Money Management

The median retirement savings for homeowners age 60 and above is $223,000. Here’s why selling your house and moving could vastly improve that number. 

While younger Americans tend to move more often, it’s those of retirement age that are experiencing significant financial gains from changing addresses.

A recent study from Vanguard showed that about 60% of homeowners aged 60 and above who moved to a cheaper housing market in 2019 (the latest available data) extracted about $100,000 in home equity.

And some are unlocking a whole lot more. Here’s how they’re doing it.

Tapping into homeownership wealth

Vanguard combed through housing market and retirement data and found that the median homeowner aged 60 or older who sold their home and moved to a cheaper part of the country — lowering their mortgage responsibility — provided them with nearly $100,000 in home equity.

Not only is that a significant financial gain in and of itself, but it’s even more meaningful when considering that the average homeowner in that age group has $223,000 of savings in retirement accounts. This means that for some retirees, selling their homes and moving to a less expensive area puts them in a significantly better financial position in their retirement.

And even more gains were made for those at the top of the financial hill. People in the 60-or-older age group with a net worth of at least $2.2 million — the top 10th percentile — accessed $347,000 in home equity when they opted for cheaper mortgage payments elsewhere in the country.

Buy, hold, then sell

The Vanguard report showed that 80% of Americans aged 60 and over are homeowners and that housing wealth accounts for about half of the group’s median net worth. This means that owning real estate has been essential to this group’s financial well-being.

The researchers noted that based on the current number of homeowners in this age group and the percentage of those who make non-local housing moves, about 25% of all those aged 60 or older could use a retire-and-relocate strategy over a 10-year period to unlock significant home equity.

Deciding when to sell is a personal decision, based on more factors than just financial ones. But the benefits are clear for those who relocate to less expensive homes.

Find a cheaper place to live

Of course, buying a house and holding onto it for many years is one of the key ingredients for this retirement strategy. And while housing costs have increased and interest rates are currently elevated, there are always pros and cons to buying a home.

Shopping around for the best mortgage lender can help you track down the best interest rates, and taking steps like improving your credit score and building up your savings account balance will put you in a better position to make that purchase.

According to Vanguard, the other part of this strategy involves finding a cheaper place to live, likely in the South or Midwest. Unsurprisingly, those who opted to move to a more expensive area of the country didn’t improve their financial situation.

So if you’re looking to easily improve your personal finances in retirement, the data clearly points to the benefits of moving to a cheaper housing market. Just maybe don’t tell your retired friends where you’re considering relocating. After all, you don’t want to start a real estate gold rush before you snag a good deal.

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Divorces are fairly common. Read on to see how to manage a joint bank account if you’re going through one. 

In 2021 alone, almost 690,000 U.S. marriages ended in divorce, says Forbes. If you and your spouse are in the process of splitting up, there’s apt to be a host of financial issues to work through. What will you do about your home and mortgage? Who’s responsible for paying off the credit cards? And what if you have a joint bank account?

You may be tempted to take a massive withdrawal from your joint bank account if you and your spouse are parting ways. After all, you contributed to that account, so you have rights to that money. But so does your spouse.

Withdrawing more than your fair share from your joint bank account could get you into trouble if you’re going through a divorce. So you’re better off dividing up that money in an equitable fashion.

You both have a right to that cash

When you’re married, you can take large withdrawals from a joint checking account without raising red flags. Granted, your spouse may not be too happy about it if you remove $5,000 without consulting them first, but it’s technically your right to do that.

When you’re in the process of going through a divorce, things work a little differently, though. Funds held in a joint bank account are generally considered marital property, and, as such, they must be divided according to state laws. So if you go and empty out 80% of the cash in your joint account and attempt to keep it for yourself, chances are, a judge is going to rule that you have to pay some of that money back to your soon-to-be ex-spouse.

In many cases, a judge overseeing divorce proceedings will award each member of a splitting couple 50% of what’s in a joint bank account. There can be exceptions, but your best bet is to leave that money alone until you receive instructions on what to do with it.

When you’re able to resolve things fairly

If you and your soon-to-be ex-spouse are on good terms, you may just agree to close your joint bank account together and divide the money equally without having to get a judge or lawyer involved. Just as you have the right to open a joint bank account, you have the right to close one provided you’re both in agreement.

And to be clear, it really doesn’t make sense to retain a joint bank account once your divorce is finalized. The only exception may be if you’re contributing to that account equally for the sake of a child, or covering a child’s expenses. But even then, you’re generally better off keeping separate accounts once your marriage has ended.

It can make a lot of sense to have a joint bank account during your marriage. But once your marriage is over, it’s generally not wise to commingle your finances in any way. So while you and your almost-ex-spouse might find the idea of keeping your joint account active more convenient, the reality is that it’s generally not a great idea.

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When I test drove a car, the “self-parking” feature failed and it crashed. Keep reading to learn if it had an impact on my bank account — or my car insurance. 

Recently I went to test drive a car, because I am potentially in the market for a new vehicle. Unfortunately, my trip to the dealership did not go as planned. In fact, while I was testing it out, the car actually crashed into a concrete footing and it incurred a significant amount of damage.

Here’s what happened, and why it didn’t end up doing the damage to my checking account it could have.

Here’s how the car crashed

I was excited about looking at this particular car because it advertised a self-parking feature and I’m not always the best at parking. So, when I got into the car, I told the salesperson that was one of the main things I wanted to try out while driving it.

The salesperson said it had been a while since he’d shown someone how to use that feature, but it shouldn’t be a big problem. And, he actually looked up a YouTube video to explain how to initiate the self-parking feature and told me how to get started.

As I initiated the process, I commented to him, “OK, so I’m not responsible here if the car crashes, right?” and he laughed. It seemed funny at the time. And everything started out smoothly. The car alerted me that it had identified a spot it could park in, and then began to back in.

Things were going great as the car zipped around and navigated its way into a pretty tight space in a parking lot that I wouldn’t have been super comfortable parking in on my own. In fact, it got right in between the two other cars and backed its way perfectly into the spot. Then it started beeping and, despite me trying to hit the brakes, it proceeded to back into a very large concrete footing, doing a significant amount of damage to the rear of the vehicle.

Needless to say, no one was very happy about this outcome.

Here’s what happened next

Once we took the damaged car back to the dealership, the salesman went over to his manager to explain what happened. At that time, the manager asked for my auto insurance information because they wanted to hold me responsible for the damages.

I was having absolutely none of this, since the car was parking itself at the time and I had even commented to the salesperson that I wasn’t going to be held responsible if something went wrong — and he was honest enough to admit to the manager. I still had to argue with them and retell the story multiple times, and the manager took the car out himself and tested the self-parking feature himself. This very nearly led to the car crashing a second time, as it stopped split seconds before it hit another vehicle on the lot.

I got lucky in this case that the car was clearly malfunctioning and having an issue because otherwise, I might have had to give this dealership my insurance and let the insurer pay for the damage. This could have led to my premiums going up.

So, long story short, if you crash a car at a dealership when you’re test driving it, your insurer is probably going to be on the hook — unless the car crashes somehow itself and you’ve made it clear that you won’t be held accountable if that occurs.

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Putting your career on hold to travel is a big decision. See all the factors to consider and learn how you can make the best decision for yourself. 

If you love to travel, you’ve probably imagined what it would be like to do it for an extended period. A trip where you spend months going from place to place, seeing the sights while also living like a local. Instead of a brief vacation, you have the kind of adventure that you remember for the rest of your life.

It’s an exciting idea, but it can also be hard to pull off when you have a full-time job. Many employers won’t be okay with you taking months, a year, or more in time off all at once.

Your other option is to take a career break so you can travel. This is definitely a huge decision, and it’s something many people wouldn’t even consider doing. If you’re trying to figure out if it’s a good idea, here are some things to think about that can help you make the right choice.

First, see if remote work is an option

Before you decide between travel and your current job, make sure you actually need to choose one or the other. If you have a job that could be done remotely, talk to your manager and ask if that’s an option.

I’m biased because this is what I do, but I think that working remotely is one of the best ways to be able to travel often. Sure, you don’t have as much free time, since you’re still working. You’ll need to find a balance between that and enjoying your travels. But you’re also able to travel without worrying about running out of money, and then needing to go home and find a job again.

Not everyone is able to work remotely, though. If you can’t, it could make your decision more difficult, but there’s usually still a clear choice.

If you know you want to spend time traveling, then that’s what you should do

It’s cliche, but the older you get, the more you realize that time flies. Hopefully, you’ll have the opportunity to travel as much as you want in the future, but that’s not guaranteed. Just ask anyone who had big travel plans that got interrupted by COVID.

There’s also the possibility that you start a family and aren’t able to travel as much. Or, you may decide that you want to spend more time close to your parents as they get older. These are just a few examples. The point is that life circumstances can change, and those travel plans that you put on hold could become something you’re never able to do.

If you know that long-term travel is absolutely something you want to do, find a way to make it happen. Take a break from your career, if necessary. You never know how many chances you’ll get to do this.

Remember also that if you built a career for yourself once, odds are that you can do it again when you get back. You probably didn’t fall into a good job by sheer luck. You earned it because of what you have to offer to a company.

Spend plenty of time preparing financially before you make the leap

I’m all for making a big move if it feels right, but that doesn’t mean I’m recommending you quit your job tomorrow. Before you do anything, it’s important to have the personal finance side of your life in order. Running out of money halfway around the world may make for a good story later, but I imagine it’s pretty stressful in the moment.

The first thing to do is save as much money as you can. Set up a savings account as your travel fund, and start transferring money to it every month. You can certainly travel on a tight budget — just read how one writer traveled for 20 months on $8,000 for the perfect example. But having more money saved makes life easier and allows you to travel longer.

This is also when you should estimate how much money you’re going to need. Do plenty of research to see what living costs are like in the places you want to visit. Once you’ve done that, you can use those costs, as well as how long you want to travel, to figure out a budget.

Taking a break from your career to travel can be scary, but it could also be one of the best decisions you ever make. Just remember to plan ahead financially and make sure you have enough money saved first. You’ll have a much better time traveling and when you get back if you’re able to pay for everything using your savings, without going into debt.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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