It is important, however, that the decision be well thought out, the source noted. Purchasing without considering the consequences could be damaging.
"While there's no denying that we have historically low interest rates and low home values right now, anyone considering buying a second home before they retire needs to run the numbers," Kimberly Foss, president of Empyrion Wealth Management, told the news source. "People get stars in their eyes sometimes at the prospect of retirement, but the reality is that they may not be able to afford to buy another home right now."
If you are considering the purchase of a second home, ensure that you are contributing the maximum amount to your 401(k) plan before making the purchase since you’ll need these funds to last the length of your retirement, the source said.
You’ll also need the extra cash to cover expenses related to the purchase. "If they choose to buy another property, they will need extra money to cover those expenses, too," Foss told the news source. "Even if they choose to rent the property for income, they need to have six to 12 months' of upkeep and rental income covered in their savings in case they don't have a renter for a while."
Some consumers nearing retirement age may have income to play with, the source noted. These Americans may be more likely to make a purchase with cash, and it could be a smart option. Others may need a finance plan to make the home purchase work. These people can fund it as a second home, which will have lower interest rates and more lenient contract items. It could be a very positive financial decision in the long run for those nearing retirement.
Consumers who think they can afford such a purchase may want to discuss the decision with a retirement expert. If it hurts your long-term financial well-being, it may not be worth the short-term advantages.