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An article in today’s Wall Street Journal illustrates a problem I never considered.
Many retirees who paid off their mortgage as part of retirement planning are now finding that increases in property taxes and home property insurance are so significant those payments now exceed the former mortgage payment thus putting some retirees in a financial bind.
It seems applying a standard inflation factor to future costs for those items may not be accurate.
Wow, I guess this is one time I feel lucky to live in California–tax-wise, I mean; I feel lucky for other reasons!. Property tax increases are limited by a series of statutes going back to 1978. And as an over-55 homeowner, if we sell our home and buy another, we get to use the previous home’s property tax basis. This was a big benefit when we sold our home in 2019–we’d bought it in 1998 before prices went out of control, so the statutory caps on property tax increases really helped us, and I was able to file a form and get that basis transferred to our new home. If we move again, we’ll get the basis transferred again.
Anyway, our monthly bill for property taxes ($635) and homeowner’s insurance ($111) for our condo is a bit under $750, which is about one-third of what our mortgage payment is. Now the HOA fees (which have now climbed past $700/month for two HOAs) are a different story. But the condo HOA pays the insurance for the buildings, and we just pay “walls-in” insurance.
IN FLA many of us are underinsured as the rates are through the roof and from times terminated and move to another company. The values of our homes will definitely go down but no state income tax and utility rates are quite reasonable. Many will decide not to retire to Florida
I just moved to Fl and my insurance rates are lower than when I lived in Virginia. Perhaps because my FL home is new?
Darn, we’re considering the reverse of that move and were looking forward to a break on insurance. We’re close to the coast; are you?
When I do the simplified math :
Property Tax + Property Insurance or
Property Tax + Property Insurance +
a Mortgage Payment. I’m thankful we chose the first choice over the second one going into retirement