If you’re a homeowner and the start of your retirement is clearly in sight, there are a few essentials you’ll want to get in order before your next chapter begins.
The biggest of which is managing your money.
For most homeowners, your property isn’t just where you live—it’s also likely your largest single financial asset and your most consistent recurring expense. Transitioning from a steady paycheck to living off savings changes the dynamic of keeping up a home.
Smart savers and planners likely have their finances in order for when they’re no longer working. (However, there are as many equally money-savvy people forced to keep working through their retirement years given the current cost of living.)
But there’s a recommended timeline when it comes to preparing your finances for retirement, and some steps are specific to homeowners.
1 year from retirement: Decide when you’ll claim Social Security
If you’re heading into retirement, you’ve likely paid close attention to the headlines on Social Security. The impending funding shortfall means that, if no action is taken, seniors will collect far less from the government than they once did.
So collecting sooner rather than later might be to your benefit.
While there is no universal “best” age to claim Social Security, you can begin collecting Social Security as soon as you turn 62. But the longer you wait, the larger your monthly checks will be. Either way, you must start collecting at age 70.
This information is particularly important to those who intend to remain homeowners after retirement.
In the past five years, the cost of homeownership has jumped 26% and, as of now, Social Security alone is enough to cover the living expenses in only 10 states, according to the Realtor.com® analysis of median Social Security benefits by state and the Elder Economic Security Standard Index.
With that said, if your projected Social Security benefit falls short of covering your baseline housing expenses, you have a year to build a backup plan—whether that means planning to tap into home equity down the road, looking into a reverse mortgage, or weighing the pros and cons of downsizing.
9 months from retirement: Review your yearly housing costs
Your mortgage is only one part of the homeownership equation.
Over time, property taxes, home insurance premiums, and maintenance costs can quietly rival a monthly mortgage payment. A smart move is to take stock and do a housing cost audit of these expenses—so as to keep you from ultimately losing your home just to make ends meet.
“Older homeowners could struggle with insurance lapses or nonrenewal (increasingly common in high-risk states such as Texas, Florida, and California), HOA fees and special assessments, and deferred maintenance that compounds into uninhabitable conditions, any of which could ultimately cost them their home,” explains Realtor.com senior economist Hannah Jones.
Let’s break it down piece by piece:
First, you should review your home insurance policy before you retire—and don’t let your homeowners insurance stay on autopilot. Compare rates across carriers, evaluate whether your coverage accounts for recent home renovations or increased rebuild costs, and consider raising your deductible if you have sufficient emergency cash.
Then, as you head into your golden years, you should check to see if you get a deduction on your property taxes as a senior. Many states and municipalities offer property tax relief for homeowners. Look into local “senior freezes” that cap your property tax rate, homestead exemptions, or tax deferral programs. Applying for these early can save thousands in fixed costs.
As for annual maintenance, take stock of your home and what hasn’t been repaired recently. How is your roof looking? Is the water heater working at optimal strength?
Whether you’re looking to sell or settling into your nest, you’ll want to make sure that your home essentials are well maintained or replaced while you have a steady stream of income to fund these repairs and replacements.
6 months from retirement: Decide on a withdrawal plan and review your budget
By six months out, you need a clear blueprint for how your investment portfolio will support your daily living setup.
A standard withdrawal rate (such as 3% to 4% annually) works as a general guideline, but your home creates unique demands.
“Retirees with a mortgage should consider a more conservative withdrawal rate, perhaps around 3%, to ensure they can cover their mortgage payments and other essential expenses without depleting their savings too quickly,” explains Jake Falcon, CEO at Falcon Wealth Advisors in Kansas City, MO.
But even if you don’t have a mortgage, this rate might be closer to what makes sense for you.
But for starters, work out which accounts you’ll pull from first. Drawing from taxable brokerage accounts first while allowing tax-deferred accounts like traditional IRAs to grow can help manage your tax bracket.
Once you have that in hand, it’s time to consider your budget. A big consideration is deciding whether it makes financial sense to pay off your remaining mortgage balance before retiring. Eliminating a mortgage payment reduces your required monthly withdrawal amount and frees up cash flow, but wiping out your liquid savings to do so can leave you cash-poor.
“Ultimately, the financial plan should allow for some cushion and change as life changes,” explains Falcon.
Finally, just because you’re retired, doesn’t mean you’re done saving. It’s recommended that you keep a separate cash reserve specifically for home repairs, independent of your general 3- to 6-month emergency fund. A sudden main line plumbing repair shouldn’t force you to sell stocks during a market downturn.
3 months from retirement: Get your estate in order
As the final countdown begins, shift your focus to planning your home’s extended future.
Your house is likely the most valuable physical item you will leave behind to your kids and family, and transferring real estate without proper planning can create lengthy, expensive legal hurdles for those you leave behind.
Of course, you can start with a basic will, but that often subjects your home to probate court, which can take months and incur significant legal fees.
Estate attorneys can help you take things a step further by setting up a revocable living trust or executing a transfer-on-death deed (if allowed in your state). These tools allow your property to transfer directly to your designated heirs without probate intervention.
Finally, while it may be a difficult conversation, talk openly with your heirs about your intentions for the property. Clarify whether they intend to keep the home, rent it out, or sell it.
