Housing decisions in pre-retirement are tricky

Dear Pete

My husband is in his mid-60s and can retire any time and is highly entertaining the idea of doing it very soon. I am in my mid-50' and will be working for at least another 10 years. We own a house and have lived here for almost 23 years. Around 13 years ago we refinanced and we have another 17 years of mortgage payments but do not owe a lot. We have two children, one is in the 5th grade and the other one is in the 11th grade. I wanted to sell our house because I wanted a different style house, although the children are happy to not sell and my husband is 75% convinced he wants to stay, and will move only if we find a house that meets all of our needs. We like our neighbors, neighborhood and its accessibility to everything. We have looked at many houses but they tended to be smaller or farther away from the highway than we wanted for commuting to work. In essence, we have not seen a house that fully thrills us and had everything we wanted.

Do you feel it makes sense at this stage of our lives to sell our house and take on a $300,000 plus mortgage and higher property taxes? If we stay in our current house we will refinance because our current rate is above 6%. We want to decide soon so we can take advantage of the low mortgage rates if we choose to stay and refinance.

Sincerely,

Undecided

There's so much here. The simple question, "should we move?" is just the top layer of a complex pre-retirement situation. Can Undecided move? Sure. Should they move? No, definitely not.

What intrigues me most about this question is the "my husband can retire anytime he wants" line. Being able to retire is one thing. Can you retire when you become eligible for Social Security? Sure. Can you retire when you become eligible for Medicare? Sure. Doesn't mean you should, though. There is no retirement age that works for everyone. We don't get to retire, with no regard for what's going on in our financial lives, just because we happen to turn 65. With Undecided's situation, my biggest concern is their young kids still living at home. I'm going to go out on a limb and assume they don't have fully funded college funds for each kid. Maybe Undecided is planning on her kids taking out student loans, and that may work, for some of the tuition. It's unlikely, though, with the high cost of school, that an 18-year-old will be able to fully borrow enough to cover 4 years of tuition. This is where Parent-Plus loans come in. Parent-Plus loans are the death knell of retirement. With their high-interest rates and their proximity to retirement, Parent-Plus loans are a major factor in delayed retirement plans. Your priority is to start sheltering money for education expenses.

You are bored with your house. It happens. But moving out of boredom could jeopardize your future financial goals. Here's what needs to happen: Don't sell the house, your husband shouldn't retire until you're sure college costs will be taken care of, and refinance your current house as soon as possible.