A Thought About Retirement
I've been giving a good bit of thought lately to the possibility of my own retirement, and this story is something that just crossed my mind. Mind you, I'm not in the habit of giving anybody financial planning advice, but I thought maybe I'd share these thoughts with everybody -- especially those "babyboomers" who are (or should be) planning how and where they want to spend their "golden years".
Even though your true retirement may be a few years off, right now might be the best time to buy that retirement residence you've been dreaming about on-and-off for the past few years. You know, the condo overlooking the golf course. The beach house. The cozy cabin in the mountains. Whatever.
Consider these facts.
First, real estate prices are low. Perhaps they are about as low as they are ever likely to be in our lifetimes. They are, however, inching their way up. Think about this: do you really think real estate prices will be this low five years from now? Other things being equal, I seriously doubt it. So, if you buy now your retirement place might be a good investment and actually gain in value while you finish off your working years. Hey, nothing wrong with that!
Second, mortgage interest rates are at-or-near an all time low. Last I heard, a 30-year fixed mortgage was about 3.6 percent or so. That's like free money! With rates that low, you can probably afford to buy a more expensive property because the monthly paymets will be much lower than they were a generation ago when your parents retired. Besides, do you really want to gamble that mortgage rates will be this low when you actually do retire? I bet they won't be! Lock that property up now and you will probably pay less for it. Also, I've heard financial planners say that with these low mortgage rates, don't pay cash for the property. Keep your cash invested ... you may need it to keep your golden years, well, golden.
Third, there's fewer and fewer properties on the market. So, it may take you longer than you think to find that "just right" retirement place. It might be a good idea to start shopping now, find it, buy it while rates are low and prices affordable. You don't have to move into it immediately. If you want, you can find a tenant for it and make a couple of dollars with it until you are ready to quit the work-a-day world and move in. If the property is some distance from where you live or you just don't want to be bothered, turn the tenant management chores over to a property manager who sends you a check every month.
Look, all I'm saying here is that retirement takes planning. Locking up your retirement residence now rather than waiting until you actually retire may make a lot of sense for some people. If you wait, I'm willing to bet that the price will be higher, the mortgage rate will be steeper, and somebody else may get that dream home you've always wanted. My advice? Act now.
Even though your true retirement may be a few years off, right now might be the best time to buy that retirement residence you've been dreaming about on-and-off for the past few years. You know, the condo overlooking the golf course. The beach house. The cozy cabin in the mountains. Whatever.
Consider these facts.
First, real estate prices are low. Perhaps they are about as low as they are ever likely to be in our lifetimes. They are, however, inching their way up. Think about this: do you really think real estate prices will be this low five years from now? Other things being equal, I seriously doubt it. So, if you buy now your retirement place might be a good investment and actually gain in value while you finish off your working years. Hey, nothing wrong with that!
Second, mortgage interest rates are at-or-near an all time low. Last I heard, a 30-year fixed mortgage was about 3.6 percent or so. That's like free money! With rates that low, you can probably afford to buy a more expensive property because the monthly paymets will be much lower than they were a generation ago when your parents retired. Besides, do you really want to gamble that mortgage rates will be this low when you actually do retire? I bet they won't be! Lock that property up now and you will probably pay less for it. Also, I've heard financial planners say that with these low mortgage rates, don't pay cash for the property. Keep your cash invested ... you may need it to keep your golden years, well, golden.
Third, there's fewer and fewer properties on the market. So, it may take you longer than you think to find that "just right" retirement place. It might be a good idea to start shopping now, find it, buy it while rates are low and prices affordable. You don't have to move into it immediately. If you want, you can find a tenant for it and make a couple of dollars with it until you are ready to quit the work-a-day world and move in. If the property is some distance from where you live or you just don't want to be bothered, turn the tenant management chores over to a property manager who sends you a check every month.
Look, all I'm saying here is that retirement takes planning. Locking up your retirement residence now rather than waiting until you actually retire may make a lot of sense for some people. If you wait, I'm willing to bet that the price will be higher, the mortgage rate will be steeper, and somebody else may get that dream home you've always wanted. My advice? Act now.
-30-
posted by Terry Ward at 11:57 AM
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