That's basically my whole question. We haven't been adding our equity in when we look at what we have vs what we'll need. Maybe because when we eventually sell, I assume we'd use the equity to buy our retirement home? How are you taking equity into consideration re: retirement planning?
We're undecided on whether we will downsize or relocate. Even if we were absolutely planning to, I'd rather be conservative and plan based on actual cash (even though that obviously isn't even guaranteed since it's all invested). We are lucky that I believe were are close to being on track based on our 401ks and IRAs so I'm not super worried. But I'm sure if we were behind I'd be thinking about potential equity to fall back on.
Post by Velar Fricative on Apr 9, 2019 10:01:10 GMT -5
I'm not taking it into account, though I expect to have some by then. We can stay where we are until retirement, but we may not, so it's hard to predict. I won't add it into the equation until maybe 10 years out from retirement, if that early. We will most certainly downsize. We'd like to stay in the NYC area, but may relocate if our kids don't stick around here. Basically, I'm just expecting to pay cash for our home during retirement through whatever equity we have in our current/next home.
The only way in which I count home equity in my own retirement planning is in assuming the mortgage will be paid off and therefore my living expenses are cheaper. The only other way I'd consider counting it is if you have a very expensive home and know that you'll be moving somewhere smaller/cheaper in retirement. Then count the anticipated difference, and only if it's significant.
Of course this is an ideal case. Plenty of people hit retirement age with not nearly enough and end up having to sell or do a "reverse mortgage" (which obviously sucks). If possible in your budget, don't count home equity.
The only way in which I count home equity in my own retirement planning is in assuming the mortgage will be paid off and therefore my living expenses are cheaper. The only other way I'd consider counting it is if you have a very expensive home and know that you'll be moving somewhere smaller/cheaper in retirement. Then count the anticipated difference, and only if it's significant.
Of course this is an ideal case. Plenty of people hit retirement age with not nearly enough and end up having to sell or do a "reverse mortgage" (which obviously sucks). If possible in your budget, don't count home equity.
This is my answer.
We’re planning on paying off our mortgage in 6-8 years and once that happens, H is retiring. Or retiring from his current job and getting some fun job like driving carts at the golf course (not kidding)
Post by dr.girlfriend on Apr 9, 2019 11:24:20 GMT -5
We aren't, aside from what others said about living mortgage-free. We are spending a lot of money now to reduce costs in future (renovating the house so we can age-in-place, putting in solar) and hope to stay in the home as long as possible. Thanks to this board we thought about this when buying, too, and bought in an area with low taxes even though the house itself was more expensive.
Sort of? I track net worth since we don't have a concrete retirement timeline yet (10+ yrs out), but I use our Zillow value minus the remaining balance on the mortgage. We will likely downsize in the future, but our house will be paid off before we retire.
No, because I don't know what retirement will look like for us. I would prefer to downsize and probably have a couple places depending upon where my kid ends up.
The idea of a small townhouse or 2 level condo with a garage is really appealing.
I guess I’m the outlier because we are counting our home equity in retirement and net worth calculations. We live in a VCHOL area and have normal not very high paying jobs so in order to buy here, where we wanted, we put down 50% which is 50% of our net worth. We probably won’t live here forever and we also think that our house should rise steadily in value so I consider it at this point not only our home, but an investment vehicle as well.
Not from a budgeting standpoint. While I am on track to have mine paid well before retirement, I’ll still need to account for a significant chunk in taxes and insurance. (There have been numerous recent posts on ND from seniors feeling they’re being pushed out of their homes due to the increasing tax amounts.)
I do account for it in regards to net worth, purely for the sense of accomplishment it gives from plugging away at it each month.
Post by dragon's breath on Apr 9, 2019 19:25:32 GMT -5
I don't even count my current home-equity into the equation for building a house on my property, so I definitely don't consider it for my retirement. (I know that selling my current house could give me over half the money I need for building, and I already have almost half saved up, but I plan to save and build, rather than sell and build. Not sure how I'll handle the current house after the new one is built; I've come to enjoy not having a commute.)
We are calculating it into our retirement plan - if you count the equity in our house we have 2 times DHs salary saved. Unless something significant happens to our neighborhood we could see ourselves retiring in this house and once we need more help we could use the proceeds of the sale to move into a 2 bedroom retirement community.
We don't other than we plan to pay it off before H retires so we don't have that expense.
I imagine we'll move into a smaller house in a cheaper area, but if DD stays in this area (HCOL) then I don't know if we'll move away so we never bank on that portion.
Yes, I count it. I'm surprised so many people don't. We won't stay here in retirement and will plan to use the equity for retirement. Most likely, we will be retiring in Mexico and will rent. I do keep this in mind when I calculate how much we will need in retirement. The only way I could see me not counting it is if we planned to stay in our house.
No, because I don't know what retirement will look like for us. I would prefer to downsize and probably have a couple places depending upon where my kid ends up.
The idea of a small townhouse or 2 level condo with a garage is really appealing.
This is my answer too.
I would also like to move to condo so that we don't have the maintenance that we would with a regular house.
No, because I don't know what retirement will look like for us. I would prefer to downsize and probably have a couple places depending upon where my kid ends up.
The idea of a small townhouse or 2 level condo with a garage is really appealing.
This is my answer too.
I would also like to move to condo so that we don't have the maintenance that we would with a regular house.
Me too. My goal is to payoff the house by the time DS1 is in college. We'll likely downsize at some point, but with the price of the small townhomes/condos I don't really expect that I'll leave closing with much extra money. We'd be doing it much more for maintenance and accessibility reasons.
Although I'd like to be near my kids so if they move somewhere that's cheaper then maybe we'd have some extra funds! If they still like me at that point. LOL
I'm still figuring out what our retirement math is, so my answer may change. At the moment, I do think part of the plan is to buy a home and have it paid off by the time we retire. We are 37 and still renting so I'm unsure how well this will work out. I am hoping to retire at 60 but we may push to 65 depending on a lot of things that are up in the air right now. Either way, we won't have a home for 30 years by then, so I am hoping when we do buy to either get a 15 or 20 year mortgage, or just have a goal to pay off our 30 year mortgage early.
I think there is a strong possibility we'll move somewhere abroad when we retire, though it's far enough away that who knows. If we do that, I do think it would be ideal to have a paid off home so that we can either sell it and use the profit to buy something in our new location, or keep it and have a place to come back to (or split the year between our home and a new country? Who knows).
So the short answer is, I do think it will be wise for us to have equity in a home and/or have a paid off home by the time retirement hits. Exactly how that figures in is yet to be determined.
Post by lolalolalola on Apr 10, 2019 8:41:11 GMT -5
We plan to downsize and use our equity to buy two homes- one for summer and one for winter, so I guess it is. But not really. We don't plug it into the calculators or anything.
I guess I’m the outlier because we are counting our home equity in retirement and net worth calculations.
I think of these separately.
Yes, home equity should be counted in net worth.
But I think, generally, most people do not/should not include home equity in retirement calculations because they will either pay off their mortgage and stay put (therefore home equity is not a factor) or sell and buy another property with all/most of the funds (therefore home equity will be used to cover the cost of another residence).
It would make sense to use some or all home equity in your retirement calculation if you have a significant amount of home equity AND you're planning to significantly downsize, leaving a decent amount of cash leftover after purchasing a new property.
In a sense yes, I count my home equity into my retirement. I view it as "step 2," as in, I'm getting up there and my 401K is dwindling down in my late 80's early 90's.....I can't keep up the house at that point since we live on acreage, so I would sell and use those proceeds (which will be nothing to scoff at) to fund my time in independent/assisted living. Or at my rate, memory care.
Post by sillygoosegirl on Apr 10, 2019 23:41:44 GMT -5
Only as the asset I plan to live in. Or possibly sell and use to pay for somewhere else to live... but we aren't really planning to move. We figure Portland will be warm and beachfront by the time we are old. And we probably will have just finished remodeling and getting everything how we want by then, so it'd really be a shame to move right after that.
Sadly, it's still gonna cost a ton to live here (utilities, taxes, maintenance, insurance), but at least we won't be paying principal and interest anymore.
Post by steamboat185 on Apr 11, 2019 8:14:50 GMT -5
I track how much it is worth, but we take the house out of the calculations for the target number we are trying to hit. Eventually we might get consider part of the buffer, but since we have to love somewhere it’s just sort of a sunk cost.
I do but I don’t see us retiring where we currently live because it’s so expensive. If our kids don’t end up here I can see us moving to be closer to them. And pretty much anywhere is cheaper than here. We plan on having it paid off well before retirement.
No. TBH we may have a family property where we could technically retire, selling our main residence, but it would 1) involve buying out another family member and 2) mean we were stuck in an area where I likely wouldn't want to live year round. I anticipate having two houses anyway, for those reasons.