They say that real estate is about location, location, location, but there’s another element that’s key when you’re moving in retirement: timing. Whether your dream is downsizing from the suburban family home to a condo in a nearby city or buying a home in a distant golf community, it really matters when you take the plunge.
Buy too many years before you leave work, and you could saddle yourself with unnecessary expenses—or just change your mind. Wait too long, and you might not have the energy to go.
Nearly two-thirds of retirees have either moved or plan to move, according to a Merrill Lynch retirement study conducted with Age Wave, a research and consulting company. The four questions that follow can help you decide on the best schedule for you.
Is It Worth Buying Before Retirement?
Some people buy a place in a vacation spot while they’re still working, with the expectation that they’ll spend their time off there and eventually move in full-time. An early purchase can solidify your interest and connections in an area and reduce the stress when you are finally ready to leave your current home behind.
But the path to paradise isn’t always smooth. People often underestimate the full costs of owning a second home, which might include a big insurance bill for properties in a hurricane zone, says Joe Heider, president of Cirrus Wealth Management in Cleveland. Those who plan to rent out their getaway for much of the year tend to overestimate the amount they’ll get in rental income and underestimate the cost of regular maintenance, such as cleaning services, he notes. If you’re considering buying in a resort community, don’t rely on the resort’s projections of rental income; talk to owners instead.