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Top 5 Mistakes of Retirees

People entering into retirement typically make some type of real estate decision. Some choose to downsize, others move cities, while some will renovate. As retirees make these decisions, there are common mistakes that are made.

The top 5 real estate mistakes of retirees are:

  1. Downsizing too late. The sooner you downsize, the more money you will save. Big homes will have more expenses with large electrical bills, higher insurance, and greater taxes. Most people wait until all of their children are out of college, but downsizing could be done earlier than that, providing years of more savings.
  2. Using the downsizing money. As people downsize, some will have extra cash after selling their old home and buying a smaller one. Many people view that money as extra money that can be spent right away. Instead, consider using that money to live off of instead of touching the retirement funds.
  3. Moving without research. Before you decide to move, make sure to look up about your new location. Does it have activities that you would enjoy? Will your taxes be affected? How much will it cost to live there? If you have specific health problems, is there a specialist who can take care of you? And do they accept your insurance?
  4. Purchasing a second home. Some people buy a second home to be able to live in two locations, depending on the time of the year. Others buy two homes with the intent of moving to the second one a few years down the road. Either way, having a second home can be very expensive. Though you may think it will save you money by not having to buy a home in the future, the cost of paying for two homes could add up quickly.
  5. Taking out a mortgage. It is best if you can buy a home where you do not have to take out a mortgage. Even though the rates will be lower, having to pay a mortgage through retirement can be challenging. Many retirees live off of Social Security, savings, and IRA distributions. To have to use that money to pay a mortgage can cause damage to financial security.

Retirement is supposed to be a period of enjoying family and relaxing after years of hard work. Make sure to avoid these common mistakes in order to save you from a difficult retirement.

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