Tuesday, November 29, 2011

My Winding Road to Retirement

Sometimes the most direct route to something may not always be the best route. This can be true in many facets of life, including the road leading to retirement. For me, this road has taken some unexpected twists and turns in what has only been the first portion of my working life. While I began this road in the fast lane of what I hoped to be a straight shot to an early retirement, I’ve encountered several detours that have turned my plan onto a different, longer, but not altogether bad route to retirement.

What I’m trying to say is that my plan is kind of like a road map. There is a start point from my initial work, which leads to an end point at retirement, connected by an interstate in between. However there are a lot of little side roads that spread out along the way. These alternate routes will eventually get me to the same spot, and they might take me in a different and somewhat unexpected direction, but that route could be a more scenic one than if I had taken the highway straight to my destination.

The Direct Route to Retirement Gets Me There Faster but…

When I was working in the hotel business, I was on the fast track to early retirement…at least that was the goal at the time. I wanted to retire when I was 45 and be done with it all. But this goal largely left me missing out on life. I was stashing as much cash as I could and working all the time, which left me with little time to enjoy myself or my surroundings.

As the years passed, I began to realize that while the highway to retirement might get me to my goal quicker, I was missing all the scenery of life along the way.

The Retirement Side Roads are More Scenic

At the realization that I only live once and that life was passing me by while I worked like an ant, scurrying back and forth between work and home with blinders on to the world around me, I began to view things from a different perspective. While retirement was still an important goal for me, I began to wonder if I was taking my goal to reach it so quickly a bit far. This led me to ponder other ways of living, ways that were somewhat outside the norm, but that might work for me, and in fact, could work for many other people if they stepped back for a moment and reviewed their situations.

This was when I began contemplating leaving the hotel business to become self-employed. At about the same time, my wife and I were considering having a child. I thought that if I could correlate the two (leaving the hotel business to work for myself, and the birth of our son), it might help me slow down a little, enjoy life a bit more and take a few scenic side roads on the path to retirement. In my opinion, it was worth working longer in a job I liked, and be able to take care of my son, even if it meant delaying my retirement.

Adopting a New Retirement Strategy

So now that I’ve stepped back from the regular working world for a time, I’ve seen a lot of different scenery and gotten a new perspective on life, living, and retirement. I’m not in a rush now to retire since I’ve found work that I actually enjoy doing.

When you’re doing something you don’t really like, retirement might seem like the only escape. This could however be a clear indication that it’s time to start considering a different job or career. For those in their younger years especially, suffering through another 20 or 30 years of doing something that is less than satisfactory just to get to retirement, could leave them with years of unhappiness. Meanwhile, doing something you love, or at least enjoy, might have you feeling like you’ve already retired while still working toward bright golden years.

I’ve now shifted gears from the fast paced, “get there at all costs, regardless of the toll on my happiness” type retirement attitude. While those early years helped to get me to where I am now, they also taught me an important lesson about a proper life/work balance -- it’s often not so much about how quickly you get where you’re going, it’s how much you enjoy the drive getting there.

Wednesday, November 2, 2011

Should You Buy a Home if You May Inherit One?

Homeownership can be an acquired taste. There are positive aspects in certain situations and for certain people, but I question whether many of the benefits that people list are really as great as they seem. And many of these same people remind us non-homeowners of the day that will come when a home is paid for and no longer such a burden upon the old pocketbook.

But there are still those holdouts like myself (even though I’ve owned a home for a brief, three year stint), who don’t feel they particularly need or want a home. We want to be free to travel and explore the country. Yet, in the back of my mind, a little voice keeps nagging at me saying, “Wouldn’t a home be nice to have in old age or when you retire?”

Part of me agrees with this voice. But then another voice chimes in and says, “If you buy now, by the time you have your home paid off, you may have inherited a home from your mother.” And while I don’t expect this or count on it, since many things can change in the next 20 to 30 years, it is something to consider.

So if you aren’t big on the whole homeownership idea, but may inherit a home by the time you’re ready to retire; is it worth buying your own?

The Baby Boomer Generation
Many boomers own or may soon be paying off homes as they near retirement. Several of my boomer relatives either own outright or are working toward paying off their homes as they close upon their golden years. While I don’t expect to inherit homes from all of them, there is a good chance that one day down the road I could, so in some ways I’d almost rather help maintain and keep up their particular properties than have to buy one of my own to maintain.

Carrying Costs
There is no denying that homes can get costly; and no matter how much you plan and prepare for homeownership, it’s near impossible to take into account every costly situation you might encounter with a property over the years. Rather than dumping money into a property as I have done previously, why not let someone who loves living in a home maintain and care for it, especially if they may one day leave it to you?

I know such reasoning might sound somewhat harsh, but it’s also logical. A home must be passed along to someone, and it’s not as if you’re knocking off a loved one to get it. But if you have reasonable expectations of receiving a home one day by way of an estate, and you really don’t care for the thought of owning and maintaining one over the next 30 years or so, it’s a logical line of reasoning to undertake.

Why should you and a relative or loved one each pay property taxes, maintenance, and all the rest on a home for the next 30 years if you don’t really need to, and when eventually you would have to sell one (or even both homes) eventually anyway?

Freedom to Move and Explore
Choosing to avoid homeownership with the chance of inheriting a home in the future, could also provide a chance to move and explore without the hindrance a home. Not having to worry about upkeep and maintenance while you are away for long periods of time, or having to go through the sales process each time you want to move, can be a weight lifted from your shoulders.

My wife and I have moved multiple times over the last decade and have found that it is much easier, quicker and cheaper to do so without having to sell a home.

Principal Considerations
Not everything might be coming up roses however in a scenario in which you might be expecting to one day inherit a home. In our case, one set of relatives has a second mortgage on a home, which means that should that set of mortgages still remain at the time of their passing, rather than inheriting a home paid in full, we could be straddled with additional debt.

The amount of principal -- or debt -- a home you might one day expect to inherit carries is another factor that may likely have to be considered in such planning. Whether a home is paid off, still carries a mortgage (or two), or has a home equity line of credit, reverse mortgage or a lien of some sort attached, might affect your decision as to whether or not it’s wise to purchase a home of your own and work toward paying it off regardless of what an inherited home might bring.

Can’t Count on it
Maybe the greatest factors of all to consider when deciding if it is wise to buy a home if you may inherit one, is that it is extremely difficult -- even with all the planning and preparation -- to ready ourselves for what the future may bring. A relative might change their will, they may encounter unexpected health or financial issues, or you might pass away before them.

This means that with all the planning, hoping or expecting, you may be left on your own when it comes to eventually tackling the housing situation. While this won’t sway me one way or the other when it comes to how I feel about homeownership, I do think it is something important to consider when it comes to an inheritance and could alter the way others could or should see the possibility of being left a home by way of a benefactor.