One of the largest expenses that retirees have to budget for is the cost of their home. Those who still have to make mortgage payments may find that almost half of their income goes to make that payment. A 2014 study by the Employee Benefit Research Institute shows that home expenses made up 43 percent of the expenses for those who were over 75. For those who find themselves with little income after paying their mortgage bill, there are some options:
Refinancing to take advantage of better interest rates can lower a homeowner’s monthly payment, but it may also put them in debt for longer periods of time. Those who are close to paying off their home may not want to add years of payments that a refinance would bring with it.
Retirees often find that they do not want to spend as much time and energy in their home’s upkeep or that they do not need as much space as they once did. Downsizing to a smaller home or apartment can save a large amount of money not just in monthly payments but in property taxes and utility bills.
Some retirees choose to relocate to a different city or state when they retire, and doing so can also bring some financial relief. Some areas have much lower property taxes and costs of living. Relocating to one of these areas can greatly impact a person’s monthly expenses.