The third age of retirement: enjoying retirement.
Someday, you may have told yourself, I’ll have that little beach cottage. Or the cabin in the mountains. Wait, not a cabin – need room for the grandkids to visit. And a deck. I’m gonna grill ‘til I can’t eat any more steak. Oh, and it’ll be on the lake, so we can go water skiing, and…
Most of us have thought now and then of where we’ll live and where we’ll vacation in retirement. Without a daily commute looming over our heads, we envision having a second home for family and friends to enjoy, and where we can live our best lives.
However, buying a vacation home can have a few drawbacks that might outweigh the benefits. This doesn’t mean it’s always a bad idea, and it certainly doesn’t mean weeks at the beach or in the hills won’t be an option. But from finance to logistics, it pays to research before you leap.
Home Free? Not Necessarily
You’ve got money put away for retirement income and enough in more liquid investments that you can afford the house. So, what’s the problem? Two words: ongoing costs.
Owning a second property means paying for maintenance, insurance, taxes, utilities, and possibly HOA fees. Have you budgeted generously for these, considering that a dollar today won’t be worth quite so much in five years? Then there will be unexpected repairs or renovations, taking money and adding stress.
And remember, not every property is an appreciating asset. If your beach starts eroding away, it might lower the value of area homes – even if your home is safe. You may then be looking at higher insurance rates – if you can get insurance – and a depreciating home. If the spring feeding your mountain home dries up or tests as unclean, you have another bad situation.
Busy Families, Busy Lives
You and your spouse take the plunge and buy a family vacation home. The kids, grandkids, nephews and nieces should be up every weekend, right?
But with increasing job responsibilities and the demands of raising your grandkids, your adult children find less time to travel. If you have two or more adult children, and those kids get caught up with soccer, homework, and friends, finding time when everyone can come together at your beautiful vacation home becomes harder each year.
If you’re often there alone, how close will you be to family, friends, and routines back home? It’s one thing to have a vacation home full of laughter; but when it’s quiet and isolated day after day, it might not feel like the retirement you’d envisioned.
Home, Sweet Home
You might not really want to go around the world. In fact, most people, when faced with the reality of extensive travel, are often happier to limit it to a trip or two a year.
However, you may feel like you need to visit your vacation home as often as possible to justify your investment – and just to make sure it’s not taken over by bears. It’s possible you’ll be dreaming of the benefits of renting a vacation place, with more options for scenery and with someone else changing the sheets and paying the bills.
And, while you may be vigorous and active now, most people slow down a bit – or a lot – as they age. The best scenery is usually far from medical centers, grocery stores, plumbers, and electricians. Have you considered how much driving and inconvenience you may be facing if you need regular medical care, or just don’t like driving long distances to get a loaf of bread?
Whose House Is It Anyway?
It seems inevitable that with any property, there’s the potential for conflicts or disputes over that property – even in the most cooperative families.
If one party is interested in using your vacation home for a week, someone else probably will want to be there at the same time, especially during vacation season. If something gets broken or needs work, responsibility will need to be determined. And that’s before the matter of inheriting your vacation home. The task of estate planning and dividing your assets among your heirs is seldom easy, especially if more than one family member has strong sentimental ties to the family vacation home.
An Investment in Your Happiness
Buying a vacation home in retirement can bring you and your family wonderful memories that last for generations – a legacy property that will be part of family folklore. But it can also potentially be expensive, limiting, stressful, risky, and conflict-inducing.
Weigh the pros and cons of your financial situation, your travel preferences, your personal goals, and your family dynamics before making a move. Consider the old adage about making financial decisions in retirement: “Rent the best and invest the rest.”
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