Savvy moves for retirees ready to relocate

If you’re nearing retirement, you probably fit into one of two categories: Either you want to stay in your current home for as long as possible, or you can’t wait to relocate to a warmer climate or a place that offers an appealing lifestyle, such as a golf community or a beach colony.

If you’re eager for a change of scenery, there are several financial factors to take into account. It’s common for retirees to downsize, whether for financial reasons or just because they want to cut back on yardwork and housework.

Moving into a house that costs less than the equity in your current home is a smart way to produce retirement funds. Renting is another strategy. Here are some tips to make the most of a downsizing move:

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rently housing prices are high and rising, and inventory is at a record low point, so it’s a seller’s market. In October, the median price of an existing home was $313,000, up 16 percent from a year earlier, according to the National Association of Realtors. Sales of existing homes were up 26.6 percent from October 2019. Housing inventory fell to a record low, and 72 percent of U.S. homes were on the market for less than a month. Avoid getting into a bidding war, which can lead to paying too much for a new home.

Understand your costs. As a seller, do you need to update or repair your house before you can put it on the market? Your real estate agent will be paid a commission, usually up to 6 percent of the sales price. What about moving fees? As a buyer, you will owe closing costs — legal fees, title insurance and many more. Try to minimize these costs by negotiating your agent’s commission and asking the buyer to assume

some of the closing costs.

Consider renting. Buying a new home will come with the same costs as your current home: Taxes, insurance, utilities, maintenance and repairs, and possibly yard service. If you rent a home these items are taken care of, and you also avoid the problem of tying up your cash in home equity again. A financial advisoe can help you compare renting vs. buying, taking into account other factors such as your need for income.

Compare community costs. You may want to move to an area with a higher cost of living, for instance health care, transportation, utilities, entertainment. Or you may choose an area with a lower cost of living. Either way, you need to factor in the difference.

Sell before you buy. If you want to buy a new house, you can increase your odds of winning any bidding wars by first vacating your current abode. That’s because sellers prefer a “noncontingent offer,” meaning the sale is not dependent on you selling your own home.

Don’t forget taxes. Unless you notched a gain of more than $500,000 (married filing jointly, or $250,000 for singles) from the sale of your home, you won’t owe any capital gains tax. However, if you’re moving to another state you need to compare state taxes. Some states that boast low or no income taxes impose higher property taxes or sales taxes. Several states will in fact tax your Social Security checks.

In short, know before you go!

Eric Tashlein is a Certified Financial Planner professional and founding Principal of Connecticut Capital Management Group, LLC, 2 Schooner Lane, Suite 1-12, in Milford. He can be reached at 203-877-1520 or through www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Investment Advisor Representative, Connecticut Capital Management Group, LLC, a Registered Investment Advisor. Connecticut Capital Management Group, LLC and Connecticut Benefits Group, LLC are not affiliated