Invest in a House or Retirement?

Written by Pembroke Insurance Advisors

According to Chris Dyer, of Ebstone Realty*, “the economy is moving in the right direction, employment is strong, and wages have increased.”

More good news, Dyer reports, is that home ownership has jumped to a 4 year high!

The 35 and under crowd had the largest jump in ownership, followed by those 35-44 year olds. Who says millennials have commitment issues?
The overall homeownership rate in the second quarter was 64.3%, up from 63.7% in the year before, according to the U.S. Census Bureau.
The national median home price continues to increase with the National Association of Realtors reporting the average at $276,900 for June 2018 up 5.17% from 2017 (unless of course you’re in NY or CA ).

Lastly, Dyer says, is that on a national level, we are seeing an increase in mortgage rates. Rates today are hovering around 5%, which by historic standards is really good. Who remembers 1981 and 18% mortgage rates

However, Buyers aren’t seeing their money go as far with rate increases and prices continuing to climb. Meanwhile, Sellers are getting lower offers and may second guess selling because they want to keep the ultra low rate they have had for the past several years.


 With home ownership on the rise, mortgage rates climbing and the economy headed in the right direction people typically want to know what investments are best given their age, skills, employment situation, values, and interests.
People also want to know how to make the choice between different investments.

The questions that Michael Menzies of Pembroke Advisors, based in Oregon & Las Vegas, frequently gets more than any other question right now is,
“Should I invest in a home or contribute (more) to my retirement?”.

YOU SHOULD CARE if you currently own, rent, have a retirement plan, or are just banking on your kids’ sweet basketball skills. No matter where you find yourself, sooner or later you’ll be faced with this question.

Buying a house and saving for retirement have the following in common:

• Money is given to others and even with legal protections, there is no guarantee that the money will be returned to the purchaser. You HOPE you will make more money than you “invested”.

• Under historically “normal” circumstances, you will probably have to hold both investments for many years before seeing a return or profit.

There are also differences:

• When the market sale price drops on your home you can still live in it (assuming you can afford your mortgage, taxes and insurance).

You can’t live in your retirement portfolio and selling too many retirement assets in a down market to pay for housing can quickly ruin your retirement.

• Housing can be expensive. Taxes, insurance, transaction fees, maintenance, repairs, and even making the house aesthetically pleasing for the next buyer can cost a ton of money.
Retirement accounts are often inexpensive to set up, the holdings can be inexpensive to own and when you sell shares there is no debating if the next owner will quartz or granite counter tops. You just sell the shares of the investments you own.


Michael says you CAN figure out which decision to make by making a list of your investment goals.

Start thinking through Home vs. Retirement goals by answering some questions.

• Is the mobility of renting important or the stability of home ownership.
Some people like to be rolling stones while others prefer to stay one place to raise their family. You need to choose which you are.

• When you retire, what kind of lifestyle do you want to live? Palm Trees or Ramen Noodles? What does your day-to-day look like?
Figuring out if you’d rather have a little in retirement or a lot is important now. If you want to travel all the time, you’ll need more saved in your retirement account. If you’re OK staying home and entertaining guests and grandkids in your beautiful home, then make a note of that.

• Do you want to live in a particular city or neighborhood for the next 5-10+ years? Picture yourself seeing the same neighbor every single day.
You can always move but sometimes it may not be a good market to sell in. You can always change your investment but it may not be a good market to switch investments in. Pick which one is more important – waiting out the nosy neighbor or the bear market.

• Is financial flexibility or financial stability more important to you?
Self-explanatory. Decide and stick to it. Of course follow that question up with a big WHY?

Once you think about those questions and write your answers down, start thinking about these scenarios and what your go-to response was in the past and would likely be in the future:

• How did you get through your previous financial hardships? Would how you reacted previously fix a poor home purchase or an underfunded retirement account if faced with the same situation?

•If your emergency fund runs out or your credit card can’t be paid off monthly, how do you deal with it?

• When your training, experience or efforts didn’t get you the job you wanted, what did you do? What would you do now? Would it be different?

The last thing you CAN do is rank your behaviors and responses.

What is your top goal? Mobility? Stability? Palm Trees? Ramen?

What is your go-to behavior? Run? Save? Bankruptcy? Push Through?

Now take your top goal and default response and make your decision!

Retirement or House – the choice is really YOURS based on YOUR goals for your life.

Talk to your financial advisor or local realtor and get the scoop on your market – real estate and financial.

Have you chosen one or the other recently? What are YOUR thoughts about home vs retirement?

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*Chris and his wife and business partner, Melissa Dyer, own a boutique real estate company in Palm Beach County, FL. Check out their website at EbStone Realty.

About Pembroke Insurance Advisors
About Pembroke Insurance Advisors

We work with individuals across the nation to secure the best life insurance rates.

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