10 Ways to Reduce Your Housing Costs in Retirement
By Emily Brandon
1. Affordable housing
Housing is often your biggest retirement expense. But there are a variety of ways to cut your housing costs in retirement. Here are some ways to pay less for housing after you retire.
2. Pay off your mortgage.
When you pay off your mortgage, you eliminate one of your most significant monthly bills. While you will still have to pay for insurance, maintenance and taxes, those costs are likely to be a fraction of your mortgage costs. Your retirement savings will stretch much further if you no longer need to make a large housing payment every month.
There's no need for a large house with several stories and a spacious yard once your children grow up. Downsizing to a smaller home that costs significantly less can give a quick boost to your nest egg and eliminate many of the responsibilities of maintaining a large or aging home.
Once you retire, you don't have to live in a high-cost city because it's close to your job. You can choose to live anywhere in the world that has the amenities, weather and entertainment options you desire. Start dreaming about the beach, a golf community or a college town. Once you exit a large city, you might even be able to buy a newer or bigger home for less money.
5. Reduce property taxes.
Senior citizen homeowners who are older than a certain age and sometimes below a certain income cutoff qualify for property tax discounts in some jurisdictions. Find out when you might become eligible for property tax breaks in your area, and factor in property taxes and any exemptions provided to retirees before making any moves.
6. Become a renter.
Maintaining an aging home can be expensive and a lot of work. Selling your home and becoming a renter frees up the cash that was tied up in your home, makes someone else responsible for the upkeep of the property and might allow you to relocate to a city center that is walkable and close to shopping and entertainment options. However, renters could be subjected to significant rent increases or asked to move, which can be difficult to cope with in retirement.
7. Reverse mortgage
Retirees ages 62 and older who are committed to staying in their current home can use a reverse mortgage to tap their home equity to pay for living expenses. However, reverse mortgages charge a variety of fees, and if you move or sell the home, the loan becomes due. Plus, your children won't be able to inherit the home unless they pay off the loan.
8. Move in with your children.
Multigenerational households can provide benefits to both adult children and retirees. Grandparents might be able to help with childcare and meal preparation, while also being provided with eldercare when it's needed. While there is certainly the potential for conflict, a thoughtful arrangement could reduce the expenses of all the involved family members.
9. Share your living space.
Many retirees end up living alone after a spouse passes away. But roommates aren't just for young people. Retirees can split the rent or mortgage payment and gain some pleasant company if they live with other retirees. While you'll need to decide who does which chores, it's often nice to have someone to share meals or watch TV with.
10. Rent out a room.
If you have more bedrooms than you need, you might be able to make some money renting out a room. Some retirees take on long-term tenants, while others might make some extra cash on an occasional basis when there is an event in town. There are now several web services that can connect you to short-term renters online.
Bonus. Sell your stuff.
A family home accumulates a lifetime of equipment for discarded hobbies and electronics you seldom use. Gather up the things collecting dust in your basement and garage and try your hand at selling them. Your house doesn't have to be a storage container for children who have moved away, and you might be able to make some cash from people who can use the things you no longer need.