Last blog we shared some ideas about how boomers may be able to retire on less money than many experts suggest. One of the topics we mentioned was lowering the cost of housing. We will explore that topic in more detail today.
Many people are facing the challenge of retirement. Unfortunately the rules of the game changed mid- course. Longer life expectancy, fewer pensions, layoffs, and difficult economies to name just a few of changing variables we need to deal with. However, these obstacles can help creative people use some out of the box thinking to find solutions.
Many people dream of owning their own home. Ideally during retirement that home would be free and clear.
Without a mortgage or rent payment people can sustain themselves with a small income to provide for food, utilities, insurance, clothing etc. Other resources can be freed up to provide for wants and wishes. One of life’s goals should be to own a property at retirement that does not require monthly payments.
To accomplish this objective we highly recommend a 15-year mortgage. While payments are a bit higher, individuals will save thousands of dollars of interest. Perhaps more importantly they shave half the years of payments.
For some this may not be possible. They simply may have waited too long.
Another option is to downsize to a smaller home or move to a less expensive area. Both of these options can be attractive alternatives. Tiny homes are now trendy. While small they can be fun and do their job. Visit Designboom for some inspiration. After all most people live in just a few rooms: kitchen, bedroom, bathroom and living area. If you decide moving to a less expensive location/smaller home you may also want to consider incorporating outdoor living space as well.
Some clients have shared that it was a very liberating experience to downsize. Less can definitely be more when living within your means.
We often talk to people about expenses in a unique way. We separate expenses into three categories let’s call them box A, B and C.
In box A are all the expenses for food, shelter, transportation and clothing.
In box B are all the fun things we enjoy doing such as: dining out, vacations, and leisure activities.
Finally, box C, includes financial security with things such as retirement saving, college education for kids, charities and financial independence.
We suggest that a high quality life is found in boxes B & C. Yes we need a safe, warm place to rest with good food to eat. What we don’t need is a large home with big expenses. We find many people are spending way too much on Box A and making large sacrifices in B & C. These are good rules to live by.
Yet what if, as before, you simply waited too long and this option won’t work either.
Then it is time to get creative. Why not consider some outside the box solutions.
Some families are enjoying having multiple generations in one home. If you love your family then having multiple generations under one roof provides a great environment. Grandparents can spend quality time with grandchildren, freeing parents from the expense daycare. Family members can share cooking duties. The social opportunities for all can be wonderful.
Some prefer to share a home with good friends. Possibly two, three or four couples to a home. This offers similar advantage as above. Sharing of social aspects while spreading the workload and of course reduced expense. A kitchen is one of the most expensive areas to construct in a home, by sharing one all people save.
One client we work with has house sitting jobs all around the world. She travels six months a year and has many repeat jobs in beautiful homes. She owns a small condo when back in the States visiting family. This works wonderfully for her. There are websites such as www.mindmyhouse.com that pairs people together.
We have another client that lives on a boat six months a year. He then travels the balance of the time using house sitting and low cost travel destinations to reduce accommodation expenses. Many countries have a cost of living far below the US. Areas like Mexico, Latin American and large parts of Asia.
Others choose to live in these countries as expatriates. We have a client who built a home in Panama. The cost of living is low, health care is good and the climate is excellent. A good website to review international living options is http://internationalliving.com/2015/01/the-best-places-to-retire-2015.
One of my personal favorite stories comes from Billy and Akaisha Kaderli. They retired at age 38, live modestly and are now in their third decade of retirement. They publish a wonderful website and newsletter www.RetireEarlyLIfestyle.com. They serve as an inspiration to many.
We believe life should be an interesting, exciting journey. With some creativity and some planning you can make it happen for you.