Money Management

Buying a new home for retirement? Read on to make sure you’re not getting in over your head. [[{“value”:”

Some retirees prefer to rent a home so they don’t have to deal with maintenance and repairs. But others prefer the stability of owning a home.

With a rental, your housing costs could rise every year. That won’t happen with a fixed-rate mortgage, or a home you buy outright.

But if you’re gearing up to buy your retirement home, it’s important to make sure you don’t go overboard. Here are a few steps you can take to avoid overspending.

1. Don’t allow housing costs to exceed 30% of your retirement income

As a general rule, your monthly housing costs should not exceed 30% of your take-home income. And those costs should include property taxes and homeowners insurance. Even if you’re able to purchase your retirement home without a mortgage (such as if you sell a larger home and use your proceeds to buy a smaller home), you still need to make sure these other expenses will keep you at that limit.

Many people find that their income shrinks in retirement compared to their working years. So don’t assume a home will be affordable for you just because you’re not looking at ongoing mortgage payments. If your monthly income goes from $7,000 to $3,500, it only leaves you with $1,050 a month to spend on housing. If you live in an area with expensive property taxes, you could exceed that limit even if you owe a lender nothing.

If you’re buying your retirement home before you retire, try your best to estimate your retirement income. Make a list of expected expenses and try to attach a cost to each to get a ballpark number.

Don’t forget about healthcare expenses, too. Medicare Part B alone costs $174.70 a month this year, and that’s just one health-related expense of many you might have to bear.

2. Take a close look at property taxes — and find out how often they tend to rise

Most home buyers know to look carefully at property taxes before committing to a home purchase. But don’t just look at the current property tax bill for a home you’re interested in — also look at the property tax history. That should give you a sense of how often property taxes rise in that area.

In some areas, homeowners of a certain age are eligible for a property tax freeze. But that’s something you’ll need to research, too, and it may hinge on your income.

Either way, you probably don’t want to take on a property tax bill that might rise exponentially from year to year. So it could be best to steer clear of towns where homes are assessed and re-taxed annually.

3. Think carefully about the maintenance involved

The benefit of being retired is having more time to tackle home maintenance yourself, as opposed to having to pay to outsource it. On the other hand, if you’re older, you may not have the physical capacity to perform certain maintenance tasks without risking injury.

Think carefully about the work involved in maintaining the home you want to buy. You may love the idea of getting to live on an acre of land. But that’s a lot of grass to mow, and it’s potentially a lot of snow to clear during the winter. You’ll want to make sure you can afford the maintenance that comes with living in your retirement home if you’re forced to hire help.

Overspending on a retirement home could leave you short on funds for other essential expenses, like healthcare. You don’t want to risk landing in debt at a time when you’re not working. Run the numbers carefully before committing to a place to spend your senior years.

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One bank account change is working to my disadvantage. Read on to see how I could’ve prevented it in the first place. [[{“value”:”

It’s hard to complain about the interest rates savings accounts are paying today. For virtually no risk, you can easily score upward of 4.00% in a high-yield savings account if you shop around. And last year, when I had a bit of extra money on my hands, that’s what I did.

I do most of my banking at a certain institution where I also hold a checking account. And while my bank’s rates aren’t the best ones out there, they’re pretty competitive. So I’m sometimes willing to accept a tiny bit less interest for the convenience of using a bank I’m familiar with and whose platform I find easy to navigate.

But last year, I was truly on a mission to find the best savings account rate. And sure enough, after digging around, I found a savings account that would pay me over 5.00% on the funds I was looking to deposit.

Recently, though, I checked up on that account and saw that my savings account’s APY had fallen. And while I’m still earning a nice amount of interest, I’m no longer over the 5.00% mark. Not only am I frustrated by this change, but I’m sort of mad at myself, because it’s a situation I easily could’ve avoided.

The surefire way to guarantee yourself the interest rate you want

The reality is that the interest rate I’m getting on my savings now is still very competitive, so I really shouldn’t complain. But it bugs me that banks can simply change your APY without warning.

It also bugs me that I didn’t just put the money I had available last year into a CD. The reason I didn’t was because CDs require you to keep your money in the bank for a preset period of time. And cashing out a CD before it comes due can result in a costly penalty, the exact amount of which will depend on the bank you use.

Because I wanted the flexibility to withdraw these funds without risking a penalty, I opted for a savings account over a CD. In reality, here we are, one year later, with that deposit fully intact.

Had I opened a 12-month CD, I would’ve locked in a rate at over 5.00% just like the rate on my savings I started out with. Only that rate would’ve been guaranteed, and I’d still be earning over 5.00% on my money instead of less.

Consider a CD — but only under the right circumstances

The only way to lock in a guaranteed interest rate on your money is to choose a CD. The reason I didn’t do so last year was because I wasn’t sure if I’d be using the cash for a big trip this year versus postponing that itinerary.

But it’s not a good time to take a longer trip, so I won’t be needing the money this summer. And to be fair, I didn’t know that last year, which is why I didn’t open a CD in the first place. I guess I also shouldn’t be kicking myself too much for choosing a savings account, since there was a possibility of me needing the money.

But if you have a situation where you’re sure you won’t need access to the money for the duration of your CD’s term and you have a separate emergency fund with enough money to cover at least three months of bills, then opening a CD could make a lot of sense right now, what with rates being so strong.

In fact, it’s an especially good time to lock in a CD because there are talks of interest rate cuts happening at some point this year. If you get ahead of those, you can set yourself up with not only a guaranteed return on your money, but a stronger one than what you might lock in six months down the line.

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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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From sectionals to dining sets, discover stylish, budget-friendly decor at Costco. Keep reading to see the deals. [[{“value”:”

Looking to spruce up your space without breaking the bank? Look no further than your local Costco. This membership warehouse isn’t just for bulk groceries and giant tubs of peanut butter. From chic vases to cozy throws, Costco has seriously stepped up its home decor game.

Imagine wowing your guests with stylish decor pieces, all while keeping your budget on track. Whether you’re redecorating your living room or adding some flair to your bedroom, these finds will transform your space without making your wallet cry for mercy. Plus, if you sign up for Costco’s credit card, you can get 2% cash back on all of these design purchases. And hey, while you’re at it, you can still pick up that giant tub of peanut butter.

1. Mina Victory Jute Pouf: $54.99

Looking to add a touch of boho chic to your living space without emptying your wallet? Say hello to the Mina Victory Jute Pouf, yours for just $54.99. This versatile little gem is perfect for extra seating, a cozy footrest, or a stylish accent piece. Its natural jute texture and neutral color effortlessly blend with any decor style. Durable and lightweight, you can easily move it around to refresh your space whenever you like. It’s a stylish, budget-friendly way to elevate your home decor game without compromising on quality.

2. Artika Triad Floor Lamp: $99.99

Light up your life (and your room) with the Artika Triad Floor Lamp, available for only $99.99. This sleek, modern lamp features three adjustable lights, perfect for directing illumination exactly where you need it. Whether you’re curling up with a book, working on a project, or just creating a cozy ambiance, this lamp has got you covered. Its black finish and contemporary design add a touch of elegance to any space. Plus, it’s a stylish way to brighten up your home without dimming your personal finance goals.

3. Artika Sonolok Acoustic Slat Panel Set: $89.99

Want to upgrade your space and improve acoustics without blowing your budget? Check out the Artika Sonolok Acoustic Slat Panel Set, priced at $199.99. These panels not only look fantastic with their warm walnut finish, but they also enhance your room’s acoustics, reducing noise and creating a more peaceful environment. It’s a smart investment that adds style and functionality to your home, all while keeping your spending in check.

4. Henredon Murphy Fabric Modular Sectional with Ottoman: $1,599

It seems nearly impossible to find a large modern sofa for under $3,000 these days. Thankfully, there’s Costco. Transform your living room with the Henredon Murphy Fabric Modular Sectional with Ottoman, available for $1,599.99. This modern, clean-lined sectional is configurable to fit any space, thanks to its modular design.

The loose and reversible back cushions add to its versatility, making it easy to switch up your look and extend the life of your cushions. Its chic cream color and waterfall design bring a touch of elegance and comfort to your home.

5. Transformer Table 4-piece Dining Set: $1,999.99

Need a dining set that adapts to your space and guest list? The Transformer Table 4-Piece Dining Set, priced at $1,999.99, is here to save the day. Priced $350 lower than where it’s listed elsewhere, this innovative set extends to six different lengths, comfortably seating up to 12 people. Perfect for hosting dinner parties or intimate family dinners, the bench seats up to six people, making sure everyone has a place.

The patented ball-bearing mechanism makes extending the table a breeze, and while the chairs require assembly, it’s a small trade-off for such versatility. It includes the table, bench, and two chairs, offering incredible value for a piece that grows with your needs.

As you can see, transforming your home doesn’t have to empty your wallet. With these stylish, budget-friendly picks from Costco, you can give your living space a fresh, new look while still managing your finances effectively. Remember, your home is your haven, and with a bit of creativity and these great deals, you can create a space that reflects your style and comfort.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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