Retired and Own a Home? Prepare for These 3 Expenses to Rise

by Maurie Backman | Published on Sept. 29, 2021

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An older couple sit on their back porch, sip coffee, and enjoy the morning.

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Older homeowners, beware -- your costs could rise for these reasons.

It's often said that homeownership is the ticket (or a ticket) to financial stability. When you own a home, you get a chance to own an asset that could be worth a lot of money. That gives you the flexibility to borrow against the home equity you've built for extra financial protection.

Also, when you own a home, you don't have to worry about your mortgage payments climbing over time (unless you have an adjustable-rate mortgage). When you rent, your landlord could jack up your monthly housing payments once your lease comes to an end.

Because of these factors, you might assume that it's a good idea for retirees to own their own homes rather than rent. But actually, owning a home in retirement doesn't always make financial sense. In fact, many seniors are limited to a fixed income once they retire that consists largely of Social Security benefits. At the same time, it's more than possible for homeowner expenses to rise substantially during retirement. Here are three specific costs that could climb.

1. Property taxes

The tricky thing about property taxes is that they have a tendency to rise over time, even during periods when home values fall. In fact, all it takes is for a home to be reassessed, and boom -- an owner can get stuck with a much higher property tax bill from one year to the next. Retirees who opt to continue owning a home should brace for their property tax bills to go up over time, especially if they live in areas where homes are assessed frequently.

2. Maintenance

As homes age, they tend to require more upkeep. But added maintenance could mean having to spend more on a home, and that's something that may not fit in well with retirees' budgets. Furthermore, many retirees find that they have an increasingly difficult time performing home maintenance themselves as they age, so hanging on to a home could also mean having to outsource more of that work -- and pay up for it.

3. Repairs

Just as aging homes tend to require added maintenance, they also tend to require more repairs. The problem, though, is that repairs can be difficult to anticipate. Whereas homeowners may be able to plan for maintenance like snow removal and lawn care, it's hard to know when a heating system will need an overhaul or when a major kitchen appliance will need to be replaced. And that's not a good thing for retirees on a very tight budget.

Beware the dangers of homeownership in retirement

To be clear, owning a home in retirement is not necessarily a bad idea. But it may not lead to financial stability as you might expect. In fact, homeownership could wreak havoc on your budget during retirement, even if you no longer have a mortgage to grapple with.

If you're going to continue owning a home in retirement, it's imperative that you have a solid emergency fund to cover unplanned housing expenses. That can buy you some protection in the face of potentially rising costs.

Of course, if you don't like the uncertainty that comes with homeownership in retirement, you may want to sell your property and rent a home instead. That way, you won't be responsible for maintenance, repairs, or other unforeseen expenses that could throw your finances off course. And while your rent could rise over time, you'll at least have the peace of mind that your housing payments won't change during the duration of any given lease.

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