A Home of Your Own
There are a lot of fun real estate choices to make when you're in your 40s and 50s. If your kids are grown, this may be your first chance in a long time to pick where you want to live without having to worry about school districts, bus routes, or day-care commutes. You can pick your location and home style based on your lifestyle now and what you want it to be in the future.
Choosing a Location
Spend some time thinking about your home location relative to how long you'll be living there and lifestyle factors that the location affects. If you're planning to live there just until you retire, a long commute to work may be a bad idea. If you're planning to put down roots and build your retirement support community of neighbors and friends, having a long commute to work for a few years might matter less to you.
Other things to consider if you're planning to stay long term include:
Access to health care and community support systems
Proximity to your kids and friends
The style of the home you prefer, including whether a one- or two-story home will work best for you in retirement, given mobility and health concerns
Weather and seasonal conditions are a more important factor in choosing a long-term location than you may realize. People move to warmer climates after they retire for a reason — the older you get, the less tolerant you become of cold temperatures. And snow and ice become increasingly irksome for walking and driving as you age.
Real Estate as a Retirement Asset
If you're planning to make your current home an investment for retirement, it's important to disregard the emotional ties that many people feel toward their home and treat yours like an investment. Make sure you're budgeting toward keeping the property maintained and equipped with up-to-date amenities. Keep personalization to a minimum and avoid being too trendy in your permanent structures and design. Consider the costs of selling the property at retirement, and have a plan B that includes assets unrelated to real estate that can provide income so you don't have to sell in a down market.
If your house is in a good location or on a large lot, you may not need to keep it meticulously up to date. Your buyer may buy for the location rather than the house or plan to tear down and build new. Don't invest in upgrades if your house isn't as valuable as the lot it sits on.
Additions to Add Value
In most housing markets, there are only a few additions and upgrades that you can make to a house that add value. Builders and designers are fond of calling some projects “investments” in the property, but if your plan to sell coincides with a downward trend in the market, even proven upgrades such as adding a bathroom might not yield a return upon sale. Make additions to your home cautiously to avoid wasting money that won't be recouped.
Homes need to be kept up to date, and that is part of the cost of owning them. A house on the market in 2008 that still has the same small, avocado-colored refrigerator your mom had isn't going to sell as quickly as one with more current appliances. Plan a regular, budgeted contribution to your household fund to cover upgrades, just as you do to cover maintenance. If you plan something more than a basic upgrade — such as changing from that avocado refrigerator to a modern, stainless-steel one — and you're not selling right away, beware that styles might change dramatically before you sell. The upgrade might make sense, as long as you budget the upgrade as something you will enjoy, knowing you might not recoup your investment upon sale.
Planning for an Empty Nest
This is your chance to plan your home around you, without having to consider your kids and their needs. Give yourself a chance to welcome this transition; it's an exciting time for both you and your spouse or partner. Be thoughtful and deliberate about what you do with your home after the kids are gone. Some parents will be happy to change the locks and convert the kid's room into a home office. But others may want to build an addition so that the kids can come back with their own children. Take this opportunity to strengthen your personal finances and theirs by ending your direct financial support and begin making financial decisions without the kids' goals in mind. You may choose to help them later under certain circumstances, but for now, this is the perfect chance to cut the apron strings.
Home decorating magazines will have a current list of additions or home upgrades that are adding value in your market. Historically, changes that add space or convenience are your best bet. Adding a downstairs bathroom to a house that doesn't have one, paving a gravel driveway, and adding a garage have been good bets in the past.