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Help Me Retire

March 1, 2021, 6:36 p.m. EST

I’m a 74-year-old widower in a five-bedroom house just making monthly payments and no retirement nest egg — should I sell or rent out my home?

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Alessandra Malito

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You also have to think about the unexpected events. Take COVID-19 for example. Many tenants couldn’t afford the monthly payments during the crisis, which means landlords who were still required to pay the mortgage suffered as well. Again, think about your own expenses — would your finances be able to handle that kind of an abrupt hit, and for how long? 

“Renting a home can be a hassle with him on the hook for repairs and maintenance,” said Charles Sachs, director of planning at Kaufman Rossin Wealth. Still, if you’re attached to the home and want to rent it out, you could consider offering just one or two rooms through Airbnb or after finding someone through family or friends. This arrangement is not for everyone, as the living situation is often short-term and with a turnaround of roommates, but it’s another avenue, Sachs said.  

The other option is to sell the home, as you mentioned. If you did that, you might want to consider a smaller, more manageable home or a condo closer to family and friends. There are also retirement communities. Depending on where you purchased your new home, you could have a small mortgage — or none at all — as well as low or no maintenance expenses. Then again, it may be an adjustment you’re not interested in. 

There was one more option you didn’t mention: a reverse mortgage, which you would have to carefully consider. Not all retirees would benefit from a reverse mortgage, but some financial advisers said it might work for your particular situation. 

Borrowers must be at least 62 years old to acquire a reverse mortgage, but the amount they can borrow against the home will also depend on their equity in the home and its value. Homeowners do not have to repay the reverse mortgage but there are additional fees and accrued interest on the borrowings. Still, this type of tool provides guaranteed income (in the form of a series of payments or lump sum) that older Americans might find useful if they want to stay at home

There’s a lot to think about with a reverse mortgage, so don’t take this option lightly. Here’s more information on how reverse mortgages work from the U.S. Department of Housing and Urban Development. 

Also see: How homeowners can use reverse mortgages for retirement income

“Where someone lives is a very personal decision,” said Marla Mason, a financial adviser at A&I Financial Services. “While financials are important factors in the decision-making process, key nonfinancial considerations should be included in the decision.” Ask yourself a few more critical questions, she said, including: 

  • What do you want or need for housing? 

  • How convenient is your current location to the services and daily-living requirements you have? 

  • What is the condition of the home? Are you able to handle most of your repairs, or do you need some help? 

  • Have you thought about your own caregiving needs in the future? Does your current home serve these needs or would another place be better? 

  • What are your social interactions like these days? And would you find more value elsewhere? 

“When adding the value of increased social contact, convenience and comfort along with the reduction in personal maintenance demands to the financial equity provided by the sale, selling and downsizing may substantially outweigh the opportunity cost of keeping the home,” Mason said. “The importance of both the tangible and intangible aspects of this decision cannot be understated.” 

Have a question about your own retirement savings or where to live in retirement? Email us at HelpMeRetire@marketwatch.com

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