Staying put is a very popular retirement strategy. And I totally understand that many of you want to stay in the home that you live in, rather than downsize or move someplace else. But from a financial standpoint, it can be tricky. You know I have always insisted that if your plan is to “age in place,” you must have the mortgage paid off before you retire and make any necessary renovations to ensure you can stay safe as well.
A new report from the Center for Retirement Research at Boston College delivers a new financial challenge if you plan to age in place: avoiding a costly penalty for selling later in life. The CRR report found that when an 80-year-old homeowner sells their home, the price is 5% lower than if the seller were in their 40s or 50s when they sold a comparable home. That works out to a sales price that is $20,000 lower for today’s median-priced home of about $400,000. That aging penalty increases as someone adds on more years.
You can do the math based on your home’s current value, but I think we can all agree that losing 5% of potential sales value is going to be a significant amount of money. The good news is that you can plan now for how to avoid this hidden cost of aging-in-place.
Keep up with home maintenance.
The study found that homes sold by older owners tend to show their age: mechanical systems often haven’t been maintained as rigorously, and there are typically fewer major upgrades over the years. Ongoing maintenance is a must, even when you have no intention of moving; taking care of your home today is how you avoid even higher costs later on.
Dated bathrooms and kitchens are also at play in this hidden cost. Whether to do renovation work depends not just on your needs—a bathroom that is safe for an aging you is indeed a need!—but also on your finances. While an updated kitchen can mean a higher eventual sale price, it must make financial sense as well.
Enlist family when it is time to sell.
The study also reported that older sellers tend to agree to off-market “private” sales rather than going through the process of having their home listed on the local Multiple Listing Service (MLS). This is often not the smartest financial move, as it removes your home from competition; when you sell, you want the most people possible to see the home.
I know it seems hard to imagine when you are in your 50s, 60s, or even 70s that you will find yourself in a situation where you just want to take the “easy” way out and sell to the one buyer an agent brings to you. This is where family can help: adult children, or even grandchildren, can help make sure your home is marketed to the widest possible audience when the time comes to sell.
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