an RV, you might have to store some items. Having an estate sale may help you liquidate larger items, such as furniture; however, others may have to go into storage until you can sort them, and renting a space could cost you $100 or more per month. As you calculate any profits you might make from the sale of your home, consider how storage costs might affect your cost of living.
3. Overall Savings
Before you sell your home, it is wise to take time and calculate your overall savings and which expenses you will be cutting out by moving. For example, if you live in a neighborhood with pricey school taxes, moving to a city where these taxes are lower and beneficial to you as a senior can be a smart move. If you pay someone to maintain your lawn or make repairs on your house, you will likely be able to cut these costs as well.
4. The Future Cost of Living
Your retirement plans can affect whether the sale of your home can properly fund your future. Travel, monthly expenses, and medical care are all costs you might want to consider. If you are going to invest in a condo or retire to somewhere warm and dry, the cost of living may be higher. It may be possible to generate income by renting your home instead of selling it, but then you will be responsible for its upkeep and have to worry about the property being damaged by irresponsible renters.
5. Marital Status
Your marital status as a senior can affect more than which life insurance plans you choose. As a married person, you can claim up to $500,000 in profit from the sale of a home but only $250,000 if you are single. If you are a widow or a widower, you can claim the same amount of a sale as a married person, but only if you sell your home within two years of your spouse’s death. Since this can seriously affect your profits, it is something to consider.
Selling your home to fund your retirement can be fruitful. However, the decision is one that should be made carefully for the security and comfort of your future.