5 Financial Tips for Renovating Your Retirement Home
As we enter a cozier season, we’ll be spending more time indoors, enjoying our homes. While doing that, we’re sure to find aspects of our houses we’d like to upgrade, replace, or remodel. What are some of the remodeling ideas that make the most sense, from both aesthetic and financial perspectives? What are the best ways to plan how to cover them financially?
There are a few reasons why you could be considering a home renovation. For one, a home improvement project can increase the comfort of your everyday life, creating the luxurious lifestyle that many look forward to after their career years. For another, a home renovation during retirement may be a necessary health and safety measure. No matter the case, taking into account the following five options may help you maintain financial health throughout retirement—while enjoying the home you’ve envisioned for yourself.
1. Consider Energy-Efficient Systems
When possible, opt for energy-efficient setups and materials. Energy-saving windows, for example, are designed to keep hot or cool air inside your home, reducing the strain on your heating and cooling systems and lowering your energy-use costs. Similarly, insulation upgrades can reduce heat and air loss. Other methods for saving energy include the use of high-quality HVAC systems with automated adjustment settings and the use of water systems, such as tankless water heaters that offer hot water only as needed. Not only will you save on energy costs but in many cases, you can also claim a tax credit on your tax return for using energy-efficient equipment.
2. Use Durable Materials
Choosing long-lasting materials can prevent the need for repairs in the future, lowering the cost of maintenance. On the exterior of your home, choosing PVC or composite lumber for renovations, such as the construction of a new deck, results in less maintenance in the long run when compared to a material such as wood. Unlike wood, PVC and composite lumber won’t splinter or crack over time, which is ideal if you plan on living in your home for many years. On the interior of your home, opting for durable materials can also lower costs. For example, when renovating your kitchen, hard-surface countertops made of granite or other synthetic materials are easy to clean and maintain.
3. Increase Comfort & Lower Healthcare Costs with Preventative Measures
Setting up your home to reduce the chance of accidents can lower healthcare costs while increasing your comfort. Updating bathrooms by adding grab bars makes them easier to maneuver and replacing tubs with curbless or low-curb showers enables you to walk right in without needing to climb. Along similar lines, installing non-slip flooring minimizes your chance of falling. Another simple change you can make when renovating is to replace knobs with D-shaped pulls, which are easier to grip. Overall, taking preventative action can make your home more comfortable and reduce the possibility of accidents. Doing so can lessen the chance that you’ll need to make even larger renovations down the line to accommodate reduced mobility.
4. Renovations Can Increase Your Property Value
If you’ve thought of selling or renting your home in the future, the right home improvement projects may boost the value of your home. No matter where your property is located, projects such as adding a deck or modernizing your kitchen and bedroom can increase your quality of life at home while also increasing the resale value of your house.
“People buying a house look first at kitchens and baths,” says Kermit Baker, director of the remodeling futures program at the Joint Center for Housing Studies at Harvard University. While these rooms can be the most costly to redo, they’re more likely to pay for themselves. Adding rooms, such as a family room or master suite, also tends to fare well at resale time as bigger homes command higher prices.
5. Choose the Right Financing Option for Your Situation
If you’re not paying upfront for your home renovations, you’ll have to borrow money through other means. One option is a home equity line of credit, which may have a lower interest rate than other loans, and any interest could be tax-deductible. Other possibilities include traditional bank loans, credit card promotions that offer 0% APR financing, or reward programs offering cashback. If you qualify, government-backed loans, such as Fannie Mae’s HomeStyle Loan or FHA 203(k) loans often are secure and have favorable interest rates.
Some might consider moving into a new home that is already equipped with the desired amenities. This can be ideal if the cost and inconvenience of a renovation look like they will outweigh the benefits. However, when possible, planning to save for a renovation makes for smoother financing. You can work a large project into your retirement spending plan and fixed income by working with an advisor to budget and minimize fixed expenses. With the right planning, you can experience financial well-being while enjoying a new-and-improved home during retirement.