What does this even mean?

amother

Wed, Feb 28 2024, 5:18 pm

I asked someone about her retirement plans and she said, my house is my retirement plan.
What does this even mean?
I have a house, how does that help me?
Freaking out because we are 40 years old and our retirement savings are pitiful.

amother

Pistachio

Wed, Feb 28 2024, 5:19 pm

amother OP wrote:

Downsizing maybe?

amother

Grape

Wed, Feb 28 2024, 5:19 pm

Why didn't you ask what she means?

Owning property is huge. You can either take a home equity line of credit or sell it and make a profit.

amother

DarkOrange

Wed, Feb 28 2024, 5:21 pm

My mother says this also and the thinking is like this. They own a house (mortgage paid off years ago) in an area that has gone up tremendously in price over the 30 years since they bought it. When the time comes they’ll sell it, buy a smaller house in a cheaper area, and retire off the proceeds.

amother

DarkMagenta

Wed, Feb 28 2024, 5:26 pm

amother OP wrote:

They can sell, downsize, and live off the rest of the funds.

mha3484

Wed, Feb 28 2024, 5:27 pm

Also to be honest, there is a mental and physical cost to early retirement. Studies link it to earlier death. Unless you can really fill your day with mental and social stimulation you may not be rushing to retire as fast as you think you will. My grandmothers husband just retired at 95 and he is the most mentally sharp person I know. My grandmother was very with it until her mid 80s but she really filled her days with so many classes, art lessons, bridge games she made it a job to keep her mind busy.

amother

Wed, Feb 28 2024, 5:29 pm

She responded as if it was self explanatory so I was embarrassed to ask for clarification.

Interesting about the downsizing because my parents thought of it but realized that it would only really make sense if they moved somewhere cheap. If they sold their house, they would still need to live somewhere and prices have skyrocketed.

amother

Wed, Feb 28 2024, 5:32 pm

mha3484 wrote:

Early retirement doesn't seem to be a thing in the frum world. Most people who retire, retire at the point that they have to.
Lucky for your grandparents. My parents retired because they declined mentally and physically to a point where they no longer could work.

amother

Aqua

Wed, Feb 28 2024, 5:34 pm

My house is both my retirement plan and my kids’ wedding fund. Trust me I wish I had more savings, but BH, my house has more than doubled since we purchased it 7 years ago.

amother

DarkMagenta

Wed, Feb 28 2024, 5:37 pm

amother OP wrote:

In many frum communities, one can sell their home for 1.2 million, buy a 2 bedroom for $400-$500K. They stay with a nice amount.

amother

DarkMagenta

Wed, Feb 28 2024, 5:38 pm

mha3484 wrote:

OP didn't mention that she's planning to retire early. Just that she doesn't have a plan.

amother

Wed, Feb 28 2024, 5:56 pm

My husband and I were very financially naive, I don't want to get into it here, the past is the past.
We recently started putting money in a Roth IRA and the markets been pretty lousy since. There is a tiny amount in there. I daven that we can continue to max those 2 yearly and maybe maybe get something by the time we retire.
I'm just quite freaked out. When my friend said this I wondered if this is actually a real thing, can this help us?

amother

Jade

Thu, Feb 29 2024, 10:23 am

Our house has tripled so far since we bought it 9 years ago. We expect it will continue to appreciate.
We will have to downsize by the time we reach a certain age anyway so we will have a nice nest egg when we sell it.
We also both have pensions and 401k and IRA accounts.

zaq

Thu, Feb 29 2024, 10:47 am

Retirees can also take out a reverse mortgage that transfers ownership to the bank and pays them a sum each month for life. The bank is wagering that the owners will die long before the bank shells out anywhere near the value of the house. The owners are wagering that they'll outlive the value of the house and make money off the deal.
In general I'd bet on the bank .