The kids have moved out and started lives of their own. By day you are putting in those last weeks or months at work before calling it a career. At night you are planning your next stage with unmatched zeal. Then it hits you, usually while you’re a few rows deep in a spreadsheet, your Orange County home will not be cheap to keep in retirement. You run the numbers again, look at what your expected retirement payouts will be and try to figure out how much longer you are going to have to keep at it so you can keep your address when you retire.
Typically I have this type of conversation with Orange County real estate clients about once a month and it always goes something like this, “we can’t afford this house, taxes and food so we either have to move or just keep working.” If you are in the same situation don’t feel bad, you have a lot of company. Between the high costs of Orange County real estate and high California tax rates a lot of folks look to head east for more accommodating accommodations. Here are your options if your current home is looking like it’s going to suck all the fun money out of your retirement savings.
1) Downsize – depending on the equity in your Orange County home you’re your current home’s value downsizing might be a good option. In recent years I’ve helped clients move from large homes to smaller, more manageable and affordable condos and they couldn’t be happier. This is a pretty common Orange County real estate transaction in the current financial climate. This can allow you to stay in the area, or in the case of a couple clients move closer to the beach, while cutting your costs significantly.
2) Consider retirement communities – we have a few communities in Orange County real estate that are age restricted with affordable options (typically the age restriction keeps the prices down since the potential buyer pool is smaller). In South Orange County you have everything from Leisure World to Casta del Sol to choose from. Keep in mind many of these places may have higher management fees than you may be use to. I have a few clients in these communities and they seem to be very happy there. Make sure you spend some quality time in the neighborhoods to see if they are a right fit for you.
3) Sell and Rent – this is becoming more common, think of it as the mobile retiree. I have a client who spends six months a year here and six months a year visiting family in the south and east coast and instead of buying they do a short-term rental when they are here and keep a rental where they are a lot cheaper in the south, which they use as their permanent residence. The plus for them is they can go spend time vacationing where ever they want and only pay to be here when they are here. Another client I spoke with recently is looking to sell and rent and decide where they want to move, taking advantage of the large savings they will have every month since the rent is much less than their mortgage was. Other clients sell and rent and move to a different area once their lease is up with the intentions of seeing a number of places during their retirement years.
4) Head out of State – what I think will become the most popular option over the next few years. Other states offer some advantages, though in every case you do give up the gorgeous weather and the beautiful beaches as well. Texas, Nevada and Florida are popular because they do not collect state income tax, Colorado has gained popularity because much of it has a very small town feel and an abundance of outdoor activity, Oregon offers low home prices and no sales tax and Arizona offers warm weather, very low property prices, a lot of retiree activities and is a short flight to Orange County. If your thinking about heading out of state make sure you visit where your heading a lot to make sure you are picking the right place to call home. If possible consider buying the home years before you retire and work on paying off the mortgage so your housing costs post retirement are minimal allowing for a much bigger fun money budget.
Housing will be a big part of your retirement financial planning. If your in a situation where your current home may prevent or limit your retirement options feel free to contact me I will gladly give you my thoughts and share my experiences with clients who also were in your shoes.
949 599 6860