My husband and I have a net worth. We are both in our 70s. He is in his late 70s and I am in my early 70s. We have $5.7 million in stocks and cash. We have a very nice home, but we have seen a home we would prefer to live in.
The community has its own gym, tennis courts, restaurants and bars, plus it is a brand-new home, while we currently live in a 30-year-old home. The new home is a little larger, but not by much. With the higher price, closing costs, etc., it would mean taking $600,000 out of our cash.
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We would then have $1.6 million of our net worth in real estate, instead of the current $1 million. We have traveled a lot in the past and have fulfilled our bucket list for that. We are wondering: Are we out of our minds to consider this?
Thank you for considering this question.
Septuagenerian Couple
Go for it.
You should be getting excited about life in your 70s. Lose your minds over your dream home? Dream big. You can afford it with $5.7 in stocks and cash and $1 million in real estate. We have been programmed to save and act cautiously in order to have a happy, healthy and comfortable retirement. And that’s the right approach. But it’s easy to forget that there should come a time when we can exhale and enjoy the life that we have worked so hard for.
Ideally, we should be doing that today. We spend our working life paying taxes in the hope that we have a decent Social Security benefit when we reach full retirement age and, if we are fortunate enough, contributing to an IRA or 401(k) so we are not solely reliant on the aforementioned Social Security. (For what it’s worth, the average monthly Social Security check in January was $1,976, according to the Social Security Administration.)
When you’re in your 70s, advisers will tell you that your asset allocation should be on the conservative side (70% in bonds and other safe havens and 30% in stocks), but that’s highly individual. It depends on your risk tolerance, your monthly retirement income, your level of stability — like owning your own home — and the size of your nest egg. The average retirement savings for people ages 65 to 74 is roughly $609,200, for those 75 and older, it’s $462,400. The median would be a lot lower.
As Katherine Tierney, senior retirement strategist at Edward Jones, points out: “Average savings benchmarks can show how you compare with others in your age bracket, but not how prepared you are to meet your individual needs. Determining that will require different tools and benchmarks. Your financial security after retirement will be unique to you.” Still, you and your husband have exceeded most Americans’ expectations for retirement.
If you are in good health and will use the tennis courts and gym, and you can afford the homeowners association fees and property taxes, this community sounds like a good fit for you. It also sounds like you are an extroverted couple open to adventure, so this lifestyle may appeal to you. If you wanted to put the brakes on your impulsivity for a moment, you could first rent out a house or condo in the development to see how you like it. If you love it, you will feel more comfortable making the leap.
There are some additional factors to consider before jumping in: Once you sell your home and buy a new one, you don’t want to have to go through the whole process and pay all the closing costs again if you later change your mind. There are other practical issues you may want to think about, including proximity to friends, to children and grandchildren if you have them, and to doctors and medical services you might currently or someday require. Climate and culture are also important, especially if you are betting on making new friends in this new neighborhood.
A financial planner will run the figures for you, but from what you have told me, your overall financial picture looks rosy and relatively stable. There are so many moving parts to every retiree’s financial situation: personal and mortgage debt, long-term-care insurance, emergency funds, health prospects, longevity outlook, lifestyle and, that often unattainable goal — our dreams. On the face of it, you have enough money to make this dream a reality.
Just be 100% sure it’s what you want before you make your move.
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