Should You Downsize for Retirement?
It may be better to sell that big home rather than keep it.
You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven't fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it's time to downsize.
Lower expenses could put more cash in your pocket. If your home isn't paid off yet, have you considered how much money is going toward the home loan? The typical mortgage payment in the U.S. represents about 30% of gross income and about 50% of after-tax income.1 When you move to a smaller home, your mortgage expenses may diminish and your cash flow may greatly increase - and don't forget about interest savings over the life of the loan.
You might even be able to buy a smaller home with cash (if finances permit) and cut your tax liability. Optionally, that smaller home could also be in a region with lower income taxes and a lower cost of living.
You could capitalize on some home equity. Why not convert some home equity into retirement income? If you were forced into early retirement by some corporate downsizing, you might have a sudden and pressing need for retirement capital - another reason to sell that home you bought decades ago and head for a smaller one.
The lifestyle reasons to downsize (or not). Maybe your home is too much to keep up, or maybe you don't want to climb stairs anymore. Maybe a condo or an over-55 community appeals to you. Maybe you want to be where it seldom snows. On the other hand, you may want and need the familiarity of your current home and your immediate neighborhood (not to mention the friends attached).
If you decide to downsize, it may not pay to wait. Anyone who wants to retire in the current economy needs all the financial resources that can be mustered. Of course, the real estate market will eventually improve; it depends on how long you want to wait for improvement. Some people want to retire and then sell their home, but it may be wiser to sell a home and then retire since homes tend to sit on the market these days. If you sell sooner instead of later, you can always rent until you find a smaller house that could save you thousands (or tens of thousands) of dollars.
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D. Alan Mercurio
Mercurio Wealth Advisors
330 North Evergreen Road, Suite 3
Louisville, KY 40243
Phone: (502) 253-9366
Fax: (502) 253-9370
Alan@MercurioAdvisors.com
Friday, July 16, 2010
Tuesday, April 20, 2010
A WEALTHY MAN'S PENNY
This was sent to me by a friend, which I thought needed repeating, enjoy!
A WEALTHY MAN'S PENNY
I'll never again pick up a penny without thinking of this! Several years ago, a friend of mine and her husband were invited to spend the weekend at the husband's employer's home. My friend, Arlene, was nervous about the weekend. The boss was very wealthy, with a fine home on the water-way, and cars costing more than her house.
The first day and evening went well, and Arlene was delighted to have this rare glimpse into how the very wealthy live. The husband's employer was quite generous as a host, and took them to the finest restaurants. Arlene knew she would never have the opportunity to indulge in this kind of extravagance again, so was enjoying herself immensely.
As the three of them were about to enter an exclusive restaurant that evening, the boss was walking slightly ahead of Arlene and her husband. He stopped suddenly, looking down on the pavement for a long, silent moment. Arlene wondered if she was supposed to pass him. There was nothing on the ground except a single darkened penny that someone had dropped, and a few cigarette butts. Still silent, the man reached down and picked up the penny. He held it up and smiled, then put it in his pocket as if he had found a great treasure. How absurd! What need did this man have for a single penny? Why would he even take the time to stop and pick it up?
Throughout dinner, the entire scene nagged at her. Finally, she could stand it no longer. She casually mentioned that her daughter once had a coin collection, and asked if the penny he had found had been of some valuable.
A smile crept across the man's face as he reached into his pocket for the penny and held it out for her to see. She had seen many pennies before! What was the point of this?
"Look at it." He said. "Read what it says." She read the words "United States of America." "No, not that; read further." "One cent?""No, keep reading.""In God we Trust?""Yes!""And?" "And if I trust in God, the name of God is holy, even on a coin. Whenever I find a coin I see that inscription. It is written on every single United States coin, but we never seem to notice it!
God drops a message right in front of me telling me to trust Him? Who am I to pass it by? When I see a coin, I pray, I stop to see if my trust IS in God at that moment. I pick the coin up as a response to God; that I do trust in Him...For a short time; at least, I cherish it as if it were gold. I think it is God's way of starting a conversation with me.
Lucky for me, God is patient and pennies are plentiful!
When I was out shopping today, I found a penny on the sidewalk. I stopped and picked it up, and realized that I had been worrying and fretting in my mind about things I cannot change. I read the words, "In God We Trust," and had to laugh.
Yes, God, I get the message. It seems that I have been finding an inordinate number of pennies in the last few months, but then, pennies are plentiful! And God is patient.
A WEALTHY MAN'S PENNY
I'll never again pick up a penny without thinking of this! Several years ago, a friend of mine and her husband were invited to spend the weekend at the husband's employer's home. My friend, Arlene, was nervous about the weekend. The boss was very wealthy, with a fine home on the water-way, and cars costing more than her house.
The first day and evening went well, and Arlene was delighted to have this rare glimpse into how the very wealthy live. The husband's employer was quite generous as a host, and took them to the finest restaurants. Arlene knew she would never have the opportunity to indulge in this kind of extravagance again, so was enjoying herself immensely.
As the three of them were about to enter an exclusive restaurant that evening, the boss was walking slightly ahead of Arlene and her husband. He stopped suddenly, looking down on the pavement for a long, silent moment. Arlene wondered if she was supposed to pass him. There was nothing on the ground except a single darkened penny that someone had dropped, and a few cigarette butts. Still silent, the man reached down and picked up the penny. He held it up and smiled, then put it in his pocket as if he had found a great treasure. How absurd! What need did this man have for a single penny? Why would he even take the time to stop and pick it up?
Throughout dinner, the entire scene nagged at her. Finally, she could stand it no longer. She casually mentioned that her daughter once had a coin collection, and asked if the penny he had found had been of some valuable.
A smile crept across the man's face as he reached into his pocket for the penny and held it out for her to see. She had seen many pennies before! What was the point of this?
"Look at it." He said. "Read what it says." She read the words "United States of America." "No, not that; read further." "One cent?""No, keep reading.""In God we Trust?""Yes!""And?" "And if I trust in God, the name of God is holy, even on a coin. Whenever I find a coin I see that inscription. It is written on every single United States coin, but we never seem to notice it!
God drops a message right in front of me telling me to trust Him? Who am I to pass it by? When I see a coin, I pray, I stop to see if my trust IS in God at that moment. I pick the coin up as a response to God; that I do trust in Him...For a short time; at least, I cherish it as if it were gold. I think it is God's way of starting a conversation with me.
Lucky for me, God is patient and pennies are plentiful!
When I was out shopping today, I found a penny on the sidewalk. I stopped and picked it up, and realized that I had been worrying and fretting in my mind about things I cannot change. I read the words, "In God We Trust," and had to laugh.
Yes, God, I get the message. It seems that I have been finding an inordinate number of pennies in the last few months, but then, pennies are plentiful! And God is patient.
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