Retirement is your time to live life on your own terms. Like everyone else, you must also have wished to spend your golden years in your dream retirement home—haven’t you?
Is it a charming condo in a bustling city or a cozy cottage by the lake? Maybe it’s a sunny retreat near the beach, where every day feels like a vacation.
Whatever your vision, the real question is: is your nest egg big enough to make it a reality? No? Here’s the good news: you don’t need a fortune to turn those dreams into reality. You just need to get creative and think outside the box.
Here are a few practical tips that will help you stretch your dollars and make your retirement home dreams come true.
1. Consider Up-and-Coming Areas Instead of Well-Known Retirement Hotspots
You know the hotspots: New York City, Florida, Arizona, and parts of California are retirement meccas. But you’ll have to pay a premium to live in those places.
Take New York City, for example. Numbeo’s Cost of Living Index ranks it as the third most expensive city in the world. Housing alone can take a big bite out of your budget. The median sales price for homes in early 2024 was $785,000—that’s a lot. Additionally, Arizona real estate has seen a surge in median home prices, particularly in cities like Phoenix and Scottsdale, making careful budgeting essential for those looking to settle in the Grand Canyon State.
Skip the overhyped and overpriced locations. Instead, look for areas that are on the cusp of becoming popular—where prices are still reasonable, but amenities are growing.
Small towns near bigger cities or regions with upcoming infrastructure projects would be great alternatives. You will snag a deal, and your property value might also increase as the area becomes more popular.
Consider checking out Montgomery, Alabama; Casper, Wyoming; and Huntington, West Virginia. These are some of the most affordable cities for retirees, according to Money Talks News.
2. Buy the Land First, Build Later
Who says you need to buy the house and the land all at once?
Purchasing a plot of land in your dream location first can be a savvy way to make your retirement dream more affordable. The land is often much cheaper than fully built properties. If you secure your ideal spot now, you’ll avoid rising real estate prices later.
Some of the cheapest lands in the U.S. are located in Arizona, New Mexico, Michigan, Texas, and Colorado.
In Colorado, for instance, you’ll find plenty of affordable land throughout the state. As these span from inhospitable mountain land to desert land, there are plenty of opportunities for land ownership.
There, cheap land is available in the southern region, which is less populated. Costilla County in the San Luis Valley is one example.
This approach also gives you flexibility. You can take your time designing the perfect home or save up for construction without rushing into a mortgage for a completed property.
3. Think Beyond Traditional Mortgages
The traditional 30-year mortgage may not be your best friend when buying a retirement home. After all, you’re likely looking for less debt, not more.
Many retirees are discovering unique ways to finance their dream homes. Explore those options.
Have you considered a HECM (Home Equity Conversion Mortgage) for purchase? It’s a type of reverse mortgage insured by the FHA (Federal Housing Administration).
Investopedia notes that these mortgages allow seniors to convert the equity in their homes into cash. However, you’ll need a larger down payment, though you won’t have to make monthly mortgage payments. Just keep up with taxes, insurance, and maintenance.
Owning the property in a self-directed Individual Retirement Account (IRA) is another option.
A self-directed IRA is a type of retirement account through which people invest in a variety of alternative assets, including real estate, explains 1031 Crowdfunding.
Real estate purchased within a self-directed IRA can provide significant tax advantages. Income, such as rent, generated through IRA investments grows tax-deferred—or tax-free if it’s a Roth IRA. This strategy lets you diversify your retirement portfolio while securing your dream home.
4. Go for Fixer-Upper, Not Move-In Ready
A move-in ready home sounds great, but it often comes at a premium price.
Homes that need a little TLC often come at a significant discount. If you’re handy or willing to oversee renovations, a fixer-upper can be a smart way to get more house for your money.
Here’s a trick: Focus on properties that have good bones—solid structure, a functional layout, and a location you love. A fresh coat of paint, new flooring, and updated fixtures can make a world of difference without draining your savings.
Bonus tip: Negotiate with the seller to leave behind furniture or appliances. This could save you thousands, especially if you’re relocating from a far-off city and don’t want to move your old stuff.
The bottom line? A modest nest egg doesn’t mean you have to give up on your retirement home dreams. It just means you need to be creative, flexible, and perhaps willing to look at options you hadn’t considered before.
Don’t rush the process. Take time to explore different areas, visit in different seasons, and think about what you want your retirement lifestyle to look like. And soon, you will have a retirement retreat you’ve always wanted—on a budget that works for you.
