The Pros & Cons Of Staying Put In Retirement

Dissecting retirement living options.

Marketwatch looked at the merits of retiring in place, that is not moving. I write a lot about moving or downsizing as a way to solve a serious shortfall in retirement savings. Someone who has paid off their house coincident to retiring or before retiring has given themselves some options if what they have accumulated is more like an emergency fund than a retirement fund.

For people who have accumulated something of a retirement fund, whether they hit their number or are a little short have given themselves the option of staying put and there are of course advantages to doing so. The task of moving is extremely disruptive and potentially stressful. Real estate transactions are always seem to have many obstacles to overcome. If you've lived in your current location for any amount of time you've likely developed a routine that makes every day life a little easier and figuring that out in a new spot would have its challenges. Your various family and social circles are very likely close by, a point made by Marketwatch. A lot of cheaper places to retire to, have less going on in terms of activities, shopping, healthcare and so on than where you might live now (one of the reasons it's cheaper?) which was another point made by Marketwatch.

With a nod to my post yesterday, does the equity in your home need to play a role in solving your retirement? If you have a shortfall in terms of what your Social Security and portfolio income could be versus what you think you need to live on, can that difference be made up with some sort of active income like a monetized hobby or some other thing that would be fun for you? It's simple math, the numbers work or they don't. If it's close can you do something to make it work? Only you know those answers.

I write about moving and downsizing a lot because I believe the idea can bail out a lot of people. Getting yourself on financial firm footing by virtue of moving trumps the inconveniences that going with moving in my opinion.

There are of course drawbacks to staying put. When you put your house on the market there is usually some amount of work in terms of fixing/improving/modernizing that is needed. Someone in their 60's whose been in their house for 20 years will have a whole lot less fixing/improving/modernizing than someone in their 80's whose been in their house for 40 years. You're also likelier to have an easier time with fixing/improving/modernizing in your 60's than your 80's regardless of whether you're hiring someone to do the work, doing it yourself or some mix of the two. This may not resonate with you but it is a consideration.

Another issue for some is property tax. Amusingly, the couple profiled in the Marketwatch article live in New Jersey which has the highest property tax. Wallethub says the average property tax in New Jersey is $7600 and in California it is $3200. Averages are deceiving, anyone living in nicer areas, not the absolute wealthiest, merely nicer are likely paying much more than the average. To the point above, someone assessing their numbers, trying to do their retirement math and it being close; an extra $7000 in property tax could be a difference maker.

Our plan A is to stay in place. The house we live in will be paid off in about four years. A year ago we bought the cabin next door and put it on Airbnb (The Walker Getaway, check it out, the views are epic and we are pet friendly). That should be paid off when I am 66 (15 year mortgage). That cash flow plus Social Security should cover our expenses. Our savings will go toward fun and emergencies. I still have no desire to retire as of now but who knows what any of us will want to do in the future versus what we think we want to do and I shouldn't expect that too many people will want to hire an 80 year old money manager.

The idea of moving to a foreign country for like a year as more of an adventure is very intriguing but not something we've ever seriously looked into. As far as work is concerned I could probably do it anytime but my fire chiefing (volunteer) gig rules that out for now. Plan B would be selling one of the two and living in the other. Plan C would be selling both to live in a tiny house somewhere. What are your plans A, B and C?

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