Can I Afford to Stay in My House on a Fixed Retirement Income?
It may be possible, depending on the legal, financial, and property details involved. Determining affordability in retirement requires a more conservative and detailed calculation than during working years, since income becomes largely fixed rather than growing over time.
Calculating total housing costs, not just the mortgage
Beyond any remaining mortgage payment, property taxes, homeowners insurance, and ongoing maintenance and repair costs, often estimated at 1-2% of the home's value annually, all need to be included in a realistic retirement housing budget.
Comparing costs against reliable income sources
Total housing costs should be weighed against genuinely reliable income sources, Social Security, pension income, and conservative, sustainable withdrawal amounts from retirement accounts, rather than optimistic assumptions about investment returns continuing at pre-retirement levels.
Building in a margin for unexpected costs
Since retirement income doesn't typically grow to absorb unexpected expenses the way a salary might through raises, building a larger margin between expected income and expected costs is particularly important for housing decisions made at or near retirement.
Planning for property tax increases over time
Even with a paid-off mortgage, property taxes and insurance premiums tend to rise over time, sometimes outpacing the cost-of-living adjustments applied to Social Security or a fixed pension, making it worth stress-testing housing affordability against a moderately higher future tax and insurance bill rather than assuming today's costs will hold steady throughout retirement.