Can you sell your house to fund retirement? (Important things to consider)
Are you thinking of retirement and wondering how to pay for it?
One option might be to sell your house to fund retirement.
This can be a good solution if you no longer need a large home or if you want to move to a location that offers a lower cost of living.
Selling your house for retirement can also provide some financial flexibility if you need more money later in retirement.
If you’re considering selling your home but aren’t sure if this is really what’s best for your future, then read through some of the pros and cons of making such a big decision.
Why sell your house to fund retirement
There are many compelling reasons why you might want to sell your home to fund your retirement.
Perhaps the most obvious reason is that you can use the proceeds from the sale to finance a comfortable retirement lifestyle.
Another reason to sell your home is that doing so could provide you with greater financial security in retirement.
Additionally, selling your home can be a way to reduce or eliminate your mortgage debt, which can be a significant burden in retirement.
Finally, selling your home can also provide you with additional income during retirement.
As we age, the fact of the matter is that keeping up with household chores and having enough energy to take care of everything becomes increasingly difficult.
You may find that your wash takes longer or laundry piles up because you can’t do it as quickly as you used to be able to. Mowing the lawn, raking the leaves, cleaning the gutters… if you’re not physically able to do all of these tasks now, you probably won’t be at some point in the future.
If you decide to sell your house, you will need to consider how selling it can make your life better in the long and short term.
The disadvantages of selling your home for retirement
There are a few disadvantages to selling your house to fund your retirement.
Firstly, you may need to move to a new location if you sell your home. This could be difficult if you can no longer live independently or don’t want to leave your friends and family.
Secondly, renting or buying a new home can be expensive, especially as you get older. The downsizing or moving to a new place might be more expensive than you were budgeting for.
Make sure you check the prices for the place you would like to move to and what it costs to live there.
Thirdly the price you get for your home will depend on the current real estate market, which can shift quickly, while the selling process can take ages.
There is no guarantee that your home will sell or that the sale price will be as much as you think it will be.
This isn’t necessarily a problem if you’re willing to wait longer to get more money for your house, but it could create problems if you need to move quickly for health reasons.
Finally, it’s important to remember that selling your home is a big decision, and you need to know that it will fund your retirement in the short but, more importantly, in long term.
You don’t want to have to downsize again to try and find more money in a few years time. If selling your house is just a short term solution to a bigger problem, it might be time to get a better long term plan.
Tips for making the process easier on you and your family
If you decide to sell your home for your retirement, a few things will make the process easier on you and your family.
First of all, you should try to get a pre-sale inspection done on your home.
This will ensure that you’re aware of any potential problems with the property before anyone else does. If there are any major problems with your home, you can either fix them yourself, get someone in or drop your sale price to account for any defects.
Secondly, try not to sell all of your furniture when you put your home on the market. If possible, keep some of your most treasured items so that you have something familiar in your new home.
Thirdly, ensure that you give your children or family members enough time to decide what they want to do. Follow you or stay where they are.
Examples of people who decided to sell their homes for retirement
There are many examples of people deciding to sell their homes for retirement.
Many older people decide to move closer to family members or friends after retiring.
Others choose to own a holiday home somewhere beautiful and spend time there when they retire from work.
Some people may decide that buying a smaller house is the best way to fund their retirement, and others use the money to buy an RV and keep moving in their early retirement.
What should I do with the money from my house sale if it’s not enough to live off of in retirement?
If you decide to sell your home for your retirement, but the money from the house sale isn’t enough to live off, a few options are available.
You can either start using some of your savings or continue working part-time.
Could you use your skills and experience to start a side hustle from which you never need to retire?
- Something your good at
- Enjoy doing
- the world needs
- And people will pay you for
This might be the type of business you can design to make money in your sleep by selling digital or physical products or services.
Alternatively, you could rent out rooms in your new house so that you still have income coming in, even if you’re no longer working.
Another option is to sell off any assets that are collecting dust or may not have much value in the future, such as old cars or rarely-used furniture items.
Tips for choosing where to live after you retire
There are a few things to consider when deciding where to live after retiring.
First and foremost, you should consider making your future home somewhere that’s familiar and comfortable for you and your family members.
Choose an area with plenty of social activities and amenities to stay active in your free time.
You may want to reflect on the types of activities you enjoyed doing when you were younger so that you can plan to do plenty of them in your retirement.
You may also want to consider where all of your family members live, as it may be easier for you to live close by.
It’s important to consider where you want to go when you retire and whether or not you’re ready to leave your family and friends.
If you own a holiday home somewhere beautiful, it’s important to remember that you won’t always be able to spend time there.
You should consider whether your family can make regular visits and how often you want to visit the property yourself.
FAQ: Selling your house to retire on
Should I sell my house to fund my retirement?
The decision to sell a house to fund retirement depends on individual circumstances and goals.
Some factors to consider include current market conditions, the amount of equity in the home, future housing needs, and alternative sources of retirement income.
It’s important to thoroughly weigh the pros and cons and seek advice from financial professionals before deciding.
It’s also recommended to have a comprehensive retirement plan in place, considering all sources of income, expenses, and lifestyle goals.
What do you do with a large sum of money after selling a house?
If you have a large sum of money after selling a house, you have several options for what to do with the money.
Some of the most common options include investing in stocks, bonds, or mutual funds, depositing the money in a high-yield savings account, using the money to pay off debt, or using the money to purchase another property.
It’s important to consider your financial goals, risk tolerance, and overall financial situation when deciding what to do with the money.
It may also be a good idea to consult a financial planner to help you make a plan.
Can I use my house to retire on?
Yes, you can use your house to retire on by either selling it and using the proceeds to fund your retirement or by using it as a source of passive income through renting it out.
However, it is important to consider factors such as the current housing market conditions, future housing market projections, and your personal financial situation and goals before making a decision.
It is also recommended to seek advice from a financial planner to ensure that this decision aligns with your overall financial plan.
Should I sell my house before I retire or after?
The decision to sell your house before or after retirement depends on factors such as financial goals, retirement plan, housing needs, and market conditions.
Here are some things to consider:
Financial Goals: If you need to free up money for other investments or expenses, selling your house before retirement may make sense.
Retirement Plan: If you have a solid retirement plan in place and don’t need to use the proceeds from the sale of your house, it may be better to wait until you retire to sell.
Housing Needs: Consider whether you need a larger or smaller home in retirement and whether it makes sense to downsize or move to a different location.
Market Conditions: Timing the sale of your house with market conditions is also important. If the housing market is strong, it may be a good time to sell, but if the market is weak, it may be best to wait until it improves.
Ultimately, selling your house before or after retirement depends on your unique circumstances and financial goals. It’s important to consult with a financial planner to determine the best course of action for your individual situation.
Should I sell my house and rent when I retire?
The decision to sell your house and rent during retirement depends on a variety of factors and is ultimately a personal one.
Considerations include your financial situation, lifestyle preferences, and future plans.
If you have significant equity in your home and are looking for a way to generate additional income in retirement, selling your house and renting may be an option to consider.
However, it is important to weigh the costs and benefits of both options and seek professional advice before making a decision.
It is always recommended to carefully consider your current and future financial needs, and seek the guidance of a financial planner to make an informed decision.
Conclusion: selling your house for retirement
There are many reasons you might want to sell your home to fund retirement.
Perhaps the most compelling reason is that it will hopefully free up a lot of cash to live your ideal life but also, as we age, it becomes more difficult for you to maintain a house.
Selling your home can free up time and money so that you can focus on enjoying life rather than trying to keep things running smoothly at all times.
But as they say in any DIY project, measure twice cut once before making any significant changes.
If you would like any help in planning your financial life click below to find out more. Feeling like its time for a big life change? Find out how we can help you here
Want help with your financial planning?
Take control of your financial future with Financially Happy!
Our financial planning coaching services will empower you to make informed decisions, set and achieve financial goals, and ultimately lead a financially happy life.
Don’t wait; schedule your consultation today and start your journey to financial freedom!
