Biggest Retirement Mistakes to Avoid
Chapter 8 – Biggest Mistakes to Avoid from our Ebook – Choosing where to retire… why not San Diego?
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We fully believe you’ll love the San Diego retirement lifestyle. However, we don’t believe you should rush the decision, or move here without carefully considering your own circumstances. But you should also listen to the mistakes many other retirees have made. Real Estate professionals are the best source, because they always hear the same questions, problems, concerns. They have a lot to share on how to make the process flow smoothly.
Misunderstanding San Diego
Don’t be put off by the median home prices in San Diego… roughly $465,000 as of Nov 2015. Source: www.zillow.com/ca/home-values/
Anyone with a budget of $300,000 or less can start getting discouraged when they search real estate listings. They might see many properties out of their price range. And instead they can find newer, more spacious homes in areas such as Arizona, Nevada and Florida for under $300k.
In San Diego the majority of homes in this range are condos and manufactured homes. Some people might hesitate if they’re not comfortable with these styles.
Take a practical approach to choosing a community and home in San Diego.
It’s important to set your expectations appropriately. For those who have done their homework, and do move to San Diego, they understand exactly why the housing market is priced this way.
The San Diego lifestyle and climate are simply spectacular! No other location can match the natural beauty and provide the same chance to be active and outdoors all year round. With endless activities, arts, culture and attractions, there’s something for people of all ages, tastes and styles.
Once this is fully understood, retirees can quickly let go of the stigma of living in manufactured homes or even condos. Contrary to what you might think, these homes are quite spacious and beautiful. And with the proper research, you’ll clearly see how practical and affordable these options are for the $300k and under price range.
You might be getting more home in those other locations, but with all things considered, you’re getting a much better value in San Diego. After all, the rewards of living in San Diego will win out every time over the allure of cheaper priced homes, in seasonal locations.
Some retirees love the easy care of the small home… and never could have imagined how wonderful it would be to live in a 55+ community manufactured home. Many find it brings peace of mind financially. Especially when thinking about spending their retirement lives taking care of a big yard, big house and big heating bills! They also enjoy having less of a footprint in the environment while managing with a little less of the material things than they thought they needed.
Choosing Desert or Tropical Areas
As Realtors we hear from retirees who’ve settled in desert areas, and many have expressed a desire to sell and move to San Diego for the mild climate. Ignoring the desert heat, especially in the off-season is a huge mistake.
Desert environments have brutal summers. Except for staying indoors, you’ll find very little relief from scorching temperatures. The trend seems to be getting worse every year. Summer temps are often over 100°F, while desert winds can blow sand everywhere – into your eyes, car and home, etc.
Florida summers can have over 100% humidity, multiple hurricanes and frequent rain. Allergies are no fun either. While they might make for ideal “wintering” locations, the off seasons are quite a different story. At times, it’s just too hard to be outside during the daytime.
Once the nice winter conditions fade, how do you survive the summers?
If you like to be outdoors, it can be particularly challenging, and you need a lot of sunblock too. Before you decide on a desert home, don’t end up just trading-off between brutal winters of your current home and unbearable summers in retirement.
San Diego is the answer. Even if you’re settling for a smaller home, with a few years on it, the real attraction is the weather and lifestyle! Especially here, with so many things to do and an outdoor lifestyle to keep you busy, you’ll likely be spending less time in your home versus areas like Florida, Arizona and Nevada.
There’s more to retirement then just sunshine. Even though the housing market is more favorably priced in Arizona, Nevada and Florida, they can’t compete with the perfect year round climate and great lifestyle of San Diego.
In addition, doctors and scientists confirm that a temperature of 72° is the optimal weather temperature for the human body. It’s the temperature where body stays perfectly regulated. It makes getting rid of excess heat easier and helps keep up a higher metabolism. It’s also the average annual temperature of San Diego!
Other Common Retirement Mistakes to Avoid
“If only I would’ve known that before…” – a phrase you don’t want to repeat. Many retirees have experienced the effects of short-sighted planning. Most recommend that you do your research and even rent first to get a firsthand feel of what life is like in your new locale. How disappointing would it be to move and discover your new environment isn’t right for you?
Not fully understanding community rules and regulations
If you hate strict rules, make sure you investigate the community regulations in advance. Depending on your personality, some 55+ retirement communities may be more laid-back or too restrictive for your liking.
Not getting enough due diligence from your real estate agent
Besides understanding community policies, some communities have important financial or legal issues that could affect you. Especially regarding the financials of the home owner’s association.
Understand the maintenance sinking funds, especially in older communities. Could the community be bought out, and ownership transferred? And what kind of obligations and assets will pass to the homeowners association? You should also know about potential foreclosures in your community.
Moving to an active adult community, and not socializing
Most communities are very social and interacting with neighbors is part of the attraction. If you’re not comfortable with this idea or lifestyle, you may wish to consider options with more privacy.
Meeting new friends and companions might greatly enhance your life. You don’t have to be best friends with your fellow residents, but they could have a big impact on how you enjoy the community.
Moving into a socially closed environment
Communities with small cliques and unwelcoming people is another potential problem. If your neighbors seem insincere, or not interested in knowing you, you could regret your decision.
Moving too far away from family and friends
If you’re new home isn’t very close, how often will they come to visit you? Or, how often are you willing to go visit them for holidays, birthdays and events? This could have you traveling back and forth several times per year. How practical would that be? However, people love to travel to sunny San Diego – perhaps your family will too.
A location with easy access to airports is important if you can’t actually live closer to your family.
Moving closer to family, children and grandchildren
This is one of the biggest reasons to move. Retirees like Sharon Roberts have commented, be careful not to rush in and find yourself in a place where you don’t like the weather, the political or social scene, or the landscape and environment. Be sure to factor in what matters most to you, and what you enjoy personally. After all retirement is a chance to reinvent yourself and explore life.
Assuming that your children would have time for you
Many retirees realize that there’s no room in their children’s lives for them. Depending on your relationship, if you’re not necessarily on the best of terms, then don’t expect all that to automatically change when you move nearby. You might not get along better with them just because you’re closer. Otherwise, you could be counted on for free babysitting or pet sitting.
Working – if a younger spouse is still in the workforce
Consider that changing jobs and locations is a whole new dilemma at this age. How likely is your spouse to find a comparable job in terms of pay and experience? Joining the job market is likely much harder for baby boomers who are starting fresh in a new area.
San Diego’s economy is doing quite well, but you’re not guaranteed to find employment in-line with your work skills and salary expectations. Until you’re established, working for part-time wages, or in a completely different field may be all you can hope for.
Retiring too soon
Realizing that you’re not ready to stop working can be emotionally difficult. The feeling of something missing is natural at first. For some retirees, it’s a challenging time of transition. Financially it’s also a potential disaster. And many retirees find themselves short on funds and realize it’s too hard to find any meaningful work.
Planning your retirement too late
A classic problem. Starting your planning too late usually leads to rushed decisions. Give yourself enough time to develop a solid plan with different fallback options. Many retirees neglect this level of detail. It leads to fear and worrying about retirement, instead of looking forward with joyful anticipation.
Thinking about where, when and why you’ll retire are important basic steps. Of course you also need to determine how to afford your retirement life. Some basic planning tips and advice will help clarify and start to alleviate your worries.
Not knowing the area well enough before deciding
Besides getting a feel for the off-season climate and neighbors, a few other factors about the local area need attention. Know your potential taxes and the cost of living, especially for items and services you’re dependent on, or that are most relevant in your life.
Understand how close you are to medical care facilities
Are there on-site options in your community, or how far do you have to travel to see your doctor?
Research doctors, especially if you have specific health issues. Make sure you find one you like in the area and verify your insurance coverage. Even if you’re healthy now (as you’re entering retirement), the picture could look much differently as you approach your 70’s and 80’s.
Maintaining two homes in retirement
Especially for snowbirds, buying a second home could be costlier than you imagine. Even if you take advantage of great home prices and low mortgage rates, costs and expenses for two homes add up quickly.
Not downsizing your home before retiring
Quickly finding an economical, better-fit home is a huge advantage in building retirement savings. A large, empty home comes with higher bills, maintenance and taxes. This usually means less savings for retirement.
In fact, many retirees still wait way too long (well after their kids finish college and move out), before transitioning into a smaller home. Don’t wait until your children are fully grown and on their own before downsizing… do it well before retiring.
Read Related Articles
- Rightsizing your life – How Making Your Home the Right Size Makes Economic Sense
- Good Rightsizing Tactics – Make Plans and Follow Through
Not investing the home equity
Downsizing your home can bring a big chunk of cash. But not everyone buys a smaller home that’s actually less expensive. This is also a concern.
But when downsizing does bring a windfall… avoid spending it quickly. A well planned investment strategy is important, and includes knowing when and how to spend it. Especially when considering taxes, your savings and other retirement funds.
Living too lavishly, not being frugal
“Keeping up with the Jones’s” might put a big dent in your retirement planning. It’s likely you should curb your lifestyle at some point to build up retirement funds. Even if you’re already wealthy, it’s still a solid way to prepare for the unexpected.
Stick to a budget. A modest lifestyle of living below your income (with smaller houses, driving used and ordinary cars, booking with cheap hotels and airlines) doesn’t mean living a life of boredom and starvation.
Use good judgment to spend only what is truly necessary. Have a well-defined savings plan, investing in IRA and 401(k) plans. This will help prepare for a satisfying retirement.
Carrying a Mortgage into Retirement
Will it be feasible to pay a mortgage into your 70’s, 80’s and 90’s? Will Social Security, IRA distributions and other savings last you long enough with a mortgage still in place? What are your other mortgage options that you can afford? Is a reverse mortgage a good option for you?