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And some love the idea of buying a vacation homeonce they retire.
The answer is no more often than most retirees think.
Consider the following drawbacks toowning vacation homesin retirement even if you plan to rent them out to recoup costs.
Retirement Budget Buster
Robert Persichitte, accountant and Certified Financial Planner atDelagify Financial, doesnt mince words.
Dont buy a vacation home in retirement because it will ruin your budgeting.
Unpredictable Expenses
In retirement, youll already deal with changes to your budgets and lifestyle, notes Persichitte.
You wont want that to be more chaotic than it needs to be.
And even that only remains the same if you take out a fixed-interest mortgage.
Every other expense can and usually does rise.
Repairs and maintenance can particularly throw off your budget, especially on a fixed income.
Its a nice thought, but you may be deluding yourself.
First of all, remember thatmost vacation hotspotshave a high season and an off-season.
Second, youll take on more expenses than those outlined above.
Youll need to pay a vacation property manager, and they charge a higher percentage than long-term rental managers.
Many charge aminimum monthly fee, even if the property doesnt rent for a single night.
Youll also pay more for accounting and your tax return preparation.
The bottom line:dont justify your vacation rental as an investment.
Travel Commitment
When you buy a vacation home, you feel obligated to use it a lot.
Otherwise, youve just wasted hundreds of thousands of dollars.
Go see the world.
Experiencenew countries and cultures, challenge yourself, stretch your comfort zone.
Dont lock yourself into the same travel itinerary every single year.
Declining Interest and Ability to Travel
Its an uncomfortable thought but one we all need to confront.
Most of us will experience declining health in retirement.
They say retirements go through three phases: go-go, slow-go, and no-go.
At a certain point, retirees start to slow down, traveling less frequently and less far.
And then they stop traveling altogether.
View any prospective vacation rental purchase through that lens.
How many weeks would you realistically spend at the property next year?
What does that come to as a nightly rate if you include all expenses, including repairs?
How many weeks would you stay there in five years from now?
Fifteen years from now?
Your usage will inevitably decline, which means the effective cost youll pay for each nights stay will skyrocket.
What To Consider Instead
Sure, owning a second home sounds sexy.
But for most retirees, its a boondoggle.
Rather than buying now, wait a few years before committing, recommends Persichitte.
Also, try out a test run.
Consider renting for a year first.
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