Never Retire - Paying Cash For A House The Day You 'Retire'

In today's personal financial environment, this might seem impossible. It's not.

This has been the focus of our recent discussions in the Never Retire newsletter.

Taking a backwards approach to personal finance, particularly how you plan for getting older and working in retirement.

Longish story short, from our previous installment, which went out to paid subscribers a couple days ago—

The backwards approach. You maintain a low cost of living during your prime years, heading toward traditional retirement age. You probably rent an apartment.

Because you suspect you won’t save enough for traditional retirement, you aim to accumulate enough to pay cash for a home at or around traditional retirement age.

At this juncture you drastically decrease your cost of living—you have eliminated your monthly housing payment—and work in retirement simply to satisfy your other, presumably low expenses, hopefully with the supplement of additional savings you already have and continue to amass.

Summary. You don’t spend your prime years doing what has proven impossible for many of us.

Saving to buy a house or service a mortgage at the same time as you’re saving for traditional retirement.

Instead, you build a nest egg that will have fallen short of allowing for traditional retirement, but is enough (or more than enough) to pay cash or close to it for a place to live.

Over the course of three installments, we covered—

• concrete ideas on how to get that done

• details on how and where I plan on making this happen in the next few years

• the impact your personality might have on how you’ll proceed

Today’s installment ties it all together.

It’s important to consider what we’ll go over because it’s easy to feel hopeless in today’s environment.

Between inflation, sky high mortgage rates, and astronomical housing prices (to rent or buy), something as lofty as paying cash for a house might feel impossible.

Except it isn’t.

The other day my girlfriend and I were having lunch at Downtown LA’s Grand Central Market. I highly recommend checking it out if you’re ever in Los Angeles.

We struck up a conversation with a tourist from Pittsburgh.

I lived in Pittsburgh for about a year, a long time ago.

Pittsburgh doesn’t get enough credit. It’s a beautiful place with some super cool vistas and neighborhoods.

Source

Anyhow, the interaction got me thinking about what it costs to buy a house in Pittsburgh.

So I did some research and discovered that the median listing price of a home in Pittsburgh is $233,000. That’s actually down 13.7% year-over-year.

Nationally, the median listing price was $405,000 in March, up 13.5% annually.

I’m not exactly sure what’s happening in Pittsburgh, but I assume it’s similar to the situation in Buffalo, where the median listing price also declined 7.2% to $225,000.

I’m from Western New York and have a decent handle on that market.

Head to a solid urban neighborhood in Buffalo, particularly Elmwood Village, and prices rise, however not quite as much as they do when you make the same migration in more expensive markets.

For example, the other day we featured a two-bedroom, two-bathroom, $390,000 condo in Elmwood Village to illustrate our strategy. I know somebody who recently sold their home in Cheektowaga, a suburb of Buffalo, for considerably below the area’s $225,000 median.

Remove my actual hometown—Niagara Falls—from the equation and that median probably increases considerably as well.

These tweaks and local qualifiers aside, two things holds true.

One, median means middle. Half of the values reside below the median. I often have to remind myself of this.

So opportunity exists below that $405,000 national median. Opportunity likely exists in cities with medians at or above the national number. Opportunity definitely exists in these relatively inexpensive markets, such as Buffalo and Pittsburgh.

Two, visualizing things like this—with real numbers—helps.

If you determined you’ll Never Retire, it’s probably because you concluded you would not be able to save $1,000,000 or thereabouts.

However, you might get close or close enough to execute the aforementioned plan B.

$500,000—for example—can go a long way in some parts of the world, including the currently hot United States.

You can score yourself a nice place to live in good places to live for even less. For cash.

Which brings us back to where we started not only with this specific strategy, but the entire umbrella notion of Never Retire.

Why run yourself into the ground physically and mentally trying to achieve something that might be impossible for you (i.e., saving $1 million or more for traditional retirement) when you can save a fraction of that as you live the life you wanna live now while preparing to enter relative old age in a position of personal financial strength (i.e., by paying cash for a place to live and eliminating your housing payment at such a crucial point in life).

People usually criticize me for writing short sentences. That last one is super long, at least by my standards.

But it’s also super important.

Viable alternatives exist to most norms and to most of the hysteria that dominates the financial media.

You just have to consider the nuance that exists in your own needs, wants, desires, and preferences as well as the broad economic conditions we all have to find ways to work around.

Where there’s a will, there’s a way.