No. of Recommendations: 2
I don't understand ignoring SS benefits.

I do, as a worst case scenario analysis. I do the same thing when crunching the numbers for a real estate investment, looking at affordability should something happen to rents. The future of politics is unknowable, so we have looked at eliminating that which we can not control, including pensions and SS, from our bare bones retirement equation. While I don't expect everything to implode, it is nice to know that we won't have to move in with the kids if it does.

As for buying vs renting, we decided to do a bit of both. We paid cash for a pre-foreclosure that had fantastic potential, getting a great deal on a property that was considered a "garage apartment" and unsuitable for a mortgage as such. Yes, the 1br/1ba 560SF upstairs was darned small, but the owner/builder had built it with expansion in mind when he could afford to do so, even putting a 3br septic in and a half bath in the lower 720SF garage/workshop. Lower level is in the process of becoming an additional 2 bedrooms, the half bath getting a shower, making the house a 3br/2ba with 300' frontage on the most fabulous crystal clear "creek" that has wonderful fishing, tubing and miles of kayaking both upstream and down. This will be our low expense home in retirement for 8-9 months out of the year, but we want to be in warmer climate for the winter.

We looked at buying a second home to use as a vacation rental for those 8-9 months we would not be there, but it soon became clear that if we instead took the cash needed for down payment and furnishing and kept it invested, the annual returns should be enough to fund 3 months of rental, and since it is discretionary spending, in bad years we stay at home sitting at the warm kitchen window, looking out at the mountains and river. No worries, no utilities, and the ability to explore extensively year after year. As much as I love real estate, this was a very exciting option for us to consider, also giving us the opportunity to find where we want to spend the second part of our retirement when rural living is not the best option. I figure 20 years of exploring should be a good amount of time to find a good place. After all it only took me 11 years to find our river house at a great value. I can be patient, particularly when the process is so fun.

As I touch up our primary residence for sale when we retire next year, I have to admit that I am looking forward to having only one house to maintain. It is amazing what can go wrong on these homes, even when well maintained.

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