Mortgages at 6.55% and Property Taxes Up 3%: The Real Cost of Staying in Your Home After 65
Remaining in your home when you retire offers plenty of perks: You can avoid moving costs, stay close to the community you've built and even tap into your home equity. But staying put can also be expensive.
Current mortgage rates remain elevated, with Freddie Mac's average rate for a 30-year, fixed-rate loan at 6.55% as of July 16. Meanwhile, real estate data firm ATTOM's annual property tax analysis shows that the average homeowner paid $4,427 in property taxes last year, up 3% from 2024. If you're planning to stay in your current home after age 65, here's what to consider.
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What ‘staying put’ really costs after 65
People often think that a paid-off home is a cheap home, but there’s still a lot you have to pay for to maintain a home even after you’ve paid off your mortgage. Not only do those extra expenses add up, but property taxes and costs associated with homeowners insurance can increase over time.
Costs related to maintenance, such as lawn care and snow removal, can also get more expensive due to inflation. Don’t forget about homeowners association (HOA) fees, if you have them.
Retirees also need to factor in costs that could pop up in the future. For instance, you may need to make safety and accessibility-related upgrades to your home and hire help for chores if physical limitations set in. Separate costs, like those related to health care, could also take a bite out of your savings during this time. Even people who can keep up with monthly costs with their Social Security benefits may be financially vulnerable to significant one-off expenses. Mobility is another factor, as some people need to be in communities that make health services more accessible. If you stay put, consider how you will get to health care centers (and how much getting there will cost).
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When downsizing actually makes financial sense
Downsizing can help anyone save money, but it can be especially helpful financially for retirees who are living off a fixed income. If you worry about outliving your investment portfolio and struggling to afford groceries in the near future, downsizing may make sense.
However, the replacement home also has to make financial sense. Going from one expensive home to another high-cost property won’t help, but downsizing to a home that could lower your monthly housing costs by $1,000 or more could make a big difference. Don’t forget to factor in other changing costs — like taxes and insurance premiums, especially if you’re moving states — when finding a new home.