Owning A Home Could Be Your Strongest Retirement Asset


Despite the fact many people think owning a home in retirement is a big mistake, it could actually end up being your strongest asset. There are several benefits in home ownership during retirement. Today we will discuss just a few of these.


Lower Variable Costs

A variable cost is one that is not definitive from month to month or year to year. These costs can change, and while your mortgage or property taxes may increase slightly over the years due to inflation it is nothing in comparison to the quickly rising costs of renting.


Keep Money In Your Portfolio

When retirees run into rising rent costs they tend towards pulling money from their portfolios. This is, of course, what those portfolios were built for – to cushion you throughout your retirement. Unfortunately, once that money has been withdrawn or those stocks sold, they no longer make any profit or receive any return on investment.

Without a large mortgage or rental payment more of your portfolio can stay intact longer. The less you withdraw, the more of a cushion you are provided for those events where a larger sum of money may be needed – certain healthcare costs or purchasing a new vehicle, for example.


Generating Income

A big benefit to owning your home is that you are given the potential to generate income beyond any social security or pension payments you might have. There are two ways this is possible.

First, if you are over the age of 62 mortgage companies will allow you to borrow against the equity placed in your home – called a reverse mortgage. You are not required to repay this amount for the duration of your life, either. Remember that things which seem too good to be true often are, however, and there are costs associated with this type of income – such as the potential for losing your home or passing debts onto your children.

Second, you can rent a portion of your home out. If you have a spare room or two you could rent the space out for a small influx of monthly income. Depending on where you live and how much real estate is going for, you could potentially generate $200 to $600 a month for each room you rent.


Better Tax Breaks

Owning your home outright allows for much better tax breaks. Property taxes, for example, are deductible whereas rent is not. Oh, and if you choose to take the route of a reverse mortgage that money is not taxed – meaning you could potentially create a tax-free income.


When to Rent

Sometimes renting may be the best option. For example, if you can get a good deal on a rent-controlled apartment you may want to take that option. These are very hard to come by, however, because – of course – they are in an incredibly high demand. Before jumping on one of these opportunities, however, make sure you have the necessary income to maintain such a dwelling.

All information presented in this article is intended for general information purposes only. Such information does not constitute legal, tax or financial advice. Investors should consult with their legal, tax and financial advisors concerning their personal circumstances. The information contained herein is derived from publicly available sources, but its accuracy cannot be guaranteed.

An investor should consider investment objectives, risks, charges and expenses before investing. All disclosures should be read carefully before investing. Investments are subject to investment risks, including loss of principal amount invested.