Do a little research before you buy that retirement home

It’s a dream that many of us have. The kids have graduated from college and settled into their new homes and new jobs. Retirement is around the corner.

Now that you are empty nesters, that big house in the suburbs no longer works for you and your spouse. So, finally, it’s your chance to get that retirement home you’ve wanted.

But, you’d better make sure you do it right. Some retirees did not think it through or plan enough, and they lived to regret it. Research needs to be at the top of your to-do list, say financial professionals.

Reid Abedeen, investment advisor at Safeguard Investment Advisory Group in Corona, Calif., says people should approach buying that retirement home much like they do downsizing.

“People buy homes in Florida and Arizona to get to warmer climates,” he says. “They may buy smaller homes, but they still have to consider what it will cost to maintain those homes in those areas. In Arizona it can get to 100 degrees for two months. What will it cost you to keep your home comfortable during those months?

“They also need to spend some time researching what it will cost for taxes,” he says.

Brian Singer, president of Singer Financial in Brownsburg, Ind., says people should think about what kind of environment they want to be in.

“Do they want a standalone place or do they want to be in a community where there is a lot of stuff for you to do and people to meet,” he says. “Maybe it’s gated and they have a gym and a tennis court. Is this a place where you have spent time? Have you vacationed there and said this is where I’d like to be? Is this a place where you see yourself at some point in the future being your full-time residence? That should influence the way you think.

Some other things to consider.

Abedeen says people need to think about if they move away from friends, family and especially grandchildren, they will need to figure travel costs into their budget. Two round-trips per year for a couple could get expensive fast. Also, “Recognize the cost of time,” Singer says.


  1. Long-distance relationships with your professionals.

Keep in mind that you may be moving away from doctors, hospitals and other health professionals that you have been seeing for years. Also, think about other professionals, like lawyers, accountants and even financial professionals that you may want to maintain a relationship with but will now need to do it long distance.


  1. Update your documents.

Living wills, medical powers of attorney and other documents may need to be updated. Remember, you may move to a state with laws and regulations that may not be the same as your home state.


  1. Make sure there are activities that meet your interests and needs

“I have one person who moved out of state and didn’t do the research and look at the activities (available in the new city),” Abedeen says. “Three months later they decided they couldn’t deal with it and moved back. They were miserable. I don’t know how much it cost, but it was in the tens of thousands. They could have avoided that by doing research.”

  1. Begin planning before you retire.

“One thing that can be helpful is to consider a retirement home while you are still working,” says Singer. “It could make a lot of sense to finance that retirement home. It is easier to do that while you are still working. It doesn’t have to be a million dollar penthouse on the beach. It could be a starter retirement home, and then you can graduate to a larger one.


“Also, most people accumulate most of the wealth in pre-tax accounts,” he says. “If you want to avoid financing and you have some savings and assets to pay for it, it is taxable if you take it out of IRA accounts. For some people, it can make a lot more sense to pay for it over time so you don’t create a huge tax bill to get that retirement home.”


Singer says if you won’t be there full time, consider renting it and getting some income.

“Pay attention to the financial components,” he says.” Is it in a community where there will be monthly fees and maintenance fees? Consult with a financial professional and get some help to crunch the numbers.”

By contacting RetirementHQ, you may be offered information regarding the purchase of insurance products. All of our financial professionals are licensed insurance agents. Additionally, some individuals may also be registered with a broker/dealer or as an investment adviser. Our financial professionals do not offer estate planning, tax or legal advice. Always consult with a qualified advisor concerning your own situation.