If your retirement planning includes transitioning to a new home, one of the first orders of business will be to settle on a reasonable budget for housing in retirement. The most reliable yardstick is thought to be a percentage of your income—but that’s not necessarily easy to pin down for retirees. As mystery novel detectives might say, a good start is sorting out what you know—and what you don’t know.
WHAT YOU KNOW: housing tops the spending category for homeowners—retirement age or any other. Even if a mortgage has been paid off, monthly expenditures include Costa Mesa property taxes, repairs, maintenance, utilities, and supplies. According to the latest Bureau of Labor Statistics data, across all states and all income groups, the monthly expenditures average $1,657. That amounts to about 27% of gross incomes—a percentage that falls in line with the often-cited expert advice that sets 30% as the prudent maximum.
WHAT YOU DON’T KNOW: you may not be certain of your income in retirement. This is increasingly the case as more and more retirement age seniors pursue at least some kind of business activity. That means the income side of the ledger may have to be an estimate. Too, if a variable mortgage is part of the picture, it’s uncertain exactly what future interest rate adjustments might be—although there will almost always be a cap on the maximum. Another uncertainty is what Costa Mesa’s future property tax rates will be (but we do have a say on that one, come election day).
WHAT YOU DON’T KNOW THAT YOU DON’T KNOW: Whether the averages (especially since the universal benchmarks are for all states and all income groups) are satisfactory guides for Costa Mesa retirees.
Writer D. Yochim looked at typical retirees’ spending patterns and found that for households headed by persons 65 or older, expenses “were lower than the Bureau” averages indicate. They differ from the working population in meaningful ways—for instance, transportation expenses ran one-third less. MarketWatch agrees: it pegs retiree food costs at 20% below working-age households. These findings point to a different “prudent” maximum—which is why some argue that for retirees, the budget percentage can be more like 35%.
Whatever budget estimate you finally settle on, we would be honored to help you sort through the Costa Mesa properties that qualify. Do give us a call!
We are built on a philosophy of Heritage & Hustle L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976. It’s L3 mission to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, L3 has grown to a full staff of 20 serving over 300 clients a year. L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact L3 today at 714-444-4663 or email us at firstname.lastname@example.org