Real Answers for Life’s Money Challenges
I live in the Philadelphia suburbs.
I recently retired as an orchestra teacher in the public school system.
I will be on Medicare in December.
I sold my large home and live in a modest apartment for $1,300 per month rent.
So Im comfortable financially and easily making ends meet.
HOWEVER, I really want to buy a small home.
The real estate market is off the charts right now and prices are insane.
I would also use most of my savings and have a mortgage.
My payments would be about the same.
I am debt-free and own a brand-new car.
My pension plan is a defined-benefit plan with a $900,000 death benefit.
Can you offer any advice as to whether or not I should buy a home?
-M.
Dear M.,
you’re free to clearly afford to buy a home.
If you were still working, Id ask you what would happen if you lost your job.
But you have no debt and $5,000 of monthly after-tax income thats guaranteed for life.
Your income isnt contingent on a salary or the stock markets performance.
So it’s possible for you to afford to spend a lot of your savings to buy a home.
Plus interest rates arehistorically low.
Our team has compiled alist of creative waysyou can fatten your bank account this week.
This is a long list, so dont get overwhelmed.
Well keep it updated as offers changes or expire.
So think about why you want to buy a home: Is this an investment to you?
Or do you want to buy a place to make your own for many long and happy retirement years?
Im not saying you have to choose one or the other.
But defining your goals will help you make the right decision.
If youre buying a home as an investment, youd want to consider how you could maximize your ROI.
In that case, of course, you wouldnt want to buy at the top of the market.
Mind you, the housing market has remained strong even in the year of coronavirus.
Its highly unlikely that well have a repeat of the 2008 housing crash.
But were talking about the worst possible outcome here, so yo bear with me.
If you approach this as buying a place to live?
Suppose the market crashes and your home loses value.
Regardless, youll be paying $1,300 a month for housing whether you rent or buy.
I think the biggest challenge youll face is sticking with your $1,300 a month budget.
The beauty of your situation is that you might afford to not make this a numbers game.
If a home will help you enjoy your hard-earned retirement even more, let the house hunting begin.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder.
Send your tricky money questions to[email protected].
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
