Health & Fitness
Your Home as a Source of Dollars in Retirement
If you own a home, you may be wealthier than you think. The equity in your home could be one of your largest assets, especially if your mortgage has been paid down over the years or paid off. This home equity can be a valuable source of extra income during your retirement years.
Trading down can give you increased income
If your home is larger than you need, trading down to a smaller place may be a good way to increase your retirement income. The difference between the price that you receive for your present home and the cost of a smaller new home can be added to your retirement funds to provide you with additional investment income. The amount of cash thatyou can get by trading down depends on the value of your present home, the cost of purchasing a new home and the incidental costs involved in the trade (brokerage commissions, legal fees, closing costs, moving expenses). You should estimate these amounts to get some ideas of the net amount you will receive.
Trading down can reduce your housing costs
The other important financial benefit of trading down is that it reduces housing costs - often substantially. A smaller home usually means lower real estate taxes and smaller bills for heating, cooling, insurance and other maintenance costs. Compare your annual cost of maintaining your present home with the expected annual cost of maintaining your new home.
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But trading down ma be disadvantages
Consider the possible drawbacks of trading down. For instance, you may not want to reduce your living space by moving into a smaller home. Or, you may not be able to find a smaller home as attractive as your present home. Another common problem with trading down occurs if you are strongly attached to your present home. you may not want to be uprooted from your home and the social network around it. Still, you may also be troubled by worries that afflict many older homeowners, such as rising property taxes, the threat of escalating insurance and the unexpected cost of major repairs. You may decide that trading down is waranted to lighten these worries as well as your financial burden.
