Besides saving you money on luggage, we also want to make Rent Luggage a place where you can learn a multitude of travel tips for your next adventure. Following this goal, we have worked with Jim McKinley, a former banker and now a retiree turned financial consultant, who loves to travel to help provide these top tips if you are looking for a vacation home in the near future.
Buy Smart to Enjoy Your Dream Vacation Home Throughout Retirement
There are plenty of great reasons to buy a vacation home in retirement. You may want a home that’s close to children and grandchildren, a source of rental income, or you simply dream of a place where you can get away and relax. Whatever your goals are, protect your retirement savings by doing your research to make the best financial decision, without having to compromise on the perfect place.
Consider All Financial Options
You probably already have an idea of what you can spend on your vacation home, but there are more financial considerations besides the sticker price. Explore all of your options to be sure you are making the best decision for your financial future.
- Financing options – Many retirees shy away from the idea of having a mortgage, opting instead to pay as much down on a house as possible. Depending on your cash flow, this may be a smart move, but you don’t want your down payment to be so high that you deplete your savings. Consult with a mortgage broker to explore all financing options, and you may also want to talk to a financial adviser for guidance.
- Other expenses – When you’re looking for the right vacation home, don’t forget to factor in other home-related expenses like maintenance, HOA fees and insurance. Start thinking about who will maintain the home when you aren’t there. If you plan on hiring a company to handle maintenance, factor that cost into your overall budget. Besides regular maintenance, you also need to keep your home safe and secure when you aren’t there. A property management company will typically do occasional checks, but you may need to take a few extra precautions.
When determining your budget, don’t forget to consider the cost of decorating and furnishing your home. For example, if you need to purchase couches and beds, consider multifunctional pieces like sleeper sofas or chaise sectionals to get more bang for your buck when it comes to sleeping arrangements — this will come in handy if you opt to rent out your vacation property. When you do purchase furniture, having it shipped directly to your vacation home makes things easier for you and helps save on moving expenses.
- Lower insurance costs – Getting your home properly insured is a necessary expense, but it isn’t out of your control when you take steps to keep your insurance costs down. The Balance recommends shopping around for insurance. Also, you should look into whether a company you have been with for awhile offers a longevity discount. You may want to combine homeowners and auto insurance policies and determine if you should only buy the coverage you need, forgoing any extras that don’t apply to you.
- Tax implications – Before buying your vacation home, CNBC recommends making sure you understand all tax implications. You don’t want to leave any tax deductions on the table at the end of the year. At the same time, if you rent the home part of the year, you will have to report that income for tax purposes.
Beyond the Money
Thinking through all the financial considerations is essential, but buying your vacation home is about more than just the money. Think about your retirement goals and ask yourself these questions to stay on the right track:
- How much time do you plan on spending in the home?
- Will you eventually make this your primary residence? If so, think about the home’s floor plan, overall accessibility, and how that will suit your needs as you get older. You may also be happiest (and save money) with a home that is low-maintenance.
- Does the location fit your lifestyle? Think about your current lifestyle as well as whether the location will continue to be ideal later on. Will you want to be closer to family later in retirement? Will you have access to everything you need and activities you enjoy?
Be sure to ask yourself these questions now so you’re confident in your choice being perfect now and longer term. A vacation home can be a great investment, besides being the ideal way to enjoy retirement. Just be sure to dot your I’s and cross all T’s before jumping in!
Photo credit: Pixabay
Enjoyed our vacation home travel tips? Subscribe to our monthly newsletter as a bonus. We will send you rental deals and travel tips to make your life more fun and less stressful.