5 Real Estate Expenses You Should Never Pay After You Retire

Senior Adult Couple in Front of Real Estate Sign, House

According to a recent analysis of retirement expenses on GOBankingRates, the amount of money you’ll need for retirement will vary greatly depending on what state you choose to live in. It can cost you $131,175 annually to have a comfortable retirement in Hawaii and this calculation is $62,154 in Mississippi. As you can see, there’s a huge discrepancy in potential retirement expenses based on where you decide to live. This is why we will explore the real estate expenses you should avoid in retirement as you transition to life after work.

What are five real estate expenses you shouldn’t pay in retirement?

Also see five retirement expenses you shouldn’t cut.

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High Mortgage Payments

The national median mortgage payment went up $50 from January 2024 to reach $2,184 in February 2024, according to the Mortgage Bankers Association. You should aim to pay off your mortgage before you retire so you don’t have to worry about this major expense in your golden years.

“High monthly mortgage payments can significantly strain a fixed retirement income,” said Neal Shah, founder and CEO of CareYaya. “If downsizing or relocating to a more affordable home is an option, consider it to reduce this expense.”

If you still have a mortgage when you retire, you may want to look into downsizing or moving so that you can use some of your equity to fund your desired lifestyle in retirement. You don’t want to be stuck with these high mortgage payments because that money could be used for travel or other experiences that can give you more joy as a retiree.

Expensive Property Taxes 

Property taxes depend on where you live, so you should ensure that you choose a destination for your retirement where these fees aren’t excessive. GOBankingRates recently used data from the Tax Foundation to review which states had the highest property taxes in the state. You can pay an annual average of $10,409 in property taxes in New Jersey or $5,112 if you live in New York.

“When choosing a retirement destination, factor in the property tax rates because some states offer property tax exemptions or discounts for seniors,” Shah said.

Property taxes can take up a significant amount of your budget and you don’t want to be stuck with this hefty expense as you try to enjoy your golden years.

You also want to research potential tax breaks for seniors so that you can choose a retirement destination that allows you to keep more of your money.

Costly Home Maintenance and Repairs

“Maintenance and repair costs increase as homes age,” Shah said. “Budget accordingly and consider downsizing to a newer, more manageable property to minimize these expenses.”

You’ll want to find ways to save money on home maintenance, as this can add up as you have to spend money on equipment and supplies to maintain your property.

There are two options to consider here:

• You can devote energy to lawn care now that you have free time, so you don’t have to outsource this service. 
• You can also look into moving to a senior community where the HOA covers the exterior maintenance to free up your time. 

The goal should be to find ways to eliminate expensive home maintenance from your budget so you don’t get stuck spending money on your property that could be used for enjoying your retirement in other ways.

Unnecessary Renovations

You may be tempted to spend money on home renovations since you’ll be spending more time there now that you’re no longer working. However, the rising costs of raw materials and higher interest rates may make this an expensive cost you’ll want to avoid for now.

“While some home modifications for accessibility may be essential, avoid overspending on luxury upgrades that won’t significantly improve your quality of life in retirement,” Shah said. “Focus on necessary updates that will directly benefit your safety and comfort.”

You could be better off allocating these funds towards your investment accounts or looking into downsizing your home. Those costly home renovations could hurt your retirement budget since you’re likely on a fixed income now.

Rising Utility Costs

According to Forbes, Americans spend an average of $429.33 monthly on utilities, depending on where they live and how much they consume. Energy costs can eat up a significant chunk of your retirement budget because you’ll spend more time at home now, so you’ll likely be using more electricity.

What can you do about this? Shah shared two helpful tips:

“Invest in energy-efficient appliances, windows and insulation to help keep utility bills manageable. Consider downsizing to a smaller home to reduce overall energy consumption.”

You’ll want to explore options for reducing utility costs because you don’t want this real estate expense to affect your retirement savings. You don’t want to be caught off guard by a surprisingly high utility bill since you have to make your fixed income work for you.

Keep Your Expenses Low During Retirement

“Remember, the key to a financially secure retirement is to minimize expenses and live within your means,” Shah said. “By carefully managing your real estate costs, you can ensure that your retirement savings last longer and provide you with the comfortable lifestyle you deserve.”

These are five real estate expenses that you should avoid in retirement so that you have more resources to allocate toward setting up your dream lifestyle after leaving the workforce. You don’t want to spend your golden years stressing about paying the bills instead of enjoying yourself.

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This article originally appeared on GOBankingRates.com: 5 Real Estate Expenses You Should Never Pay After You Retire