I have to admit something; I never wanted a house. I’d lived in apartments or townhome like structures most of my life, and I was content with that type of living. True, I never had a garage, and often I’d lose my parking spot, but if anything broke all I had to do was call someone and they’d make sure it got fixed.

J Davis Studio At Work: Jake
Creative Commons License JDavisStudio via Compfight

Then I got married, and at some point my wife said “we should get a house”; I think her friends put her up to it. Thus, we went on a quest to find a house, and I put a lot of money away with the intention of being able to put down a nice downpayment and still have some money leftover to address whatever issues were coming with the house. That part worked out well; we found the house we wanted in the neighborhood we wanted and, for the most part, all’s been well, There are still some issues we have to address after all these years but we’re getting there.

I was pretty content and my only goal was to try to pay off the house by the time we reached 65. The way I saw things, it seemed like it would be the best thing financially. No mortgage, only the yearly taxes, and because we also planned on paying everything else off by then, what could be better for our finances?

Over the last couple of months I’ve had a change of heart; maybe it’s not the best financial move for us long term. What’s got me thinking that way is what’s going on with my mother’s house.

After a fall in January and her fight with dementia, we had to move my mother in with us. After 6 months we’re trying to get the house in shape to try to sell it before autumn comes. It’s in a buyers market, which means that’s in our favor.

What’s got both of us thinking is that it’s just my wife and I, if I take my mother out of the equation for now. What happens to our house if at some point neither of us can make the proper decisions for us, especially when it comes to the house?

We actually know that answer; the state would take it, sell it, and that would be that. No estate, nothing to leave anyone… all gone and absorbed by the state. Would we have gotten anything out of the deal that we could have used, had fun with, or given away to some of the people in our lives that we love? Who knows, but probably not.

Here’s a quick example. We pay off the house and live off Social Security / investments. We don’t have to pay mortgage, but we have to watch our money carefully in case something happens.

Then one day, the furnace decides it’s time to give up the ghost. Furnaces these days cost at least $10,000 to replace; who knows how much it’ll cost in another 10 years. That’s a pretty big chunk out of our savings, right? Let’s add that to the $6,000 a year in taxes we have to pay in the area where our house is located. Off the top there’s $16,000 and a hope that nothing else catastrophic happens to the house; high hopes there.

Meanwhile, there’s a local apartment complex we know about where we could rent a large 2-bedroom apartment for around $850 a month or a 3-bedroom for $1,000 a month… both of them with heat included… and no worries about ever having to pay for anything to break on us. This comes to $12,000 a year, a savings of $4,000; sounds like a pretty good deal… or does it?

Let’s look at it from the other side. Let’s say we stay in the house and nothing bad happens for 5 years. If that’s the case, then all I’ve had to spend money on is taxes, at that $6,000 I mentioned above. True, I still have to pay to keep the house warm in the winter and cool in the summer but that might cost me around $3,000 a month based on what it is now.

Compare this to renting that 3-bedroom apartment that started at $1,000; within 5 years, based on estimated increases in monthly rent we could be up to $1,250 a month, or $15,000 a year; ouch! The Wall Street Journal estimates that apartment rentals double every 25 years, which means if we lived long enough our yearly rent payments could be around $32,000… with no opportunity for our income to increase.

All things being equal, this is a tough decision either way one looks at it. The only thing that really comes into consideration is how to deal with the house if either my wife or I expire and leaves the other one here. If both of us are incapacitated and the state takes it over, is that really a concern for us anymore? We don’t have any kids, and if we get lucky funds will already have been put aside for some of the kids in our life who we’re hoping to leave a little bit of money to.

You know what? It turns out there’s no easy answer to a question like this unless you have a big pot of cash stashed away somewhere to live off. Kiplinger estimates that if you have around $1,000 in investable assets you could do pretty well renting in retirement. Our article on investing gave a scenario where if you have at least $730,000 a year in an investment account next touched until you reach age 65 that you could be generating around $65,000 a year in new income, which isn’t all that bad and would offset most of the increases that could come your way. The only problem with that is making sure you invest early enough and consistently add more money over the course of at least 45 years (most of us have already failed in doing this).

One more sources showed how tough a decision this is for the overwhelming majority of us. Investopedia stated that in retirement planning, there is no one answer. A deeper search found no one confirming the best way to go in this instance unless you’re looking to buy a new home by downsizing; I’m not even going to touch that one.

Although we’re ambivalent in making this decision, we realize a couple of things. One, we have time to work on this problem. Two, we know we need to start going through all the stuff in our basement and a lot of the things in our house and decide whether to throw it away or donate it. We’ve also learned that things we find valuable others won’t, so there’s no equity in any of the large items we thought we could make any real money from (such as beds, furniture, china cabinet, etc).

For once we don’t have any advice to give, so this is a financial piece where we’d love to entertain a discussion on the topic. It’s possible some of you may have never thought about this topic before and if that’s the case then we’re glad to bring it to your attention. If you’ve thought about it or gone through it, we’d love to hear from you.

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