Your needs may change in retirement, and you may have considered moving when the time comes—but according to a recent study, 36% of retirees plan to stay put (The New York Times, “Renovation vs. Relocation in Retirement,” April 2015). Although downsizing may make economic sense, family ties and emotional considerations often trump financial ones—especially the older you get. As one renovator puts it, “you can’t put a price on comfort.”


If you’re thinking of renovating your home, draw up a list of the changes you’d like to make; talk to renovation experts and get estimates. You may be tempted to use your 401(k) or IRA to fund the work, but consider the tax implications. A home equity line of credit (HELOC) may be a better option, as it gives you a lump sum upfront, to pay back over the long term, with your house as collateral.


TIAA-CREF can help you budget for your home renovation project. We recommend you start off by asking some key questions:


  • How long will I live in the house? If you plan to stay there long term, you will get the full return on big-scale remodeling such as kitchen renovations.
  • How much should I pay? Keep in mind that the final cost could be higher than the original estimate. You may also need to budget for extra expenses such as eating out while your kitchen is being revamped or sleeping elsewhere during a bedroom makeover.
  • How should I find a contractor? Personal referrals are advisable. Ask around, find out who’s had some work done to their home recently. If you need to search online, read customer reviews. Make sure the plumber or electrician you choose is licensed, bonded and insured. All work needs to be done “to code”—in other words, it has to comply with all local building requirements. Set deadlines and don’t pay for everything up front.
  • Renovations are expensive: Where can I cut costs? Investing in energy-efficient fixtures and appliances will save you money on energy bills in the long run. Consider doing some of the renovation work yourself: Painting and other finishing touches don’t necessarily require professional hands. Remember that contractors are busiest during the summer months; therefore, you may get a better rate if you wait until January or February to avail yourself of their services.
  • Am I entitled to any tax relief?


The tax information contained herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may  be imposed on the taxpayer. It was written to support the promotion of the products and services addressed herein. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.