In this episode, podcast host and author of “Control Your Retirement Destiny”, Dana Anspach, covers Chapter 9 of the 2nd edition of the book titled, “Real Estate and Mortgages.” If you want to learn even more than what there is time to cover in the podcast series, you can find the book “Control Your Retirement Destiny” on Amazon. Or, if you are looking for a customized plan for your retirement, visit us at sensiblemoney.com to see how we can help. Chapter 9 – Podcast Script Hi, this is Dana Anspach. I’m the founder and CEO of Sensible Money, a fee-only financial planning firm. I’m also the author of Control Your Retirement Destiny, a book that covers the vast array of decisions you need to make as you plan for a transition into retirement. This podcast covers the material in Chapter 9, on real estate and mortgages. If you like what you hear today, go to Amazon and search for Control Your Retirement Destiny. And, if you are looking for a customized plan, visit sensiblemoney.com to see how we can help. ————— It was about 2010, and I was having a conversation with a woman who I considered to be successful and intelligent. Suddenly she says, “Well, stocks are a much better investment than real estate, right? You’re a financial planner, so isn’t that what you tell your clients?” I was speechless. A good planner plans. Planning encompasses all aspects of one’s financial life, including real estate and mortgages. It would be irresponsible for a financial planner to make a statement such as “stocks are better than real estate.” Many financially independent people that I know accumulated their wealth through real estate. On the flip side, many people I know experienced bankruptcy and foreclosure by stretching their real estate investments TOO FAR. Real estate can be a profitable investment if you know what you are doing, and a disaster if you don’t. When nearing retirement, all aspects of your financial situation need to align toward a common goal: generating a reliable source of cash flow. That means real estate and mortgages need to be evaluated just as carefully as other items on your balance sheet. In this podcast, I’m gonna start by talking about your home and mortgage, and address one of the most common questions, which is, “Should you pay off your mortgage before retirement?” Then we’ll talk about home equity lines of credit and how to use them in retirement. And we’ll move on to discussing investment properties, and the last thing we’ll cover will be reverse mortgages. First, let’s talk about your home. Is it an investment? Meaning is it something you hope to make money on? Or is it a lifestyle choice - something you purchase for comfort and pleasure? Everyone has their own opinion on this. For most people, the answer lies somewhere between these two extremes. I rarely see people buy a personal residence solely because they think they can make money on it. Most of the time other factors like location, the type of neighborhood, and other personal lifestyle preferences have a big impact on a home purchase. Yet, when discussions about retirement start to happen, at that point, people often take a fresh look at their home as an asset. For many of you, a portion of the value of your home will need to become a part of your retirement income plan. If you know this ahead of time, you can put more thought into your next home purchase, how you finance it, and figure out how it fits into your plan. When I talk about fitting a home into your plan, I am not talking only about downsizing. There are other creative ways to think about your home and where you live. For example, you can choose a home that has ample access to public transportation, so you would not need a car on a daily basis. With services like Uber and Lyft, this option can work well today and result in a net savings over the cost of auto ownership. You can make your home as energy-efficient as possible, and make sure it has a garden or other area conducive to growing your own food. Another option is to rent a room in your home, or buy a home that has space that can be converted into a rental. For a large portion of my adult life I had roommates. Financially, it helped cover the mortgage. For me, of even more importance, it provided me with a built-in pet sitter. I’m a dog lover. When I traveled for work or to see family, I never had to kennel my pups. This saved me quite a bit of money over the years. And today, online options like AirBnB or VRBO.com (which stands for “vacation rentals by owner”) allow you to rent out your home, or a room in it, on a temporary basis to travelers. Or maybe you’re thinking about moving once you’re retired. Look for states that are tax-friendly for retirees. A simple Google search on “tax friendly states for retirees” will lead you to a few great articles that show you which states might be best. There are many creative ways your home can ...
