Realty Executives Oceanside



Sales Associate/REALTOR®

Realty Executives Oceanside



(Published on - 5/15/2024 1:22:18 PM)

Relocating to a smaller home might be a wise decision for retirees or even older adults who are still employed. Despite the Great Recession, most real estate appreciates over time. Residential sales can release funds that, if you can find a replacement property at a reasonable price and secure a favorable mortgage rate, can help ward off longevity risk—the most morbid of retirement fears.

The risk that you'll outlive your money is measured by longevity. Usually, the best defense against this is to apply the well-known 4 percent rule, which states that a retiree should take out no more than 4 percent of their savings in any given year. You can find out if the rule applies to you by using a basic life expectancy calculator. However, inflation and market swings are not taken into account by the calculation.

Private retirement income is not guaranteed to increase in line with inflation each year, in contrast to Social Security benefits. Growth in stock prices is erratic but can be beneficial. Additionally, selling some of your real estate and investing the revenues could be the perfect solution if your portfolio now appears like it might run out of money in the future.

Consult an agent beforehand.

Locating a trustworthy real estate agent is the first step. You should be able to find out from that agent how much your existing house is worth. That agent can also assist you in determining whether downsizing makes sense if you're looking to purchase a new property in the same market. If you intend to move to a different state or municipality, they might also be able to put you in touch with recommended agents.

Then, Optimize Sale Price

Maintaining your house will increase its worth. It is your goal to take action in order to maximize the value of your existing property. This might be as simple as clearing out clutter or tidying up your garden beds, or it can involve more costly upgrades to update your home's aesthetics or bring it up to code. Curb appeal, interior design, and roof type are all significant considerations when getting your house ready for a buyer. These aspects affect how the buyer perceives your house and how marketable it is.

Invest the Earnings

Reducing monthly expenses and/or allocating funds towards augmenting retirement income are the primary rationales behind downsizing for financial motives alone. It's excellent news that most residential sales' capital gains are tax-free for the first $250,000 for single filers or the first $500,000 for joint filers

Depending on your circumstances, you may want to invest a larger portion of money in investments rather than a new location to live. It can make sense to get a new mortgage or rent a place that doesn't require all of your money. But the math is up to you. And if you happen to be one of the fortunate individuals who earns more from a sale than what is tax-exempt, you might want to look into sheltering the money by buying a new house.  

Examine Your Finances

Various investment advisors will offer suggestions regarding the financial goods you ought to purchase with your funds. A salesperson for annuities may promote single premium annuities (SPIA) or deferred annuities. Government bonds with inflation protection may appeal to other advisors. Instead than investing in individual assets, I use mutual funds with my own money. But no two funds are the same.

In summary

In many respects, your home is a treasure. Prudent investing can transform this treasure into a long-lasting asset for a more comfortable retirement when you downsize. Reach out to Realty Executives to learn the best downsizing and investing tactics to safeguard your future when you're prepared to make an educated real estate selection for your retirement.




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Sales Associate/REALTOR®


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