YOUR RETIREMENT HOME: HOME
Staying put, standing pat, retiring in the place you're at. Is this the new Boomer nursery rhyme? Or the latest contribution to the Dr. Seuss series? No. For many nearing their retirement years, it's just reality. While we may dream of retiring to a better climate or purchasing that vacation or retirement home, the fact is that most people will find it difficult to move into a new dwelling after they leave the work force. Finding a buyer for your current home can be challenging in the current real estate market. Obtaining financing and coming up with a down payment when you're moving to a fixed-income status are big obstacles. In short, most of us will probably retire initially to our homes or in our current communities.
If you've decided to remain in your hometown you will most likely encounter three housing alternatives: stay in my current home, buy another home or rent in the area. The Stay/Buy/Rent decision is driven by some financial factors that should be considered:
1. MAINTENANCE ISSUES
Every house has a "life-cycle" and it is important to know where yours stands. How old is your roof? Coming up with $10,000 to $15,000 to replace your roof can wreck the best-laid retirement plans. The same goes for furnaces, air conditioning systems and other big ticket items such as refrigerators and washers. Make a careful assessment of all the potential major expenses while you're earning a regular income. Replace worn systems and appliances while you can still afford it.
2. INSURANCE AND TAX ISSUES
Home-owners insurance is a big part of the carrying costs of a house and you need to keep an eye on premiums and coverages. Some states have rapidly escalating costs for these policies (think Florida: hurricanes). In other places the insurance companies may have requirements to upgrade electrical and plumbing systems before they'll issue or renew a policy. Rising property taxes will also eat into a fixed income over the years. Consider this: even if you have a paid-off home, you'll still have a house payment every month in the form of taxes and insurance.
3. NEIGHBORHOOD ISSUES
Over time your neighborhood may change, for better or for worse. A declining community can bring decreases in property values and introduce safety and lifestyle issues that you've never had to face. Is a new road being built nearby? How about commercial development encroaching on the fringes of your neighborhood? Stay alert as to changes that may be happening and never assume that things will always be the same.
4. HEALTH ISSUES
Do you live in a two-story house with no bedrooms downstairs? Do you really want to be climbing stairs eight times a day when you're 80? You need to make a realistic assessment about the "livability" of your current abode once you have reached a certain age. Bathroom accessibility and usability are big considerations as are small details like entrance obstacles and cabinet heights. Moving to a more compatible dwelling or seeking an assisted-living arrangement may eventually be necessary.
There are financial advantages to keeping your current residence. See a good summary in this article from The Motley Fool financial website.
Many people would like to remain in their homes because it is, after all, home. The emotional comforts, sense of well-being and security usually outweigh the financial challenges. Just be aware that the money and lifestyle dynamics of retirement are different from those you've experienced during your working years.
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Filing bankruptcy is always a hard decision to make. While it may relieve you of your debt, it can come back to haunt you in other ways. Under section 525(a) and (b) of the Bankruptcy Code, there are provisions that protect you from discrimination for filing bankruptcy. No employer, government or private, can fire you because you file bankruptcy. Your current employer cannot reduce your salary, demote you or take away responsibility because you filed. However, if there are other valid reasons for the negative actions against you, you would not have a case against your employer for illegal discrimination because of your bankruptcy.
Federal, state or local government can't discriminate against you by denying or revoking licenses, permits, charters or franchises based on your bankruptcy. They cannot terminate or deny public benefits, public housing, withhold college transcripts or deny you a contract such as a contract for a construction project. You can still apply for government-guaranteed student loans. You can still get a drivers license as long as any debt tied to a suspension of a license was discharged in the bankruptcy.
Private agencies are very different. In Myers v. Toojays Management Corp, the Eleventh Circut Court of Appeals affirmed a summary judgment in favor of private business. The court held the under section 525(b) of the code, a private employer may deny hiring an individual based on a past bankruptcy. Companies usually do a credit check as part of the background check done for employment. A past bankruptcy can be an issue. Other private entities are affected as well. Landlords can deny renting property to individuals with a bankruptcy. Credit can be denied from lending institutions and college transcripts can be withheld if it is a private college.
According to the Nolo's 3rd addition of The New Bankruptcy Will It Work For You?, "There are no reported cases from any state of a parent losing custody because he or she filed for bankruptcy." Be aware however that bankruptcy does not wipe away any child support or alimony obligations past or present.
Should you still file bankruptcy? That depends on your individual financial situation and how you see future job opportunities. Your credit will be restored with time. New job opportunities with private companies can be an issue. What would you do? Comment on my blog.