I am 35 and I don’t know if I’ll ever be able to buy my own home. Is my financial wellbeing in retirement in jeopardy?

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I am 35 and I don’t know if I’ll ever be able to buy my own home. Is my financial wellbeing in retirement in jeopardy?

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A. Great question and it is one that has arisen a lot recently on the back of a tight property market and rising property valuations. That said, while owning a home is one of the four pillars to building financial wellbeing, it is not the only one. But let’s examine some basics.

First, while owning a home does allow the owner(s) to (tax efficiently) build personal wealth through the pay down of the mortgage and rise in equity, it is not without cost. So, where a mortgage is paid off, there can be a temptation to argue that the owner is without cost; nothing is further from the truth. As a property ages, so will its upkeep costs and this needs to be factored into the household budget. Other costs also like insurance, energy efficiency and even property taxes are always going to be a factor; even simple energy efficiency upgrades can be expensive. 

Of course, it goes without saying that wealth trapped in a form of the home can be very difficult to access. Yes, there are so-called ‘reverse mortgages’ that can release home equity without the need for regular monthly repayments. However, as they are loosely based on an estimation of when the homeowner will die, they are not for everyone. Additionally, placing a lien against the family home will often draw objections from those that might expect to benefit from an inheritance and so, scupper any plans by parents to take this route. 

Enrolling in an employer-sponsored pension or setting up the likes of a PRSA can go a long way to building other forms of wealth. Plus, they are an extremely flexible and mobile form of personal wealth. At my financial wellbeing seminars, I encourage those that have decided against buying a home to examine how they can supercharge their pension by early enrollment, maximize contributions and how to put elements of managed risk to work for them.  

Protecting your health is another major consideration. One can work in retirement. Individuals are also permitted to have reasonable levels of tax-free income but here, I point out that it is important to invest in one’s health as part of their overall financial wellbeing strategy. This will be critical when they reach retirement. Two of the biggest things they need to control are blood sugar and blood pressure as these have a significant effect on health and quality of life later. Both can be improved through a good diet and regular exercise. 

So, there are many ways to improve your financial wellbeing prospects in retirement. While property can play a big role, it is far from the only means of achieving it! 

Frank Conway is a financial wellbeing coach and founder of MoneyWhizz.

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