Buyer tips for 50 plus
Buying real estate, whether for investment purposes or personal use when you are 50 plus, should be guided by different considerations than when you are in your 20s, 30s, and 40s.
Have you heard of the retirement red zone ? The retirement red zone refers to those critical years just before and after retirement. It is an analogy for the red zone in American football. The red zone refers to the 20 yards closest to the end zone. It’s that critical point where you must protect your gains while still driving to the end zone and the opportunity to score. It’s where a risky play could set you back. It’s where strategy is paramount.
When you buy real estate in your 50s, you’re playing in your retirement red zone.
First things first – buying real estate can be an excellent investment at any age, but it’s key to ask the right questions to set yourself up for a better, more comfortable future.
- Let’s start with the mortgage. Will there be a mortgage? Ideally, you are mortgage-free when you begin your retirement. There are many options here, but the question is, which one suits your goals? Perhaps you don’t intend to fully retire for the duration of the 20-, 25- or 30-year loan duration. Maybe you have sufficient income to take a 15-year mortgage. Is there appropriate space and form in the property to allow for rental income that could accelerate or alleviate your mortgage payments? It may be that your projected retirement income and expenses leave room to carry that mortgage comfortably through retirement without restricting your lifestyle.
- Are you upsizing, downsizing, investing, or rightsizing? You may be clear on this at this moment, but as they say, hindsight is 20/20. If you are downsizing, how much square footage can you comfortably give up? If you are investing, have you considered the potential impact of vacancy and the implications of passive income on Old Age Security and taxes? If you are upsizing, do you anticipate needing that extra space into retirement? Which leads us to the Goldilocks’ question, what is the right size?
- Are you buying your forever home? Are you investing for the short or long term? Are you planning to buy and sell again, before or at some time in retirement? Approximately 90% of adults 65 and older want to stay in their homes and their communities as they age. Will the property you are contemplating buying age gracefully with you? This is not only a question of condition but also a question of suitability. For example, is the first floor large enough to support your living space and all amenities? Eventually, it will be essential to take steps to avoid steps.
- Tell me about your lifestyle, your hobbies, and your social circle. Let’s consider that in concert with the mantra of real estate: “Location, location, location.” The value of your real estate is unequivocally impacted by location, but let’s put that aside and consider the living impact of location, specifically into retirement. Perhaps you are looking for an area that is closer to your hobby. Less commuting = good for you, good for the environment, good for your wallet, safer, more sustainable. Sounds great so far. How close is this location to the other activities that make up your life? Your family? Your friends? Your medical team: doctor, eye doctor, dentist, chiropractor, a hospital, etc.? Everyday destinations: a grocery store, shops, entertainment, a bank? What about public transit? Will you always have a driver’s license? How walkable is the location you are considering?
- What about affordability? The question of how much you can (or should) afford depends on who and when you ask. Your mortgage broker or lender will analyze your current income, expenses, and debt load. How will those factors change when you retire, and will the math still work? If you ask a certified financial planner, they will take a longer view. They will help you answer the question of how much you can afford and still retire comfortably.
Buying real estate can be an excellent investment at any age but working with a realtor who understands the end zone, and asks good questions, will help you make more strategic decisions that add value to your long-term outlook.
