I often hear people say some version of, “Owning our home is our retirement plan.”
Sometimes they’re half joking. But that also means they’re half serious. And retirement is no joke.
Owning your home can certainly be part of how you plan for retirement, but there’s a lot more to it than that.
First off, you have to put some meat on the bone and figure out how you’re actually going to use your home. Are you going to stay there and use a reverse mortgage? Or do you plan to sell? If you do plan to sell, where will you live? Or if you want to downgrade but still rent it out, what’s that going to look like financially?
You don’t need to have all the answers. And the numbers will change over time. But when it’s just a vague idea, sometimes people have the false sense that they can do all these things at once. Getting specific helps clear things up.
Secondly, you shouldn’t be relying solely on your home. You need to have other sources of income and there are a lot of good reasons and tax advantages to diversifying away from your home as your sole asset.
And third, you need to think about everything beyond the financial bit. Going through the process of creating a retirement plan is about so much more than just money. It’s about creating the lifestyle you want to lead until the end of your days.
It deserves more of your time and attention than a throwaway comment about how at least you won’t have a mortgage and you’ll figure the rest out later.
That day will come. The more prepared you are, the better.