Winter is here and you may begin staying inside for a longer period of time, especially with the advent and ramping up of increased COVID, RSV, and flu breakouts occurring locally and nationally. You have more time to think about retiring and getting out of the cold and snowy weather to a warmer destination.
There is quite a lot to think about when and if you are going to retire. How much time do you provide your employer? If self-employed, will you be selling your business or having one of your children take over? Will you need to take on a part-time job to pay your real estate taxes? It’s obviously a huge decision to come to grips with and you need to set aside the time to formulate a plan to keep the stress to a minimum.
Another decision is whether you will be selling your home and downsizing. According to the National Association of Realtors survey, back in 1985 the average time Americans would reside in a home was only five years. Since then the amount of time has increased and is now an average of 10 years. Lifestyle changes and specific needs and wants may have you thinking about other possibilities to enhance your living conditions and surroundings.
Your home also may be larger than necessary. The costs of heating, taxes, and upkeep are putting a strain on your finances. I have been told that the last thing many are thinking about is shoveling snow or even hiring someone to perform that task.
As we grow older there may be discussions with your children about moving closer to them (as was seen in a survey done by the National Association of Realtors) so in case of any issues arising, they will be able to help. Another benefit could be spending more quality time with your grandchildren.
Prices have never been as high as they are today. According to the Federal Housing Finance Agency prices throughout states and locally vary, but have increased nationally on average by 60.6% over the last five years and 288.7% over the last 30 years. Cashing out now will put more money in your pocket than waiting as prices depreciate in 2023 and interest rates continue to rise, softening demand.
If you are married, you are allowed $500,000 over your original purchase price, plus any capital improvements over the years subtracted from your sale price as savings before capital gains are considered. If you are single, then it is a $250,000 exemption, plus your original buying price and all the capital improvements made subtracted from the sale price as to whether or not capital gains would have to be paid. Depending on your income, the rate for long-term capital gains is from zero to 20%. However, this should be discussed with your CPA and/or your certified financial planner.
Everyone has different retirement goals and ways to satisfy what they are trying to accomplish. Planning ahead and creating a checklist will enable you to see the pros and cons of retirement as well as considering downsizing, staying local or moving farther away. Knowing what type of property you want, the price, number of bedrooms and bathrooms, as well as whether you will have enough cash to pay outright for your purchase or will need to finance a portion of it are critical steps in shaping your plan.
Although interest rates have increased, depending on the amount to be financed, it may still be a comfortable situation, and you could always refinance as rates come down. From now through February is an excellent time to search for a new place as there is much less competition until spring arrives. If you really want to retire and perhaps earn some income part-time, this may be an excellent decision and make your day a bit brighter, knowing that the 9-5 daily grind will be in your review mirror. Whatever you decide, look at all your options to make your transition as smooth and worry-free as possible.
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Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 40 years of experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S) as well as the new “Green Industry” Certification for eco-friendly construction and upgrades. For a “FREE” 15-minute consultation, value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] or via https://WWW.Li-RealEstate.Com Just email or snail mail (regular mail) him with your ideas or suggestions on future columns with your name, email and cell number and he will call or email you back.