Planning a home for life after retirement
For many, buying a retirement home is a part of the planning for when it's time to hang up one's boots. More so if the individual is living in accommodation provided by his employer.
By Preeti Kulkarni, ET Bureau |
For many, buying a retirement home is a part of the planning for when it's time to hang up one's boots. More so if the individual is living in accommodation provided by his employer. The disadvantage of such long-term planning is that such early decisions are fraught with pitfalls as many potential buyers have a rose tinted visual of their retirement home. The `close to nature' home might prove to be too distant from civilisation for comfort. The area which shows promise as a developing district may well turn out to be a ghost town in future. Since, buying property like any other investments involves taking a view on the future it is best to take a decision based on what one's needs are likely to be rather than betting on property.
Convenience First
Needless to say, once you retire the parameters for an ideal home would be vastly different from the ones applicable to a younger buyer. However, certain factors like convenience - in terms of public transport as well as shops catering to day-to-day needs - would be pertinent during the retirement period as well. Healthcare facilities would constitute another indispensable element. Adds Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj: "A retirement home must be easier to maintain than one's erstwhile dwelling.
Not everyone can afford to retain the services of extensive support personnel, so it should ideally be compact. It is best to buy a home in a centrally managed complex that is close to a shopping establishment with home delivery options, a well-equipped hospital and public transport points. You should also consider the location for potential resale value, because it is not always possible to predict how you would feel about the purchase a couple of years down the line."
Pursue your interests
Next, you need to ascertain if the neighbourhood offers opportunities to pursue your interests. "After retirement, many retirees wish to indulge in their hobbies like gardening, painting or teaching. Hence, a conducive environment is critical," says Gulam Zia, national director, research and advisory services, Knight Frank, a property consultancy firm. For instance, if you wish to devote some time to teaching, you should scout for a house that offers a training institute, an orphanage or a self-help centre in the vicinity. Similarly, if you are someone with a religious bent of mind, proximity to a place of worship would rank as a key consideration.
Stick to your budget
Before drawing up fancy plans for your retirement home, you need to take stock of your financial position ��� affordability should supersede all other parameters. If you have identified a house with all the amenities and ancillary infrastructure that you desire, but it is likely to put an enormous strain on your finances, the property may not be worth the stress. If you are close to retirement it is best to avoid of a loan.
Prior to finalising a retirement home, you need to undertake an assessment of your liquid assets (including pension payout as well as rest of the retirement corpus) and lifestyle expenses, in addition to making adequate provisions for emergency needs. This exercise will help you determine your affordability.
Convenience First
Needless to say, once you retire the parameters for an ideal home would be vastly different from the ones applicable to a younger buyer. However, certain factors like convenience - in terms of public transport as well as shops catering to day-to-day needs - would be pertinent during the retirement period as well. Healthcare facilities would constitute another indispensable element. Adds Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj: "A retirement home must be easier to maintain than one's erstwhile dwelling.
Not everyone can afford to retain the services of extensive support personnel, so it should ideally be compact. It is best to buy a home in a centrally managed complex that is close to a shopping establishment with home delivery options, a well-equipped hospital and public transport points. You should also consider the location for potential resale value, because it is not always possible to predict how you would feel about the purchase a couple of years down the line."
Pursue your interests
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Next, you need to ascertain if the neighbourhood offers opportunities to pursue your interests. "After retirement, many retirees wish to indulge in their hobbies like gardening, painting or teaching. Hence, a conducive environment is critical," says Gulam Zia, national director, research and advisory services, Knight Frank, a property consultancy firm. For instance, if you wish to devote some time to teaching, you should scout for a house that offers a training institute, an orphanage or a self-help centre in the vicinity. Similarly, if you are someone with a religious bent of mind, proximity to a place of worship would rank as a key consideration.
Stick to your budget
Before drawing up fancy plans for your retirement home, you need to take stock of your financial position ��� affordability should supersede all other parameters. If you have identified a house with all the amenities and ancillary infrastructure that you desire, but it is likely to put an enormous strain on your finances, the property may not be worth the stress. If you are close to retirement it is best to avoid of a loan.
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"The thought of availing of a loan to buy a retirement home should not even cross your mind as the lack of incremental cash flows in the future would make repayment difficult. After all, salary hikes or bonuses will not come by at this age. Besides, most banks will not sanction a loan when the borrower has retired or is nearing retirement," points out Nikunj Kedia, director, PARK Financial Advisors. Hence, it is best to fund the purchase through your investments and retirement corpus. Prior to finalising a retirement home, you need to undertake an assessment of your liquid assets (including pension payout as well as rest of the retirement corpus) and lifestyle expenses, in addition to making adequate provisions for emergency needs. This exercise will help you determine your affordability.
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This apart, since real estate is an extremely illiquid asset, it is unadvisable to buy a second house unless there is a valid reason. "One shouldn't assume that rental income earned would justify the purchase of an additional house because in India, generally, it does not account for more than 3-5% (pre-tax) of a property's value," he adds. Striking the right balance between personal preferences and affordability is important to ensure that your dream retirement translates into reality.Start a SIP with as low as ₹500 with ET Money App!
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