Few things mean as much to a family as their home. Not only does it carry a heavy emotional attachment, your house likely makes up a significant portion of your wealth. That’s why it can weigh heavily into decision-making once you’re in retirement.

In this episode of the Money Wisdom podcast, we want to break down some of the most common scenarios our clients face and how we help them make the best decision. From downsizing to financing, let’s take a look at a list of situations you might also face in retirement.

The first is downsizing. It’s something most people will consider at some point in their life as children move out and upkeep becomes more and more difficult. If you begin assessing your home, the first thing to consider is the lifestyle of living in a smaller home. Outside of the money and the expenses, would you be comfortable and happy in a smaller house than you currently live in? And would you be fine if this was your last home?

From there you can think about the financial side of it. Make sure you do the home sale in a way that reduces your taxes. It’s great to avoid paying capital gains taxes if you can do it. There are other financial considerations but lifestyle is a bigger discussion in our mind.

Now let’s talk about your mortgage. Once you have enough money to pay off your mortgage debt, should you do that or continue paying it down on schedule? If you’re asking that question, it probably means you’re comfortable having a mortgage to pay every month. For most people, if they have money to pay off the house or spend it on something, it makes sense to pay off the mortgage before retirement. Sometimes it’s going to be a better financial decision on paper to put that money to work somewhere else but often times people just feel better being debt-free.

Another scenario people often face is wanting to buy a second home in retirement but not knowing the best way to pay for it. The traditional way of taking out a mortgage is likely the best option for most people because pulling it out of investments might mean paying high capital gains taxes and forcing you to sell much more than you’re actually going to have to put towards the home. But the option of pulling it out of an IRA is almost always a bad one.

What about someone that wants to move out of state in retirement? We get this question so much from clients that we’ve created a Retirement Relocation Checklist that runs through many of the factors and considerations that you need to run through before making that decision. If you’re in this position, you’re not alone. Let us know and we can get that checklist to you.

Another scenario we discuss on the show is whether to sell your home and begin renting in retirement. We’ve always believed that having ownership is the best position to be in but that’s changing more and more. Just consider the amount of property taxes many people in the northeast have to pay each year. Trimming off that bill alone might make it worth it financially for you.

The last scenario is whether to move into a continuing care retirement community. Joel has experience with this first-hand so knows how beneficial it could be. The biggest reason why this makes sense for so many people is that you go ahead and lock in a price and service in the event you ever need full-blown nursing home care. There really are a lot of positives to this decision and why many clients choose to go this route.

As you can see, there’s a lot to think about when it comes to your home. Always make sure you weigh all the factors before making such an important decision with your money.

0:23 – Tax planning in the final quarter of 2021

2:18 – Why Joel is doing a large Roth conversion this year

3:24 – Scenario 1: Considering downsizing to a smaller home

5:12 – Scenario 2: Pay off the house if we have the money or not

6:37 – Scenario 3: The best way to finance a second home

7:57 – Scenario 4: Moving out of state in retirement

9:13 – Scenario 5: Selling the home and begin renting

10:30 – Scenario 6: Moving into a CCRC in retirement