I live in the Philadelphia suburbs. I recently retired as an orchestra teacher in the public school system. I will be on Medicare in December.
I sold my large home and live in a modest apartment for $1,300 per month rent. So I’m comfortable financially and easily making ends meet.
HOWEVER, I really want to buy a small home. The real estate market is off the charts right now and prices are insane. I would also use most of my savings and have a mortgage. My payments would be about the same.
I have $200,000 in an IRA invested in stocks and bonds, $14,000 in a Roth IRA that I just opened last year and $80,000 in savings. I am debt-free and own a brand-new car.
I am collecting a monthly pension of $3,000 and $2,000 in Social Security after taxes and Medicare supplemental payments. My pension plan is a defined-benefit plan with a $900,000 death benefit.
Can you offer any advice as to whether or not I should buy a home?
You can clearly afford to buy a home.
Normally I’d start the finger-wagging if you told me you wanted to spend most of your savings for a home purchase.
If you were still working, I’d ask you what would happen if you lost your job. And if you were a retiree who depended mostly on investment income, I’d warn you that a stock market crash could temporarily wipe out much of your nest egg.
But you have no debt and $5,000 of monthly after-tax income that’s guaranteed for life. Your income isn’t contingent on a salary or the stock market’s performance. So you can afford to spend a lot of your savings to buy a home.
Plus interest rates are historically low. That’s