Retirement Planning: Will Owning a Home Help You Retire?
There was a time when nobody had doubts about the value of owning a home. It was considered an incredible long-term investment and ideal for retirement. Today we know that real estate isn't as safe as we once thought it was, at least as a short-term investment, and Americans, young and old, are leery of sinking their life savings into a home as an investment. Knowing this, will owning a home help you retire? That depends on a number of factors, including when you purchase the home.
If you buy the home in advance of retirement, when you have the time to build equity, then yes, the home may help you retire. If you are thinking of buying your first home in retirement, there could be problems.
Ideally, a home purchased to help you financially during retirement is one that will be paid off by the time you bring in the shingle. Unfortunately, that doesn't happen for many homeowners. Forbes.com claims that although almost half of Americans aged 50 to 70 say they plan on using their home's equity to fund their retirement, 37 percent of them are not anywhere near having their mortgages paid off.
That's OK, though, according to Sydney Lagier, former certified public accountant. "With interest rates so low right now," she says, "a mortgage can be an excellent hedge against inflation."
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