How Homeownership may help your Retirement

September 19, 2017

The Dream: Retire early! Wouldn’t that be nice? No matter when you choose to retire, the key is to be ready. It’s never too early to plan ahead. A person with a plan, that works the plan, is worth gold!

Take a moment to think about all the things you will be able to do when you retire. Travel the world, spend more time with family and friends, bring out your inner artist- the list can go on! Whatever it is that your heart is set on doing, will most definitely cost money. With no work income, you may be relying on the traditional retirement income streams – Social Security, Private Pensions, and savings. Will that be enough?

Real estate ownership has changed over the years. Homebuyers are not buying one home and living there for the rest of their lives. Most people buy & sell an average of 4 homes in their lifetime. And although most people will not live in a home for 30 years+, real estate ownership still continues to be a safe and lucrative investment. By just adding the homeownership factor to this three-legged traditional stool, you may be able to set yourself up to enjoy financial freedom during retirement.

According to a recent study by Urban Institute, leveraging the equity of your home at an older age can increase your retirement funding. If you choose to relocate once retired, selling and cashing out the profits would be an obvious option. However, if you choose to stay in your home, you can use your home equity line of credit to increase personal funds. Since the recession ended in 2012, homeowners aged 65 or older have increased their retirement income by nearly 50% (avg.) by simply borrowing a home equity line of credit, selling their home for a profit, or taking out a second mortgage or cash-out refinance. Others have opted for a reverse mortgage, which allows elders to access the home equity built up in their homes now, and defer payment of the loan until the homeowner’s death, sale or they move out of the home. Whichever method you choose to access the equity in your home, you are guaranteed to significantly grow your retirement income. An option you wouldn’t have if don’t buy a home now!

Even with home prices on the rise, a home can still be your “nest egg”. Real estate ownership is one of the nation’s greatest investment arenas, where if you buy and hold, you can weather the fluctuating market changes. If you are looking at long term goals, buying real estate now can prove to be a highly valuable asset later.