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Dream as if you’ll live forever, but plan like you know you won’t. This is the delicate balance that older prospective home buyers must strike. The age-old question remains: How do you make the most out of your retirement years by living where and how you want without straining your financial portfolio and taking unnecessary risks? In life’s many great transitions, perhaps none feels starker than retirement. It is quite literally a life-changing experience—personally, professionally and financially. Even for those who don’t stop working entirely in their mid-60s, many scale back their professional responsibilities or find part-time work that better fits a more leisurely or flexible lifestyle.  

One of the most important decisions you’ll make when approaching retirement is where to live—and you’re not alone. There’s been a spike in retirements among U.S. adults aged 55 or older in the past decade, according to PEW Research Center. By the year 2030, the trailing edge of the baby boomer generation will be at least 65. That means millions more older adults contemplating housing transitions in the coming years. It’s a misnomer that all retirees prefer renting over downsizing or upsizing on their current home. In fact, there’s a recent uptick in retirement age adults—both couples and individuals—who are buying property. Buying a home at this stage can offer seniors stability, happiness, tax-benefits, and greater equity.

But buying a dream home that checks all your later-in-life boxes isn’t a walk in the park. If you’re a prospective buyer looking to purchase an ideal home to live out your retirement years, there are several important considerations that will help you avoid a house on Dreary Lane. We’ve provided suggestions for the most critical aspects of the home buying process to address as you enter this new phase.

Finances

At this stage of life, your salary has likely peaked, but that doesn’t have to be cause for concern. It does mean, however, that you need to marry fantasy with financial reality when house hunting. Your income stream at or around retirement age is likely a diversified combination of Social Security, 401(k), Roth IRA, or pension accounts. Understanding exactly what you can afford, while planning for unexpected home maintenance and medical costs, is part of all good financial management. Consult a wealth management professional before you begin your search to manage expectations and be better positioned to make a comfortable offer.

The home buying process for retirees won’t look much different than it would for working adults but establishing stable income streams will help quickly qualify you for a mortgage. Downsizing can lead to increased cash flow and a cheaper mortgage, but it also means eliminating many of your personal possessions, which can be a difficult emotional experience.

Must-Haves Checklist

Once you’ve nailed down your budget, it’s time to establish the must-haves for your next home. What matters to you now? If applicable, what matters to a partner/spouse? What will matter in the coming years of your life? It’s important to ask yourself the tough questions about your changing health needs during this process. Perhaps proximity to everyday destinations like shopping, restaurants, or entertainment takes priority.

As you look to the future, perhaps you’ll need an accessible one-story home that could be renovated to adjust to your mobility needs. Maybe you need to move closer to your family and need to upsize to accommodate frequent visits from a growing gaggle of grandchildren. Or you might desire more outdoor patio space on your property to catch daily rays. Whatever your must-haves may be, they will help you define your search and identify that perfect property more quickly.

Housing Market

No dream home exists in a vacuum. You will have to adjust your dreams depending on the state of the housing market. If it is in transition, as now with higher home prices, meeting with an experienced Realtor® is the best way to navigate buying and selling a home in Minnesota. Skilled Realtors® can’t predict your future or the future of the market, but they can help evaluate your financial situation and must-haves, while bringing an understanding of what is and isn’t possible within the current housing market.

A Realtor® could help you explore the optimal mortgage situation based on your needs, whether it’s a 15- or 30-year fixed rate mortgage, or an adjusted rate mortgage (ARMs). Sometimes their guidance might mean waiting for a more buyer-friendly market or finding a seller for your current home first.

Dream then Do

Dreams and plans aren’t like water and oil—one can inform and complement the other. You must imagine what your future home will be like before you buy it, but you can’t buy it without making an action plan, especially at retirement. Living where and how you want to live is so important to your happiness as you age. You don’t want to waste any time or resources on homes that don’t fit your vision or add financial stress. The balance of dreaming and doing will lead you to your dream home after retirement.