Retired couple cooking in their kitchen together.

Buying A Retirement Home: A Complete Guide

Sidney Richardson6-minute read

October 13, 2022

Share:

Planning on buying a new home to spend your retirement years in? Whether you’re already retired, will be soon or you have years to go, the best time to start planning for a new house is now. There’s a lot to consider when purchasing a home that you expect to spend a big portion of your life in. Let’s break down a few key things you should be thinking about as you get started on your post-career house-hunting journey.

When Should You Buy A Retirement Home?

First of all, it’s important to note that when we say, “retirement home,” we’re talking about a house you plan to spend your retirement years in. This house may not look the same for all homeowners; the features and location of your retirement home will differ based on your unique situation and what you need from a house.

That said, when should you even buy this home? If your dream is to finish your working years by moving your life to a house on the beach in Florida, you’re probably wondering when the best time to put that plan in motion may be – especially with uncertainties in the real estate market. Let’s talk about the pros and cons of buying a new home before and after you’ve actually retired.

Buying A House Before Retirement

What if you bought your home for retirement right now? Whether you’re 30 and have a good chunk of your career left or 66 years old and preparing to leave the workforce, buying the house you plan to spend your post-work years in now can have some benefits.

First, it might be easier for you to qualify for a mortgage while you’re still employed and have a steady income to pay for costs associated with this second home. Second, if you don’t plan on living in this house full-time until you retire, you can actually use it to make some money on the side. By renting the house out or turning it temporarily into an Airbnb for all or part of the year, you can make some passive income to help cover the cost of the new mortgage.

Get approved to buy a home.

Rocket Mortgage® lets you get to house hunting sooner.

Buying A House After You Retire

On the other hand, it may make sense for you to put off buying your retirement home until you’re actually retired. Buying an additional home too early could actually postpone your retirement date because it will put additional financial stress on you that could prevent you from saving as much as you’d like.

You also have to consider that your needs will likely be different after you retire vs. before. You may not be thinking about a need for fewer stairs, proximity to health care, etc. while you’re still young and working, but it may be a big factor for you later on. If you’re not sure about the location you want to be in yet, either it’s probably a good idea to wait until your plans for the future are more set-in stone before buying a house you’ll be spending a large portion of your time in.

What To Consider When Buying A Retirement Home

Retirement is a whole new era of your life – so it can be hard to know how to plan for such a big change. Let’s talk about a few aspects of the home buying process you should keep in mind as you prepare to purchase a retirement house.

Finances

The most important thing to consider when buying a home to retire in is the impact that this house will have on your finances. If you are taking out a mortgage to pay for this home, when will you be able to pay it off by? Will you need to alter your retirement budget to accommodate for mortgage payments and other home expenses? Consider how big of a down payment you’ll need to make, too, and how much you’ll need to have set aside in savings for that as well as closing costs.

You should also think about how much home you can realistically afford. Your income will likely look a bit different after you’re done working – so keep in mind you may not have the monthly cash flow that you may have enjoyed before. Make sure your budget for housing expenses is accurate and based on your future income, not your current one. If you’re moving to a new, warmer state, you will also want to think about the impact that could have on the cost of your property taxes.

Location 

When you think of the dream house that you want to spend your life in, you might imagine a mansion on the beach – but that may not be very realistic, even if you could financially swing the purchase. If you’ve lived in a northern state your entire life, moving to a place that experiences hurricanes might be a bit of a shock that you won’t necessarily want to have to deal with.

Beyond weather, think about practical problems you could run into. As you get older, will your home be near healthcare? Do you want to be in a peaceful, quiet location or even a retirement community or would you rather be close to the amenities of a big city?

You should also consider your future home’s proximity to any family or friends that you keep in touch with. Without the social network that working provides, many homeowners find themselves feeling isolated or lonely, especially if they move out of state to retire. If you want to stay close to loved ones, that should be a factor you take into account when moving. 

House Type  

The type of home you choose is also something you should think about. Beyond just what style of home you’d like, be it Victorian or Colonial, you should think about what features will be useful to you in a retirement home. A house with a large yard, a pool or elaborate landscaping that will require a lot of manual labor may be something you want to stay away from as you get older. Too many flights of stairs may also be an issue if you struggle with mobility.

Nearby Amenities

When you’re thinking about the location you want your home to be in, you should also consider what amenities it would be useful to have nearby. Do you want to live near a park so you can enjoy daily walks? Maybe you’d like to live near the grocery store or doctors’ office, so you won’t have to drive far to get groceries to go to appointments.

Long-Term Housing Costs

Buying a home is more than just affording the down payment and closing costs. When you choose a house, be sure to consider all the potential long-term costs you will face. Home maintenance and repair costs will undoubtedly spring up now and then and you should assure you can pay those unpredictable costs on top of your taxes, monthly mortgage payment, possible private mortgage insurance, etc. You don’t want to find yourself stuck in a home you can’t afford long term, so planning what you can realistically spend on a home is important to do in advance.

Future Plans 

When you buy a house to use during your retirement, you should also consider what your future plans for the house are, even if they eventually change. If you want to live in the house for decades to come, you might buy a different home than you would if you were planning on selling it to move closer to family in 5 years. Additionally, if you plan on eventually using the house as an investment property, that will impact what kind of home you look for, too.

Mistakes To Avoid When Buying A House In Retirement

If you’re on the hunt for a retirement home now or just researching, here are a few things you want to make sure you avoid, too.

  • Purchasing a home that’s not sustainable for your budget. As we noted earlier, many homeowners make the mistake of purchasing a home they can’t afford long-term because they don’t budget for their change in income during retirement. Make sure to plan out how much house you can actually afford if your cash flow will see a change during retirement.

  • Buying a house where you can’t age in place. If you’re 40 or 50 years old, you probably aren’t even considering buying a house with easily accessible showers, no stairs, etc. If you develop mobility issues as you age, your retirement dream home with three flights of stairs might start feeling like more of a nightmare.

  • Failing to make a list of priorities. When you retire, your life changes more drastically than you might think. Failing to plan for things like being near friends or family or being in proximity to amenities and activities you enjoy could leave you feeling isolated. Before you buy, make sure to jot down everything you want out of your future house.

The Bottom Line: Are You Ready To Purchase Your Retirement Home?

Buying any new home is exciting but purchasing a home to retire in is especially so. With likely more money saved up than you had when you bought your first house, finding a place you can really call home and spend your free time is a fantastic opportunity, if you have it. There are many things you should keep in mind on your house-hunting journey, however, especially if you plan to live in this house for the foreseeable future.

Buying your retirement home and concerned about qualifying for a loan without a job? Learn how mortgage lenders look at your retirement income during the home buying process.

Get approved to see what you can afford.

Rocket Mortgage® lets you do it all online.

Sidney Richardson headshot.

Sidney Richardson

Sidney Richardson is a professional writer for Rocket Companies in Detroit, Michigan who specializes in real estate, homeownership and personal finance content. She holds a bachelor's degree in journalism with a minor in advertising from Oakland University.