1. Pay Off Your Mortgage
Paying off your mortgage is one of the most important things you can do before you retire. As you head into retirement, you want to pay off any and all outstanding debt that you have. Whether or not you plan to stay in your home, paying it off so you can own it outright makes good financial sense, and can help you get by on a reduced overall budget.
2. Move to a Smaller Home
Especially once you have your home paid off, you can sell it and move to a smaller home or a home in a less-expensive market. All the money that you have left after your sale becomes additional capital that you can then invest and treat as part of your retirement war chest. What’s more, smaller homes also have lower utility costs and generally lower property taxes, saving you additional money over the course of your retirement.
3. Move to a Cheaper Market
In addition to buying a cheaper home, cheaper housing markets generally have a cheaper cost of living. This covers everything from food to the cost of your health care, the latter of which might well be the biggest expense you have heading into retirement. Similarly, you can save money on transportation by moving to a market closer to your family, or places to which you frequently travel.
4. Move Abroad
This is an extreme form of moving to a cheaper market, but one that more and more Americans are doing. Indeed, there are a number of countries in warm climates boasting a respectable cost of living as well as safety and enjoyment. Some of them are even advantageous for tax purposes.
5. Rent Instead of Buying
It depends on what market you’re in, and what you expect rental and ownership costs to be long-term, but real estate on the coasts tends to be cheaper to rent than it is to buy. If you live in an expensive market, but you don’t want to move, look into renting where you already are. Renting also allows someone else to be responsible for maintenance, which may be helpful as you age.
6. Move Somewhere With Better Transit
You can pull a double whammy by moving to a location with good public transportation and a lower cost of living. That makes it possible for you to go carless (or at least save on gas) as well as lower the cost of your housing in retirement.
Additional Options to Save on Housing Costs
There are four other things you can do to save on housing costs, though they may not be for everyone:
7. Move in with your kids
Multi-generational living in the U.S. is on the rise. Especially if you have grandchildren, the arrangement may benefit everyone, allowing your children to save on childcare costs -- and allowing you to spend more time with your grandkids!
8. Share a home with other seniors
If you know other retirees who are looking to save money on housing costs, you can move in together, in the style of the TV show “Golden Girls.” If you would otherwise be living on your own, this option could also be helpful for your health.
9. Reverse mortgages
These are only for people who have paid off their home, and the pros and cons should be weighted carefully.
10. Renting out part of your home
Similar to sharing housing with other seniors, this is a way to potentially create the opportunity for more social interactions while also bringing in additional income.
While all of these options may not be right for everyone, some may be worth further consideration. Ultimately, less money spent on housing means more money to spend as you choose (travel, luxuries, hobbies, etc) in your retirement!