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:
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.