How Homeownership Can Finally Work Even if You’re Over 50

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If you’re in your 50s or 60s, you may have a 401(k), investments and retirement savings set aside for your golden years. If you’re thinking about a move, you may wonder if buying a new home will derail your retirement.

For many homeowners, downsizing to a smaller home can put more breathing room in their budget by lowering expenses and freeing up cash when done strategically.

Here’s how a new home purchase can work if you’re over 50.

Use the Equity in Your Home

One of the biggest advantages for homeowners approaching retirement is home equity. The median home equity for homeowners age 65 and older was $250,000 in 2022, according to the National Council on Aging.

Using that equity for a purchase can provide financial flexibility by buying a smaller home for cash, making a larger down payment and taking on a smaller mortgage. It can also allow you to pay off debt and put more money into your retirement savings. 

Lower Monthly Housing Costs

Downsizing to a smaller home can reduce financial pressure after 50 by lowering your monthly housing costs. A smaller, less expensive home can mean a lower monthly mortgage payment, smaller utility bills and a reduced home insurance premium, which has climbed 24% in the past three years, according to the Consumer Federation of America. 

A home with more square footage and features costs more to insure, according to Wawanesa Insurance. With the money left over, you can grow your retirement nest egg.

Reduce Tax Burdens

Property taxes have been climbing faster than inflation, up 3.7 % since 2024, according to real estate data from ATTOM, reported CBS News. The average homeowner pays $4,427 in real estate taxes annually and in some states with higher taxes, like New Jersey, homeowners are paying around a median of $9,358 a year, according to Smart Asset. Moving to a state with lower taxes can dramatically reduce your tax burden, especially in a state that offers tax relief programs. 

Cut Maintenance Costs

Average annual maintenance costs range from $4,000 to $22,000, according to Home Guide. What you pay will depend on your home’s age and size. You can expect to pay 1% to 4% of your home value in annual maintenance costs, said Consumer Affairs. Moving to a condo or a smaller home can reduce the unexpected repair costs that come with owning a larger or older home.

When Downsizing Doesn’t Work

In some cases, downsizing isn’t the best financial option for some homeowners. Here are a few reasons when it may not work:

• You don’t have much equity in your home
• You have to invest in costly repairs to sell.
• The new home is in a location with high property taxes.
• HOA fees are expensive.
• The home is located in an area prone to natural disasters, which drives up home insurance premiums.
• The new purchase requires you to pay real estate commissions as both a buyer and a seller.

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