8 Ways to Lower Your Housing Costs in Retirement

Editor’s Note: This story originally appeared on Boldin.

It’s not unusual for people to look for ways to reduce housing costs, and it’s especially true for older adults who may be looking for ways to retire early or live on a fixed income.

From the traditional method of downsizing to the exciting option of retiring abroad, there are many ways to reduce housing costs in retirement.

Learn about ways to reduce your housing costs.

1. Plan for Multiple Phases of Retirement

You will probably live longer in retirement. Also, a home that is right for you in your 50s or 60s may not be right for you in your 70s or 80s, let alone in your 90s.

You can do a better job of forecasting and possibly lower your housing costs by planning ahead. You may want to stay in your family home now, but downsize when you reach a certain milestone.

Or, conversely, maybe you want to sell your current home – cash in on your home’s equity now – and live the hard life abroad for a few years before moving back to a lower level later on.

Because housing is such a large retirement expense, planning for these types of changes can have a significant impact on your overall retirement wealth and security.

2. Home Sharing

If you’re single – or even if you’re single – sharing a house is one way to reduce housing costs by separating yourself from others.

For older people with large homes that are rarely used, it can make sense to have someone else move in, whether it’s someone their own age or a college student attending a nearby university.

The National Shared Housing Resource Center provides more information.

3. Reduce

Downsizing is another option to consider if you don’t like the idea of ​​sharing your home but realize you don’t really need all those extra bedrooms.

By selling your current home and buying a smaller one, you can end up with no mortgage or extra money left over after buying your new home.

Additional benefits of downsizing can include lower property taxes and fewer home maintenance requirements.

Do you really want to downsize? Explore small retirement homes.

4. Get a Reverse Mortgage

If you’re still making monthly payments on your “primary” mortgage, here’s a way to lower your housing costs: Get a reverse mortgage.

The federally insured Home Equity Conversion Mortgage (HECM) program allows homeowners age 62 and older to borrow against the equity they have built up in their homes.

Borrowers can use their money to pay off the balance of their existing loan, which is also one of the loan requirements.

5. Go to a Retirement Friendly Place

Many times, families move to areas with higher property taxes to ensure that their children can get the best education possible. If your children are grown and you no longer use the public school system, it may make sense to move to another state with lower property taxes.

Some states are known for being retirement friendly, with low or no income taxes. Some have a low cost of living that can benefit people living on a fixed income.

Here are the most tax-friendly states for retirement.

6. Sell Your House and Move or Live Abroad

Another option is to retire abroad, as other countries may offer lower costs of living and milder climates that are often preferred by retirees.

Panama, Mexico, Costa Rica, and Colombia are the top countries for American retirees, mainly because of their low monthly living costs – thanks to affordable housing and inexpensive food as well as a warm climate and cultural attractions.

Portugal came in at No. 5 because of its high-quality public health system and old European beauty.

Asia is another popular destination, with Malaysia and Vietnam being the top choices in that region.

7. Look for the Best Home Loan Terms

If you bought your home a few years ago, you may have a lower mortgage rate than you could currently get.

However, it would be a good idea to always look for the best loan terms.

Weigh the pros and cons of accelerating your mortgage payments to pay off debt faster. Also understand that there are pros and cons to keeping a loan in retirement.

8. Consider Your Potential Long-Term Care Need

No one wants to think that they will need long-term care in the future, but not planning can be detrimental to your finances.

Long-term care is not covered by Medicare. It’s covered by Medicaid, but you have to be high-income to qualify.

And, while you don’t want to need it, chances are you will. About 70% of people who reach the age of 65 will need some form of long-term care in their lifetime, according to the US Department of Health and Human Services.

Having a plan is important both financially, emotionally, and physically.