Hi, I was a young single mother and went through some struggles. I had to get random jobs that would work with my kids schedules so I never had anything to save or to buy a home. They are now out of the house and I have a government job. I am very fearful of retirement due to now having medical issues. I believe I can make it through work for 20 more years though to get my pension. Housing costs are so expensive where I live so I fear if I save for retirement then I wont be able to afford to live in an apartment in the future. But if I save for a house then I wont be able to save for retirement but I will eventually have a pension and social security even if I don't put anything extra away. And my thought is that if I buy a house and I make extra payments in 20 years I might have a paid off house and be able to more comfortably. I am taking home about 40K right now with about 25k of bills and household expenses etc. The cheapest home in my area is about 400k. What should I do?
I'm 50 with no retirement or assets, do I save for a home or retirement?
byu/Disastrous_Park_7621 inpersonalfinance
Posted by Disastrous_Park_7621
19 Comments
You need to save for retirement and should focus on that since you are behind.
You should definitely not buy a house for 10x your annual income.
Follow the prime directive on the wiki.
>if I save for a house then I wont be able to save for retirement
Don’t buy a house.
Save for retirement for the next 20 years.
Renting may work better for you. In a lot of markets, rent versus buy calculator doesn’t work in favor of home buying. I second the notion that you definitely should focus on savings. While pension and SS are great, you need money for longterm care, especially given that you already have health problems. If your work has HSA available, max that puppy out plus everything you can into your retirement accounts.
Retirement.
I have a federal job with pension. I’m familiar with the math here. Assuming you can tough it out for another 20 years, your pension would only amount to around $2000 a month, max. Your social security would be around the same amount, max. You would be retiring on around $4000 monthly. That’s 100% not gonna be enough when you’re already have medical issues now.
When making your decision factor in that you may not have the full pension.
Im wondering if Im the odd man out here. If you’re able to buy a house, condo or townhome and have that mortgage be equal to or possibly less than your rent, then in my opinion that is the way to go. You will be able to save just the same, while building equity in your home, of which, 20 years down the road will lend nicely to retirement.
If homes are 10x your income, I don’t even see how that is possible for you. 3x-5x income is the general guideline.
Very rarely does it make sense for a single person to buy a house. Most are simply too large and expensive for a single person to maintain.
1. Save for retirement as first priority (including your kid’s university expenses).
2. Save some more
.3. Panic and save some more
4. work as long as you can goal is to get the pension
5. move to a L(ower)COL area once retired
(if needed) 6. Think about renting in a sliding scale type place
Honestly unless the stars align I’d say you will be a renter… that’s fine and there’s nothing wrong with it. By the time you save to buy a house and get past the money sink years, you won’t have enough time for it to appreciate before needing to sell due to old age needs.
Can you work a 2nd part time job so you can also grow your non retirement savings
>I am taking home about 40K right now with about 25k of bills and household expenses etc. The cheapest home in my area is about 400k.
The mortgage payment on a 400k house is going to be about $2200/month. Add in $200 for insurance, $350 for property taxes and $300 per month towards repairs and maintenance you’re already over $3000, or $36k per year, which if you’re only bringing home $40k does not leave you enough to live on, much less save.
It’s a hell of a gamble to think that someone who is 50 with health issues is going to be able to work another 20 years. Not only are government jobs a lot less safe than they were 20 years ago, but there are just so many ways it can go wrong that putting all your eggs in the pension basket seems very risky.
In your shoes, I’d be planning to rent for the rest of my life and saving as much as I could towards retirement.
You likely can’t afford a $200k on $40k a year, much less a $400k house. Prioritize your retirement first.
I’m nearing retirement and I will be okay financially. I’m a single person. I just sold my home and am renting because I don’t want my money tied up in an illiquid asset. In my opinion, as a single person, you need to have more liquidity.
Keep renting. See if there are affordable housing options in your county or state. Apply for those housing lotteries. Get on wait lists. The sooner the better. If you can manage a 2nd job, do it. If not, expect to move to a cheaper area when you retire if you dont have affordable housing then. Also, expect to get at least a part time job when you are retired.
I say rent as cheaply as possible and max a Roth IRA plus save in a high-yield savings account. When it comes time to retire, move to a locale where homes cost less. Use your savings and Roth IRA to buy the house.
Retirement is 25x income so save as much as you can, or work on your health so that you can work for as long as possible.
It’s ideal to have a paid off home in retirement, keeping housing costs to a minimum. However, you cannot afford it .
Keep saving. In reitrement, move to a low cost of living area and buy a home in cash. Or try for a low-income program like Habitat for Humanity.
55+ community and save for retirement
Start saving for retirement. High yield for money in flux, Roth for a target year, no credit card debt etc. save save save.
Sounds like you want to own a house. Have you looked for ideas a tiny home or a townhome in a lcol area? If you are single maybe focus on some options like that