Tuesday, July 5, 2011

Fixed Income Retirement-House Poor?

Every couple of weeks, I attend a widow's support group at a friend's house-we're a group of women with a wide age range..from forty something to seventy somethings, all with a wide variety of backgrounds.  Recently, we were discussing finances and the world in general.  One of the older women shared that it used to be the case that one's house was,in essence, one's retirement

For many of us, that time has changed.  In my case, I only bought this house a few years ago, and can foresee paying a mortgage for some time.  This means that a hefty portion of  my income will go towards either house payments or basic house upkeep.  With a base income of $3500.00 (not including various tiny income streams and supplements), this means means that my housing expenses (mortgage, utilities, security, and basic home maintenance) come to approximately two thirds of what's coming in monthly.  While I expect I'll be able to manage that with income stream assistance, its a huge percentage.  There are still medical premiums and expenses, food, transportation and car maintenance costs, and pet care just to name a few.  That doesn't include all the little things that come up, nor does it cover the 'lifestyle" expenses of travel, quilting, or the other things that make my life full.

I am not the only person dealing with the "house poor" phenomenon these days.  No longer do we live in a society where everyone necessarily lives in a single house their entire lives.  As we move, often for work or better opportunities, new house costs arise. While there are people like my brother who has paid his house off prior to retirement, there are others of us who are looking at continued payments.  Even for those who have homes paid off, there are still all those little expenses that are part of owning a home that can drain the bank account.  Routine maintenance, weather emergencies, appliances that wear down or out, homeowners insurance, even home association dues.  All these small items add up and eat away at the cash on hand. Due to the economy, there's also another group out there.......folks that had planned to sell and downsize to a more manageable abode, but find themselves unable to get their home sold.  Unfortunately this group may be growing.

When our house is too much for us (financially or otherwise), we can do one of two things (depending on economic feasibility). First, we can downsize.  We can rent a smaller home or condo, buy a smaller home or condo, move to a mobile home, even go on the road in an RV (although I suspect that's a stretch for many of us nesters).  Eventually, I plan to downsize, once I decide where I want to do that (Denver, Hill Country, or stay in place). Meanwhile, like many, I'm dealing with the situation as it is now.

The second alternative is to find ways to lower the costs of the house we are in.  Ways to do this can run the gamut from sharing a house, cutting services like cable, improving home efficiency and other ways.  In my case, I am working on finding ways to make my home more comfortable and more efficient, while lowering long term costs.  This means that what tiny bit of disposable income I have left is going towards affordable housing changes and improvements. I've installed storm doors even though we live in Texas (in other words, I have two doors, like much of the north does).  I'm making sure that my appliances run efficiently, and replacing my dishwasher with a more energy efficient model.  Although new windows are not in my future, I've created energy efficient covers when necessary.  And most importantly in this climate, I've begun the process to xeriscape my front and part of my backyard to low water and no maintenance plants, getting rid of most of the grass.

A side advantage of my "slowly but surely" preparations is that my house will be more manageable on a daily and weekly basis in terms of maintenance and needs.  While I'm by no means handicapped, a serious and un-improvable knee issue means there are bad days, to say the least. Having the foresight to buy a home where everything is literally on one level (no basements in Texas) has already made things easier. Having no grass, for example, means that although I cannot always mow myself, I probably will no longer have to pay the boy down to road to mow and edge every two weeks. Of course, it also means the next time I take a road trip, I won't be concerned about how the lawn will look after two weeks.  

Eventually, if God and the economy agree, I'll leave my yard, patio, and comfy but slightly too big house for something smaller and more efficient. Meanwhile, I'm finding ways to manage with what I've got, and still live the life I like.

What about you..have you downsized?  Will you?  How much time, effort and money does YOUR home require?


  1. I've been thinking lately how my mortgage is the least of my worries - the 'little' expenses definitely add up to more than my mortgage and believe me - when it rains it pours! Stuff picks the worst time to go kaput.

    I would like to get a diffrent house(have a 2 story townhome)and prices are good but sheesh I'd be like my neighbor - struggling to sell what I have.

    my mortgage is a little under $500 but I pay $500 per month. The insurance, monthly HOA dues, and taxes are closer to $600 and that's not even counting the other upkeep of the required yearly termite and furnace inspections.

    I would like an open floor plan one story but have a large townhome where the only full bath is upstairs. Not ideal for retirement though I'm still in my 40s so that is just a distant dream unfortunately.

    I'm trying to imagine a yard without grass - I know some HOAs here require certain kinds of grass(at leasst I've heard that). That's something I'll have to watch out for if I ever buy a house.


  2. We have downsized our lives quite a bit over the past 2 years. Enough so that we both retired early and while we will never be rich, we have enough to cover our annual expenses.

    We decided on quality of life instead of quantity of life and think that it will be better in the long run for both of us.

    I just recently found your blog and enjoy reading your blog.


  3. Getting my house paid off is a major part of my retirement plan--I've got 3.5 years to go. I'm still on the fence about keeping my home--when I bought it 18 years ago, I was tired of ranch houses. I wanted a yard, stairs and OLD things--all nicely provided by my 1929 home. Nowadays, the hardest part of upkeep is the yard, the stairs, and the age of the house!

  4. No basements in Texas???
    Really, why not?
    I love reading your thoughts and ideas as you head thru retirement.

  5. When we downsized after our daughters left home, we bought the next house for cash. I really wanted to not worry about mortgage payments again. But, as you note, no mortgage payments doesn't mean free housing. Real estate taxes, insurance, water, sewer & trash, utilities, new roof and paint every 10-15 years...it is substantial.

    Our plan was to sell this home and move to a condo where someone else took care of all the maintenance and such. But in the last few years this house has lost 50% from its peak value in 2007. While it would still sell for 50% more than we paid for it, that lost cash would create a real problem in the future, so we will hold tight.

  6. Susannah, my hoa allows no grass..you dont need approval for the front yard unless you are building structure or really raising or lowering the ground (tiering or the like). I have a bad knee so one floor was enough.

  7. Thanks for the visit Harold, Im looking to downsize as well, but not at a loss. This house has a hefty downpayment tied up in it.

  8. Anonymous-no basements because of the kind of earth and if it gets too dry, said earth must be watered around the house. The only place ive ever ived where foundation companies were more prevalent on the radio than insurance or cars.

  9. Bob..while I did not pay cash, I did what at the time I though was my single smart financial decision and made a hefty down payment. So yep, If I sell for less than I paid, im losing fifty grand..

  10. You are living off slightly more than we do monthly. I don't think we could do it if we still had a mortgage. Still- our property taxes and insurance bring us up to just about what you are spending monthly on housing! At this point my husband is quite happy. I know if we sold anytime soon we would lose a lot of money.
    I have thought of splitting the property and selling just the house- leaving the barn and the land---and building a small house on the land.
    Then again- property taxes are on the rise and look to be out of control soon. If they get too far out I am not sure what we would do- I do know we could not afford it here.
    When he is gone- it all goes as well. I plan on two tiny houses - one in each location near children. Maybe two condos- that would actually make much more sense. I am not sure I could live in shared walls again.
    First I have to figure out EBay and get rid of LOTS of stuff.

  11. My house was paid off when I was 50 years old. Now, 10 years later, I can not tell you enough how wonderful it is to live rent free. I see my MIL, who is in her 80's (who sold her home 15 years ago because she said renting was cheaper than owning)struggles every month to pay the rent.
    Yes, the home needs care and upkeep. My husband takes care of the outside and I take care of the inside. Personally, we like the work. It's enjoyable and we don't see it as drudgery or a chore. It's more of a hobby.
    The property taxes are manageable and once you turn 65, you get a discount.
    Until one of us becomes disabled, I really don't mind being house rich and cash poor. When the time comes, we can sell the home, regardless of the price or the economy and get the cash we will need to afford the next phase in our lives.

  12. Hubs and I are planning on retiring in 7 years. Our home is paid for but we plan on downsizing from 2,100+ sq. ft. to something all on one level and about 1,400-1,600 sq. ft. that is in another state.
    While we would like to make a profit on the sale of the house(from what we paid for it), as long as we recoup enough to buy what we want in another state we are going ok. Having extra cash leftover after buying the next house would be great tho. ;-)

    We have to stay in this school district for our teen son for another 3 years and then we can put the house on the market. We figure it could take up to 4 yrs. to sell it, so start trying as soon as we can. If we sell it quickly we can rent something closer to Hubs work and then relocate when he retires. That way when he retires we have nothing holding us here.

    If we can't sell we won't leave here tho. That outcome won't make me happy but it's a possibility and I am ok with it. Since it's paid for and the taxes are fairly low here, we would still be able to travel and see family which is elsewhere.

  13. Slugmmama, it sounds like you have it thought out........I certainly wont have enough to buy another house in terms of equity, but it would me I would have SOMETHING in savings, or a down payment on a condo if I found one low cost enough that was a single floor. No steps, ever, for me.

  14. I have downsized and moved in with some old friends of mine.
    retirement communities new york


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