Retirement Budgeting St Cloud Housing Knowns And Unknowns

Dated: 04/10/2019

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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 St. Cloud 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 St. Cloud’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 St. Cloud 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, I’d be honored to help you sort through the St. Cloud properties that qualify. Do give me a call!

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Noel Johnson

Passion for investing in real estate brought me to create Premier Real Estate Services in 2002. Ten years of purchasing & managing several rental properties, while assisting friends & clients with bot....

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