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MarketWatch's Hoak: Five Real Estate Traps for Retirees to Avoid

By    |   Tuesday, 21 October 2014 07:58 PM

One big decision many retirees have to make involves real estate.

For example, do you want to continue living where you are? If you're living in a house, do you want to downsize to an apartment?

"Real estate is usually one of the biggest assets retirees have, but it’s the area with the most emotional attachment—and a place where it’s very easy to mess up," Larry Luxenberg,
managing partner at Lexington Avenue Capital Management, told MarketWatch personal finance editor Amy Hoak.

She cites five common real-estate errors committed by retirees.
  • Not downsizing soon enough. Big homes mean big bills.
  • Not investing the downsizing proceeds. If you do invest them, you have the opportunity to earn substantial income.
  • Not researching an area before relocating. You don't want unwelcome surprises.
  • Maintaining two homes. That's a major cash drain. Just think of all the expenses you'll be paying twice.
  • Having a mortgage in retirement. That's another major cash drain.
Meanwhile, many of those people approaching retirement age may have too much of their
savings allocated to stocks.

A rule of thumb has it that the percentage of your portfolio devoted to bonds should equal your age. But many older baby boomers are drifting far from that formula.

In the 60-to-65 age bracket, 30 percent have placed almost all of their savings in stocks, and 52 percent allocate more than 70 percent of their portfolio to equities, according to an analysis of 10,000 users of FeeX, which helps users find lower investment fees, CNNMoney reported.

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MarketWatch personal finance editor Amy Hoak cites five common real-estate errors committed by retirees.
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2014-58-21
Tuesday, 21 October 2014 07:58 PM
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