Making a retirement dream a reality: Budgeting for your vacation home

Most retirees are accustomed to budgeting. It’s something they’ve done all their adult lives. If you’re a retiree, you’ve budgeted for homes, cars, and an education for the kids, so it goes without saying that you’ve worked extremely hard to make it happen. All that hard work and financial diligence deserve a reward, maybe some fun in the sun. So why not apply those budgeting skills to a vacation home, a place where you and your spouse can enjoy the fruits of all that labor? It’s a great way to put a little extra shine on your golden years. A growing number of older Americans agree: half of all second-home buyers are older than 46.

Before you get serious about budgeting for a vacation home, ask yourself if it’s enough to justify spending the money. If you or your spouse require ongoing medical attention, flying off to a vacation getaway whenever you feel like it may not be realistic. Maybe you have family issues that make it impractical to get away very often. Ask yourself, can you really afford it? A beachfront condo or a cabin in the woods may look enticing, but no amount of budgeting will make it work if you just can’t swing it. So take some time to carefully assess your finances and make sure a vacation home makes sense from both a lifestyle and financial standpoint.

Budget according to your circumstances

 

People often assume that retirement means their living expenses will only be about 80 percent of their expenses while they were working. But many don’t realize that this is only the case if you plan to live a pretty staid, uneventful retirement. The financial transition from working to retirement isn’t always a smooth one. Financial planning experts warn that the first few years after retirement can be just as expensive as your working life. It’s been estimated that retirees carry unpaid medical costs as high as $250,000, a financial burden that must be planned for as you budget for plans after retirement. Many have children who are still in college, or daughters who haven’t married yet.

Don’t forget the tax man

 

It can be easy to overlook property taxes if you’re budgeting for a vacation home. They may be higher than what you currently pay either because the tax rate is higher than where you live, or because it isn’t your primary residence. Florida is one of the most popular destinations for retirees looking for a vacation home, though ill-informed and unprepared buyers are often surprised to find that taxes on second homes there are generally considerably higher than for their primary residences. And don’t forget that you’ll have to pay income taxes on any rental income you receive from your new home.

Location and utility

 

It’s a given that you’ll want to buy a home in an environment you really love, a place you’ve always longed to live in but never imagined you could. Once you’ve identified your dream location, bear in mind that your vacation home should suit your needs, now and in the future. Adjust your budget for a home that’s “age-friendly:” typically that means one that’s easy to get around, with open floor plans and easily accessible entryways. If you intend to rent the home to others, it’s smart to choose a location with multiple seasons of rental demand.

Note that bathrooms and kitchens often need to be updated in vacation homes. These can be costly, so consider setting up a separate budget category to pay for home improvements. According to Home Advisor, the average price in Los Angeles to remodel a kitchen ranges from $23,320 – $50,026 and takes from two to two-and-a-half months.

 

Article was written by Michael Longsdon  info@elderfreedom.net

 

Courtesy Pixabay.com

 

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