10 Tips for Downsizing Boomers
April 21st, 2010 categories: Money and Mortgages
1. Grab The Homebuyer Tax Credit
If you’re ready to move soon, there’s a $6500 tax credit for folks who have lived in their old home for 5 out of 8 years prior to closing on a new house. To qualify, you must have a binding contract to buy before May 1, 2010 and close before July 1, 2010. Watch out- there are income limits and other restrictions.
2. Consider A Short-Distance Move
While Sunny and exotic climates might beckon, research suggests that short-distance moves make retirees happier. Maintaining ties to your community- Church and friends and maybe family- will lead to a sense of well-being and security. Consider too the convenience of shopping, doctors, cultural venues and public transit, as well as recreation.
3. Investigate Taxes for Retirees
If you’re considering moving to a new state or city, compare local and state income tax rates, and whether some or all of your pension and Social Security will be excluded from taxable income. Also look into special homestead real estate tax exemptions for seniors. Don’t overlook car and boat taxes.
4. Consider Renting- For Now
Why own when in most of the best markets in the country right now, annual rents are 3% to 5% of purchase prices? If you’d planned to buy all-cash, opt instead to put your funds into 30-year triple-A rated muni bonds, yielding 4.4%. The income they generate will amply cover your rent in many markets- save any surplus bond income. This makes even more sense if you’re trying out a new location where you might want to buy later.
5. Look For Universal Design
If you do buy, look for a home built along universal design principles- wide doorways, flush thresholds, walk-in showers. That will allow you to age gracefully at home. It also will be a help if you’re younger and say, break your leg skiing. A lower level master bedroom and a lower-level bath are key.
6. Consider Multi-Generational Living
Multi-generational living arrangements have social as well as financial benefits. If you might be taking in a parent or a boomerang child at some point, look for a house with an “in-law suite” -a separate bedroom and bath and if possible, a kitchenette, too. Some privacy helps keep family peace.
7. Look for Security and High-Tech Features
Technology can make a retirement home more livable, increase resale value and make it easier for you to travel the world or safer to live alone. A home security system is a favored add-on. In a condo or gated community, look for convenient intercoms to announce visitors and even emergency call buttons.
8. Aim For Low-Maintenance
Folks 55 and up surveyed by the MetLife Mature Market Institute last year wanted help with gardening and a lot of other services, such as major and minor home repair, home-delivered meals, housekeeping and even laundry. You may enjoy these chores now, but check that services are available should you be unable to do it all.
9. Go Green, Senior Style
Consider saving energy (and drudgery) with remote control window blinds. Look for more conventional green features too, such as energy-efficient heating and cooling, solar hot water, or a new Energy Star refrigerator- or install them when you move in. These will pay off in lower utility bills later.
10. Consider Freeing Up Equity
The Center for Retirement Research at Boston College estimates that if boomers are ready to tap into their housing wealth with reverse mortgages, the percent whose retirements are “at risk” drops from 61% to a still high 51%. But reverse mortgages carry many fees. Consider buying cheaper housing now and investing the excess equity or using it to buy an immeidate deferred annuity.
If you or someone you know is looking to downsize and needs help with real estate needs, feel free to call or email me. Also, don’t forget to join others and become a fan of Kathy Villa Real Estate. We look forward to connecting with you!
courtesy of forbes.com