Over the years, Americans have been living longer lives, thanks to healthcare improvements, better treatments, and cleaner living conditions. In the early 1900s, the average life expectancy in the United States was 50, but now it is averaging 77 years! As people live longer, it's creating new challenges, especially in planning for retirement. A Stanford study found that most males (over 60%) and females (about 50%) underestimated how long a 65-year-old might live after retirement.1 Experts estimate that living just 3 years longer could cost a whopping 50% more than expected.2 This can be a costly mistake. Since housing remains the single largest expense in retirement years, we will focus on three real estate solutions that can help you avoid running out of cash during your retirement years. These answers include rental income, multi-generational living, and the HECM for purchase program to eliminate your out-of-pocket mortgage payment.
Rental Income
Some senior citizens are choosing to supplement their income by renting out rooms in their homes. By utilizing spare space in their homes, they not only earn extra money but also often enjoy the companionship of a tenant. It's a mutually beneficial arrangement, offering financial support to seniors while providing affordable housing options for tenants. There are many sites to help you find roommates including roomies.com and spareroom.com. These platforms don't just help you screen tenants; they also guide you through the necessary steps to set up your tenant properly. Be sure to check out reviews for the company you ultimately select to help you make the right decision. For example, you can find reviews on Trust Pilot for roomies.com here and spareroom.com here.
Multi-Generational Living
Multi-generational living, where seniors live with their adult children or extended family under one roof, can significantly alleviate financial burdens for everyone involved. For seniors, sharing expenses like mortgage payments, utilities, and even groceries can drastically reduce their living costs, allowing them to stretch their retirement savings further. Additionally, pooling resources can make it easier to afford in-home care or necessary home modifications for seniors as they age. Simultaneously, adult children or other family members can benefit by saving on their own living expenses while having the opportunity to provide support and care for their elderly loved ones without the hefty costs of separate care facilities. This arrangement not only fosters a stronger sense of family support but also eases financial strains for both seniors and their families.
HECM for Purchase Program
The HECM for Purchase program is a valuable option for seniors seeking to purchase a new home while simultaneously accessing their home equity. This program enables older adults aged 62 and above to buy a new principal residence using the net proceeds from selling their current home and purchasing another home without an out-of-pocket monthly mortgage payment. As a result, the program allows you to be in a home of your choice and frees up the money you previously used to make monthly payments. This strategy provides financial flexibility, as it reduces the need for a substantial upfront payment and allows them to preserve their savings. Moreover, it empowers seniors to downsize, relocate, or find a more suitable living arrangement in their later years without the financial strain of a traditional mortgage.
As we live longer, planning for retirement gets trickier. People often underestimate how long they'll live after they stop working, hurting their finances. So, we need creative solutions. Real estate offers some great options. Renting out extra space brings in money and helps create affordable housing. Living with family can save money and build stronger relationships. In addition, the HECM for purchase program allows seniors to buy homes without out-of-pocket mortgage payments, giving them more financial freedom. These real estate ideas help secure finances in retirement, making sure it's not just about living long but living well. If you need more information on the strategies discussed in this article or more customized solutions for your situation, please be sure to reach out to TruSite Realty or set up a free online consultation via Zoom Here
1,2 Underestimating Years in Retirement. Stanford Center on Longevity. Link to Article
After 10+ years of working for multiple Fortune 500 and 1000 companies across Logistics, Finance, and Marketing, Denise made the leap into the Real Estate Industry, hoping to help others achieve their homeownership desires. She can remember purchasing her first home at the age of 23, and it being both a time of joy and stress because she didn't fully understand the process and the implications of owning a home. Since then, she has purchased and sold multiple personal properties, including an investment home that turned from a Rehab to a New Construction project in 2020. She also recently helped her senior parent through the process of downsizing to a more suitable home where they can comfortably age in place. These experiences have inspired Denise's drive to generously impart her ever-growing knowledge to prospective clients, aiming to significantly enhance their journey toward joyful homeownership and a seamless home-selling experience.
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