Preparing for Retirement
Part 4: What About Housing?

Housing is the biggest portion of most any budget. If you manage it well, you will grow wealthy. If you don’t, you won’t.

When it comes to retirement, one of the best ways to prepare is to make sure you have a paid for house by the time you stop working. 

That doesn’t mean you won’t have housing expense! You will still have property taxes, homeowner’s insurance, utilities, maintenance. But if you can reduce this outflow by having a paid for house, you significantly increase your chances of having a comfortable retirement. I remember in my teens being genuinely shocked that someone over 35 could get a 30 year mortgage. “How can they pay a mortgage when they’re not working?!”

It would be great if we were still shocked by that...shocked enough to never do it.

When you get a mortgage for your own house, you should get a term that can be paid off by 65, earlier if possible! (If you’re buying investment real estate, that’s different, and for another discussion.)

A few things to consider:

Your property taxes will probably be lower in retirement. I don’t know the rules in every state. Not even close. But where I live in Texas, folks who are over 65 years old get a nice property tax break: both an exemption and a freeze on school district and some other property taxes.

Selling your family-size home for a smaller home can make a big difference. Sure it would be nice to put up all the kids and grandkids at the holidays but at what cost?

You can use your 403(b)(9) for your housing costs in retirement. Remember that if your spouse is not licensed/ordained, they don’t get this benefit after you die. Consider maximizing your housing expense withdrawal in the early years of retirement when you want to spend more money and so that you don’t lose this benefit.

Most people spend more money in the early years of retirement than the later years. This is a function of health. When you’re in your 60s and 70s, you have the vigor to travel and be more active. You will likely slow down and have lower expenses after that.