Retirement Planning Traps – Purchasing an Overly Expensive Home

 

Retirement Planning
Image: investopedia.com

Edward (Ed) Marsi is a respected Manchester, New Hampshire-based financial consultant. As a senior financial consultant at TD Ameritrade, Edward Marsi works with clients to envision pathways to comfortable retirements that maintain a steady income flow.

One essential aspect of retirement planning centers on making real estate choices that don’t wind up owning you and your family. Unfortunately, many people who move upward into the residences of their dreams end up “house poor,” with meager savings and little spending money after accounting for the mortgage and upkeep of the home.

In addition to the monthly payments and taxes associated with home ownership, expensive houses come with a host of other embedded expenses, from landscaping to furniture, as well as utilities that are typically on the high side. They also provide loan leverage that can be tempting to utilize, but which may lead to higher levels of overall debt.

The bottom line is that entering retirement with a modest house and a mortgage that is winding down may make more sense than taking on an impressive residence that costs more than you can reasonably afford.

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