One Retirement Misconception: Housing Costs.

Hearts and Wallets, a study group, interviewed 1,994 late career workers (aged 50-60 year olds) on what they expected to pay in retirement for housing and medical care.  There were pretty striking differences between the predictions and the reality, suggesting that pre-retirees in their 50s and 60s get more serious projecting their expenses in retirement.
We should be a little less worried about [what we’ll spend on health care] and focus a little more on housing,” said Hearts & Wallets founder and CEO Laura Varas. “The big misunderstanding was in housing.” Nearly half of the late career respondents (46%) said they anticipated spending less on housing in retirement. This is simply not true. (Click here for full article)

seniors in front of their home.jpg
Two seniors (not us) standing in front of their home

Why are the housing projections so off for retirees? The main reason is most retirees housing preferences have changed. Many move to a new area, one that costs as much or more than where they’re now living. This is what happened to my husband and myself when we moved to a condo in Sarasota, Florida (we paid $163,000 cash for the condo). What started off as $7,500 in housing costs (HOA fees, Security Fees, Mandatory Pool Membership fees, Taxes, Insurance and CDD Fees) got raised to $10,000 in only a year and a half. When you’re retired to a fixed income as DH and I were, I realized instantly that retiring to this condo was unsustainable (plus we had horrific neighbors!). Once we added in electricity, internet access and some other minor expenses, I realized our monthly costs were going to be sky high ($1,034). We immediately sold the condo (for a small profit) and thankfully we were able to come back to our marital abode, our current home in the New York Hudson Valley area.

Our housing costs, in our current paid-for home, only come to $809 a month, with mild annual increases projected. Our monthly housing costs to remain in place are: $420 taxes, $96 electricity, $50 home owner’s insurance, $155 propane, $28 for sanitation and $50 in repair and maintenance parts, as we provide all the labor. The total comes to only $809 a month. Where can we go for only $809 monthly living expenses? The cheapest rent for a one bedroom apartment in our area is $1,500 a month. That does not take in the monthly costs for water, sewer, sanitation, heat, electricity, insurance, internet etc.

Other factors that neither my husband nor myself were aware of when we contemplated re-locating to Florida was car insurance (super expensive), medical insurance (super, super expensive) and just for the daily, simple day-to-day living expenses: social expenses such as attending parties, concerts, lunch out with the ladies, book clubs came with sky-high price tags. You can’t help but socialize in Florida. It’s expected of you. I was appalled when fellow retirees would invite hubby and I over to a dinner party and expected us to pay $20 a person! Or bring enough flan to feed 20 people. Yes! These were actual requests! You can decline these invitations but you will quickly be labeled an outcast and be invited to NOTHING in the future. Who wants to retire alone and lonely?

Where we live here in upstate New York, it’s a very rural area. Most of our neighbors live on 10 to 20 acres. It’s OK to decline invitations and seek solace on your acreage. The town offers oodles of free events to keep you busy and engaged with as many neighbors as you like. No strings attached. Another great point to remain living in NY, for us, is the low cost health care hubby gets ($20 a month). We also just signed up for low-cost dental insurance ($22 a month). The Senior Citizen and low-income reductions available to us on our property taxes make living here affordable. That’s what the local government wants. They want people like us to remain living in New York and will bend over backwards to keep us here. No taxes are due on our social security.  Other senior benefits are offered to us also, such as: free picnics, free social events as well as free daily meals if and when we so choose to accept these perks. There are NO Senior Discounts in Florida. Why? Because almost everyone in Florida is a senior. LOL! Tons of senior discounts readily available to us here in New York! Our summer pool membership is only $50 for the season!

Who knew?

Before you make a decision on whether or not to relocate in retirement, you have to run all of the numbers. Financial experts tell you to rent first before you buy. Wrong. We rented every winter in Sarasota for over 8 years before we bought. It wasn’t until we became actual homeowners did we truly understand what the heck was going on in this new location. Renters don’t know anything about property taxes, car insurance or the sales taxes due on most big ticket items. The super high prices for home repairs and upkeep. The greedy little HOA board members who somehow turn into monsters the day they are sworn into office.

Again, who knew?

16 comments

  1. Good information. I am hoping to stay put where we are living – this house – until we need to go into some kind of retirement or assisted living apartment. We will have the house paid for, hopefully, by the time PC retires. Would be nice to get it paid for a little sooner. We’ll see.

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    • Leslie, our plans also. We would like to stay here till we go to an assisted living environment. With all the new technological innovations for seniors, it just may be the smartest thing. I’m wishing and a hoping for a really cute robotic butler. Yes please! LOL.
      Good luck to you all. Living in a paid-off home is awesome!

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  2. Florida is ridiculously expensive- I know because I live in this crazy state. Even though we don’t have state income tax, the cost of living is very high. Insurance of any type is very expensive. The State has a 40-year recertification for buildings (like condos) that turn 40 years old. The condo associations that are prepared for this get hit with steep assessments in order to rectify the deficiencies. I am happy to rent in this crazy place.

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    • In a way, I’m glad you agree. But what is your rent? For how many rooms? That’s the question. I didn’t know about that 40 year re-certification for condos. UGH!

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  3. My cheap lil house is paid for. My taxes are under $500 a year, but we have VERY high electric rates in this state. My water bill (which includes garbage is really high, at $65 a month….and I have no washer nor dryer and it is just me! We are paying for the newly redone sewer lines in this small town. Currently, our state does not tax social security, nor state retirement, but who knows in the future with the greedy people in a local legislature! It is all about making the rich folks richer. I don’t really like the little town where I live, but I do like my house. If I relocated near my kids, my housing price would go up 4 times as much, at a minimum. So, I sit still and just keep on working. I am afraid of unexpected expenses like what you just posted…yikes! Your HOA sounds like it was awful, and I never heard of inviting someone to a party and then asking them to donate….wow! I know I couldn’t make it financially in that part of Florida, with all those hidden costs. I agree with you, renting never lets you know all the hidden expenses that a home owner can incur.

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    • HI Cindy. Every single retiree I met in Florida, whether they were an attorney, pharmacist, nurse etc ALL had side hustling “jobs”. They sold cruises to all their friends (secretly collecting $50 per person they signed) gave lectures, sold hobbies such as jewelry making, photos, paintings etc. etc. etc.)
      Until I bought a home and moved there, I had no idea what was going on.
      Thanks for your comment.

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  4. Good article! You got me using paper and pencil to figure our monthly homeowner costs. They total $855. We live in N. Illinois on two nice size lots along a river. Our house is just under 1400 square feet with three bedrooms, 2 and 1/2 baths, a deck, a screen porch, an attached two car garage, and two detached utility sheds. There is no basement, just a crawl space with two sump pumps and the furnace and air cleaner. We have a cavitette septic system and our own well. Monthly costs are the following. Taxes, which include the use of our local library, run $460. Electric is $71. Homeowner’s insurance is $56. Natural gas for heating, the water heater, and the dryer is $79. Weekly garbage pick, plus yard waste pickup, is $27. For home repair I am averaging at $100. Also, we have the cavitette maintained and pumped at a monthly cost of $24 and AC/heating inspection and filter change for a monthly cost of $6. It looks like we have a good deal as well!

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    • Congrats Sue! Your home sounds lovely. It’ll suit you for many years to come. Your expenses are super low! Knowing your home expenses is a must, especially in retirement. Thanks for sharing.

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      • I know. I know. It’s heaven on earth here and we are truly blessed. Everytime I read an article stating New York is the worst state to retire in, I chuckle. Yes, New York City is the worst place to retire. But upstate New York is a dream. If you have guaranteed steady income, you can buy a home for like $170,000 upstate and live a very good life. Lots to see and do.
        Who knew?

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  5. Hi Cindi, I too find owning my home has my housing expenses around $800 dollars a month and that moving closer to my kids creates a doubling of this. Having an older home dramatically increases my maintenance cost now especially being a widow I can’t be as DIY as I was with my DH. Today I am having my driveway sealed $200 labor charge besides The $150 in materials . There is no way I could lift those heavy sealant buckets! The painters just finished eight days of doing the exterior of my home. The exterminator was out twice to get rid of wasps and bees nest before they started. I have my lawn cut and hired a teenager to keep up with the weeds and spread lime and fertilizer.
    Thank goodness I have a bucket set aside for maintenance that I tap for these expenses. I have five major projects yet to do. Then hopefully it will be a few years till another one. Sincerely, Lara

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    • Lara, I so admire you. I really do. I think you are simply amazing!!!!
      We need to do something with our driveway. Now that Roundout has been banned, we tried using vinegar to get rid of the weeds popping up through the gravel. It worked for about a week. All the weeds and more, are back! We need to blacktop our 250 foot driveway! Gulp! Maybe next year.
      Thanks again, for your comment.

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      • I was behind a guy buying a gallon of Roundup in our local Ace on Monday, Has NY State banned it? Scott’ makes a spray weed kill product too. Look on Rodale organic site for maybe another solution. Sincerely Lara

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      • My husband refuses to buy Roundup. It really does cause cancer and we are astounded that the product is still for sale anywhere! Everybody was touting this vinegar stuff, which we bought, sprayed and it worked for a week. All the weeds, plus more came back. Hubby is investigating the subject again. This season is over so we’ll see what we are going to do next spring. Our driveway looks awful right now. You can’t tell the lawn from the driveway because its so overgrown. Le sigh!

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