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What Housing Options Can You Afford After Retirement?

Monday, September 11, 2023

After retiring, you might have to reconsider your housing options. You no longer need to live near your place of work and are free to choose the home of your dreams. However, your preferences could be limited by your financial situation. Retirement often goes hand-in-hand with a drop in household income, and the cost of housing is one of the biggest worries for retirees.

Having a quality place to live in is crucial for enjoying your retirement years. Do you wonder what housing options are within your budget post-retirement? Read on to discover various affordable choices, from downsizing to exploring different locations. Make the most of your circumstances and find the perfect home that aligns with your financial goals and offers the lifestyle you desire in retirement.

Double Check Your Housing Expenses

A retired man receiving keys to his new home

Calculate your retirement savings and income sources to determine a budget for housing expenses. The guideline for qualifying for a mortgage says that monthly housing expenses (loan and interest repayment and insurance premiums) should not be higher than 36% to 40% of monthly gross income.

This recommendation applies to all ages. You may want to budget less for housing expenses, for example, up to 25% to 30% of your available income, setting aside more money for luxuries like traveling.

Review Your Needs and Preferences

Your physical abilities play an important role when selecting a home for your golden years. Many people remain active long into retirement, but at some point, you may require an age-friendly home. 

Also, when thinking about housing options, think about what matters most to you now that you have plenty of free time. Is it living in a warm climate? Close to a golf course? Or is it more important to you to be near your children and grandchildren? 

Why Stay in Your Current Home

Do you want to stay put but can’t afford it? Why not make your home generate some extra income in your retirement? Take roommates or opt for short-term rentals. You can rent out a spare room or even your whole house while you are away traveling. Of course, check your local regulations on this type of rental.

Staying put may be the most affordable housing option if your house is wholly or nearly paid off. You may need to modify your home, for example, by installing grab bars and benches in bathrooms, non-slip floors, and adequate lighting in every room, hallway, and doorway. Budget for these renovations and do them sooner rather than later.

Or Move to a More Affordable Place

Relocating for retirement can save you a bundle, if you find a place with more affordable housing, budget-friendly living expenses, and lower taxes. 

When assessing your housing options after retirement, consider the cost of living, proximity to amenities and healthcare services, social and community engagement opportunities, availability of public transport, and any specific features important to you. Ideally, you should spend a few months or even a year in a new place before moving permanently.

If you decide that moving is the best choice, don’t put it off. Check out some of the following courses of action:

Move in with your children: For lower-income retirees, moving to live with their children is sometimes the most stable housing option. This is a deeply personal choice, but such an arrangement can benefit everyone: retired parents, grown-up children, and grandchildren.

Downsize: After selling your home, you can use the proceeds to buy or rent a less expensive house or apartment in the place that suits you. Downsizing your home makes sense if you are an empty nester. It also gives you a chance to declutter and start fresh. Besides, a smaller place takes less effort to clean and maintain. 

Young woman visiting her retired mother in a retirement community

Settle in a retirement community: Retirement communities are suitable for healthy and active adults. Minimum age requirements vary, but as a rule, you need to be over 55. Housing options include single-family homes, townhomes, or condominiums for sale or rent. 

The cost of retirement communities ranges from moderate to expensive. The fees typically include property maintenance and landscaping, as well as access to amenities such as a pool, fitness center, or planned outings.

Opt for a long-term care facility:  Long-term care facilities such as assisted care facilities and nursing homes are for people who need help in their day-to-day lives or constant medical care. 

Continuing care retirement communities (CCRCs) are sometimes also called life plan communities. Residents can access higher levels of care when needed because CCRCs offer independent living, assisted living, and skilled nursing units, all within the same community.

The costs vary depending on the location and level of service, but CCRCs tend to be the most expensive.

Move abroad: Several countries around the world attract American retirees because they offer an excellent quality of life on a modest budget. When contemplating a move to a foreign country, do your homework well. Learn about the residency types, tax regulations, healthcare provisions, and more. It is also a good idea to go armed with at least a basic knowledge of the local language.

Apply for subsidized housing: Finding affordable housing options in retirement can be a challenge for low-income groups. Several programs are designed to provide financial assistance in such cases. For example, the US Department of Housing and Urban Development (HUD) offers affordable public housing apartments with subsidized rents, usually capped at 30% of income. Contact HUD for assistance and apply early because the procedure is complex, and the waiting lists can be lengthy.

Should You Buy or Rent in Retirement?

Owning your home offers comfort and security that renting does not. However, homes age, and maintaining them can become expensive. When you rent, the cost of repairs and regular maintenance falls on the landlord.

The biggest drawback of renting is the lack of control. Your landlord can increase the rent or even sell the place. Also, you will not be able to carry out significant renovations or modifications, at least not without prior permission.

Renting may be a good housing option if you are not sure where you want to spend your retirement years. You may want to relocate to a place with a warm climate in the early stages of your retirement. Later on, you could wish to move closer to your family. In such a case, renting provides more flexibility because selling a house is often an involved and lengthy procedure.

A retired man celebrating after moving to his new home

Move to Your New Home With Shyft

Whatever housing option you choose, like moving in with your children or moving abroad, the process of moving can be time-consuming and stressful. When you entrust AARP® Moving Services powered by Shyft with your move, you can enjoy a smooth transition. AARP members also get an exclusive discount of up to $250 every time they move, regardless of where and how many times they move.

Shyft will handle all the logistics while you focus on the next phase of your life. To help you prepare, Shyft has created a practical moving checklist. Print it out, stick it on your fridge, and tick off item by item, secure in the knowledge that your relocation is in good hands. 

Shyft is a technology-driven moving platform that streamlines the moving process and saves money. To get things rolling, fill out a short form online or call 1-888-838-5981. You will be assigned a dedicated Move Coach to guide you through the process.

Your Move Coach will ask you to download the Shyft Next app for your iPhone or Android device and schedule a video call.

During the video call, you will walk around your current home and point the camera on your device at the items you want to take to your new home. Your Move Coach will create an inventory list through the app without setting foot in your home.

The video call also allows you to ask questions and discuss your options. Tell your Move Coach whether you need boxes or other packing materials, whether you will pack everything or need a packing service, what type of insurance you want, and what types of specialized services you require (for example, moving your pets or specialty items like a grand piano). 

The video call lasts 30 minutes. About half an hour after the call, your inventory list will be ready. This list is typically 95% accurate. Go through it and make any changes you deem necessary. 

The inventory list you approved then goes to Shyft’s secure bidding platform, along with all the details of your move. This is where vetted professional moving companies bid on projects, ensuring you get competitive pricing. Shyft will gather three or more top quotes from different movers and present you with the options. 

When you select the quote that suits your needs and budget, it becomes binding. You will not encounter any extra fees. The quoted price may change if you add or remove items or services or fail to book your move before the quote expires.

Your Move Coach will oversee the whole process from start to finish, ensuring you receive high-quality service and that your possessions arrive safely at their destination. You may contact your Move Coach whenever you have a question or want to enquire about the progress of your move. Shyft is available seven days a week, be it day or night.

Start your stress-free moving experience with AARPMoving Services powered by Shyft now and claim up to a $250 discount.

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