The Key to Your Retirement May Be Just That – A Key (to your very own house)

Steve Ganns,, shares tips for retirement.As a financial advisor, I am often tasked with consulting with people on how to best set up their retirement, along with other important topics such as college education for children, etc. Basically I start with this kind of approach.

The first and foremost asset people should have in their portfolio for retirement is a home. A home is a wonderful tax advantaged investment and unlike any other kind of investment, it has a functional part as well. You can actually live in the asset as opposed to owning shares of Apple or Google. Not that I have anything against Apple or Google, but it’s hard to live in stocks.

The value of a house is two-fold:

  1. It is a place for you and your family to live in and enjoy.
  2. It grows tax free up to the first $500,000 of profit according to current law and tax deferred for any gain above that. If held until death, it can pass to beneficiaries with a market value tax basis for them.

Houses have gotten a bad name in recent years due to the mortgage crisis, but in the long run, a house is the best investment vehicle you can have. Even if it just retains and doesn’t grow in value, at the end, you have an asset that you have been able to live in which is yours when you get to retirement, to liquidate and turn into cash by downsizing, reverse mortgage, etc.

I always advise saving for a house as opposed to putting a lot of money into 401Ks or 403Bs early in the retirement planning cycle. Those plans are important, but that money cannot be touched until retirement. You have to pay to live somewhere anyway, so those plans should be secondary to the house. (Of course, I do advise that if your employer is going to match any 401K or 403B contributions, you should contribute at least up to that amount as it is “free money.”)

To summarize, don’t forget the tax advantage benefits of owning your own home along with the emotional benefit of living in a place of your own that will also help you maintain a comfortable lifestyle at retirement.

Stephen J. Ganns

Stephen J. Ganns, CPA


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