Is owning a home in retirement a financial mistake?

The Annuity Man

This is an interesting article from one of my favorite retirement pundits out there, Jane Wollman Rusoff.  Her piece at ThinkAdvisor knocks the scab off the home ownership wound...and the "American Dream" that has been pounded into our heads by a financially uneducated mass media complex.

Growing up in America, the typical dream scenario pitched from when you were young is to get an education, work hard, get married, have kids, and own a home.  To most Americans, their home is their biggest investment...and headache.  I think Jane is correct to point out that people need to reevaluate home ownership in retirement.  In my opinion, they should reevaluate home ownership in general.  Numerous studies have shown that owning a home is not a good investment.  There are exceptions to that rule, but overall the ROI (return on investment) with owning a home is not that good.

One of the paragraphs from the article sums it up pretty well, "Financial planners mislead near-retirees by classifying their house as an asset, she contends.  In retirement, though, a house requires increased expenditures since aging owners must hire folks for maintenance work they’re no longer able to perform."  Bingo.  And that's assuming the house has somewhat increased in value.

For many people, reverse mortgaging their home to create an income stream can make sense if they have no other income stream source than Social Security.  For people in their retirement years, many find themselves in too big of a home after the kids leave.  For others, property taxes can eat up a lot of the retirement income when prevents them living a better lifestyle in their golden years. 

Read the article and the Q&A with Jane.  I believe she is right on this one.

Stan The Annuity Man