Do you consider your home part of your retirement?

[hannamaren]

Would you consider investing less in your retirement accounts knowing that your house is a solid investment? (before you give me examples of underwater houses, there are certain areas, where homes are unlikely to lose value- example a house in NYC, not condo, supply and demand)
We wanted to buy a house for $600k but we could buy more house and a better investment for resale, etc if we spend $650-700k but pur retirement fund would suffer. My H aruges that in 25 yrs, we will have a paid for house worth at least $650, probably more.
Thoughts?

[chessie]

We are not counting our home at all. Who knows what our next house be worth at that point, things can going through the downward spiral yet again, so I will not count on that as any retirement investments

[Deleted]

No, we don't consider it as part of our retirement.

[giantsgirl]

No. We are going to need a place to live, so, unless we sell it and move to a lower cost of living area, the house isn't going to help us much in retirement. Our goal is to have our house paid off before reitrement, so we don't have to deal with the expense of a mortgage, so getting equity of our home won't be something we are likely to do either.

[bunch]

But then you'd still want to live in that house! I kind of do. In that I plan to have it paid off when I retire so I won't have housing costs, but that doesnt stop us from keeping our retirement investment percentage high. Mainly it just helps me sleep better at night.

[Deleted]

I think that would be foolish, given what we've seen happen to home values over the past five years.

[hannamaren]

Aug 20, 2012 20:38:49 GMT -5 bunch said:

But then you'd still want to live in that house! I kind of do. In that I plan to have it paid off when I retire so I won't have housing costs, but that doesnt stop us from keeping our retirement investment percentage high. Mainly it just helps me sleep better at night.

I said that and my H said we could remortgage and live off that. Then we die, kids sell the house and pay off the debt.
And if there are a limited supply of single family homes in an area of high demand (big city) then the houses wont lose value. It may slow, but it wont lose. If it does, our retirement will also be losing.

[CloudBee]

Definitely not. Our home last lost $200k in value since we purchased it in 2006. Yeah, once it's paid of it is a place to live, but the value is never guaranteed. Taxes around here are equivalent to many people's mortgage payments to boot.

[sillygoosegirl]

Yes, in the sense that it is where I plan to live in retirement and I don't anticipate that I'll be making rent or mortgage payments on it. However, I do anticipate that I will still be paying property taxes, insurance, and maintenance expenses, so I'm not exactly counting on it as a completely free place to live...

[ESF]

I think it's part of the overall retirement picture in that if the home is paid off, your living expenses are much lower, making it easier to live on a fixed income. I feel like I read somewhere that financial advisors suggest to people in their 50s who do not have much saved to try to prioritize paying off their home before the retire. If you aren't paying for housing, your social security $$$ will go so much farther.

I wouldn't treat it as an investment vehicle though. And if part of your retirement plan is to have some place to live in without paying a mortgage/rent, I'd make sure the place you are buying is going to work for you in old age - ie that it's one floor without a lot of land or maintenance associated with it.

[hannamaren]

Aug 20, 2012 21:04:25 GMT -5 @msstarry said:

I don't but that doesn't mean you shouldn't. It really depends on a lot of factors. I do wonder about the Canadian real estate market though just based on posts I have read here and on ML... it seems like they could be getting closer to the burst or a bubble of their own. But I have no idea. I am surprised upping your price point by $50k makes such a big difference in your budget and buying capabilities.

It means the difference between 2 and 3 bedrooms. Or Townhouse vs small SfH.
But you are right that it shouldnt affect our budget too much.
The housing market in Canada is approaching a burst, but the government made some legislation changes to protect the economy, but supposedly the condo market is bursting in .vancouver. Way too many condos built way too fast and mostly shoddy.

[Deleted]

Aug 20, 2012 21:04:25 GMT -5 @msstarry said:

I don't but that doesn't mean you shouldn't. It really depends on a lot of factors. I do wonder about the Canadian real estate market though just based on posts I have read here and on ML... it seems like they could be getting closer to the burst or a bubble of their own. But I have no idea. I am surprised upping your price point by $50k makes such a big difference in your budget and buying capabilities.

I'm a realtor in Ontario and I think many areas in Ontario and Canada as a whole are about to burst.

No investment is foolproof, including your home. I don't think it is wise to count on it for retirement money. What if you need to stay in your home?

[kadams767]

I don't think of it in the same way I do my actual retirement funds, but it's in the back of my head in that I will no longer have to pay my mortgage. But it's not generating income to live off either, so I still need to keep my accounts funded and strong.

[vanillacourage]

Only in the sense that it will be paid off when our oldest goes to college, and we'll sell it to downsize shortly afterward, and that timeline follows close to retirement. So we'll get an influx of cash at just the right time, but we are not counting on receiving a certain amount or decreasing other savings in anticipation of it.

[Deleted]

what ESF said.

This house-- no, we've lost about 60K in equity plus another 20K in renovations. We will sell it next year (hopefully) and it will probably still be a loss unless a miracle happens. But we are hoping our next house (our forever home) will be paid off by retirement. Then we can either live in it mortgage free, or sell it at a gain. We aren't considering this at all in our retirement planning, however. It will hopefully be gravy.

[pamela]

Yes. A paid for house counts for a big chunk of needed monthly income.

[Deleted]

Yes, we plan to have it paid off & keep it to rent out. It's large & has 2 rentable spaces--right now we could rent it for ~$1k more than payment & the rent in 20yrs would be a part of retirement income (along w/ several other sources). We plan to move to a smaller, cheaper condo in our older years a couple blocks away. This house is way too much for us as empty nesters but in an urban, central, hot rental area.

[lindyanne]

Other than the fact that we plan to have it paid off and will therefore not have a mortgage payment, no.

[thatgirl2478]

Only in so far as I will need a place to live and prefer not to rent.

It's not really an investment though.

[LoveTrains]

Aug 20, 2012 22:07:08 GMT -5 lindyanne said:

Other than the fact that we plan to have it paid off and will therefore not have a mortgage payment, no.

This.

I do count my rental property as part of my retirement, because I anticipate that I will either a) sell it and add the proceeds to my nest egg or b) continue to rent it out and then use that income each month for expenses, meaning I don't have to pull as much from my nest egg each year.

[codec]

Yes.

[Deleted]

yes, because a paid off house means I need less income every month, but ditto ESF

[SJ]

I consider real estate part of our overall financial picture. Certainly it will be a factor during retirement.

However, I do not consider it as part of our retirement investments as I do our Roth IRA's, 401K, etc. When we say things here like "try to put 15% into retirement" or "try to have one year's salary in retirement by age 30" I do not consider property in those calculations.

[aspentosh]

Aug 20, 2012 21:04:06 GMT -5 ESF said:

I think it's part of the overall retirement picture in that if the home is paid off, your living expenses are much lower, making it easier to live on a fixed income. I feel like I read somewhere that financial advisors suggest to people in their 50s who do not have much saved to try to prioritize paying off their home before the retire. If you aren't paying for housing, your social security $$$ will go so much farther.

I wouldn't treat it as an investment vehicle though. And if part of your retirement plan is to have some place to live in without paying a mortgage/rent, I'd make sure the place you are buying is going to work for you in old age - ie that it's one floor without a lot of land or maintenance associated with it.

I agree with this. You're living there, so it's not like you're able to pull from it, but if you're not paying your mortgage then you're saving money each month.

[anna7602]

Funny, I just posted a similar-ish question the other day. DH does count the equity we currently have in our home and a second piece of property as part of our "retirement savings." I came to this board and the consensus was that we shouldn't count it.

Personally, I don't want to count it because I don't particularly want to plan on giving up real estate in NYC, ever, no matter what our retirement plans are. I can always see myself spending at least part of the year in NY, regardless of where we spend the rest of the year. I also hesitate to make longterm plans without having any idea of where DD or future children/grandchildren will be. We could end up like my parents, who own an apartment in Florida they planned to retire to, but who still own their home in the NE U.S. because it's driving distance from me and my siblings. (And they are well into their retirement years already.)

[lys]

No. I do not consider my house an investment - it is my home. We are currently mortgage free and plan to be mortgage free in retirement as well - so that part is a portion of our retirement plan.

[smiley]

I don't think I would consider it a part of my retirement investment. I am hoping the next house we buy will be our forever home and we can live in it during retirement. It will save us a lot of money if we don't have a house payment in those later years or rent etc. but I don't take into account how much money we could make off of the home if we sold it and stashed it away. With the way the housing market has been I wouldn't rely on it.

[Velvetshady]

Only in the sense that the plan is for the next house we buy/build will be a design we can stay in as we grow old and we should not have a mortgage payment anymore. So part of our retirement planning, but not part of our retirement savings/investment.