Cashing in the Deed and Moving to Retire

A deed is a key asset as you approach retirement. If you opt to sell your home, you’ll have the equity at your fingertips.

You might opt to downsize, or you might decide to rent at a retirement community, or move downtown for the culture and convenience.

Here are a few points to consider—and an attractive destination, just in case you’re looking!

Moving Up by Sizing Down: Now Could Be the Time.

If you’ve built up some serious equity, downsizing could feel like a windfall. And you can pick your next home with cash—or at least without depending on a very hefty mortgage.

Now could be the time to sell your home, and use cash to buy that smaller home. You’ll likely be paying less in overall housing costs when living in a more compact home. That allows you to invest any monthly savings your move achieves.

For some deed holders, this switcheroo is the key to retiring in style. Many seniors pick places in walkable towns. This makes it easier to get to medical appointments, find services, and so on.

Downsizing frees up cash while keeping a homeowner’s lifestyle. A deed represents dependable shelter and autonomy. And seniors have plenty of ways to plan for accessibility when shopping for a smaller home.

Renting by Choice? Totally Valid.

Renting can be a good decision in the run-up to retirement. After all, if you sell your home now, you know what price it can fetch. No one knows with certainty what the real estate market will look like later on.

Yes, rent will trend upward. But with a good stash of equity built up, you’ll have a basis for a strong cash flow.

So, choose your location and examine the pricing. You can do an online search for “retirement projection tools” and find a calculator that shows you how the numbers will work. Be sure to factor in the expenses of your home sale itself.

Renting can work particularly well for those who travel frequently. And it needn’t be forever. You can rent for a few years, put your home sale proceeds in an investment account, then buy a smaller home. Some retirees decide that owning feels safer—no concerns about a landlord selling or taking the home back to renovate.

Capital gains? Here’s how to plan for taxes—even if you’re exempt.  

Could Anything Be Finer Than a Move to Carolina?

To get the most out of retirement, where will you live? According to a recent interview at TheStreet, North Carolina is worth a look.

Some states have high property taxes that just won’t quit rising. By comparison, North Carolina offers an attractive cost of living. Moreover, there is property tax relief for seniors with modest incomes. Disabled vets also get meaningful breaks.

In North Carolina:

• The state charges a flat rate on taxable income. Distributions from retirement accounts? Pensions? Interest, dividends, capital gains? All get taxed at the flat income tax rate.

• Under the Bailey Act, which North Carolina recognizes, some pensions are totally exempt from state income tax.

• The flat income tax rate is just 3.99%. Why so low? North Carolina has a healthy economy and new people are moving in. That allows the state to spread the tax burden over a larger tax base.

• Very helpfully, this state has no tax on Social Security. Also in North Carolina, Medicare premiums (including supplemental policies) can be included in federal itemized deductions.

• The state generally does not tax services. Prepared food and many medical supplies are exempt.

North Carolina may offer the best of many worlds for a retiree. There’s coastal living to the east. To the west, there are homes near the mountains and the famous Appalachian Trail.

One more (important!) thing before we let you go… Do bring your plan to a financial professional to go over. Get personalized guidance to preserve and maximize the financial benefits of your decision.