Buying retirement home while still working can be a risky proposition
It's OK to purchase a place to retire if your final paycheck is only a few months away, but it's a different story if you don't plan to move for several years.
Q. We live in the Midwest, but we plan to sell our home and move to Florida or Hawaii when we retire about five years from now. We know home prices in both of those states are rising quickly, so we have been thinking about buying our future retirement home now (at today's prices) and renting it to tenants until we leave our respective jobs in 2022 or '23. What do you think of this idea?
A. Buying your future retirement home now may seem tempting, but it's an idea that also is fraught with risks.
Sure, prices in many retirement "hot spots" are soaring today. But there's no guarantee they'll keep climbing, especially over the next five or six years before you and your spouse expect to quit working.
You would kick yourself if you bought the new house for top dollar now, only to find out the historic rise-and-fall cycle of real estate values found the property at the bottom spoke of the wheel when you're finally ready to move.
In addition, because your proposed retirement home would be hundreds or even thousands of miles from your current house, you would need to hire a professional management company to find a tenant and handle day-to-day chores, because you would be too far away to manage the property yourself. Management companies typically charge 10 percent or even 20 percent of a property's gross rental income, which would cut deeply into your bottom line.
Perhaps the biggest issue, though, is that a lot of personal things could happen between today and your expected retirement date in five or six years. You or your spouse might decide to work even longer, become sick or disabled, or simply decide to stay in your current home because you don't want to leave relatives or longtime friends behind.
Those are just a few of the "what ifs?" that could drastically alter your future housing plans.
I wouldn't object to your idea if your retirement date was just six months or a year away. But you and your spouse don't expect to stop working at least a half decade from now, so buying a retirement home in a faraway place today just seems too risky.
Real estate trivia: An analysis of U.S. Census Bureau statistics conducted by the nonpartisan Pew Research Center found that more than 19 percent of sunny Florida's roughly 21 million residents are 65 years of age or older, the highest percentage in the nation. Chilly Alaska had the lowest, at about 9.5 percent.
Q. The garbage disposal in our kitchen stopped working a few days ago. It was installed about 16 months ago, but it came with only a one-year warranty. The manufacturer says we will have to either pay full price for a new one or call a plumber to (hopefully) repair the one we have now. Either way, we'd be out $100 or maybe even more than $200. What should we do?
A. With some luck, you can easily fix the problem yourself.
If the disposal doesn't make any noise when you try to turn it on, it may not be getting any power. Try to restore the flow of electricity by pressing its reset button, which you'll probably find on the underside of the appliance.
If that doesn't work, simply go the electrical panel box of your home and reset the circuit breaker that regulates the flow of power to your kitchen.
Should that fail to get your garbage gurgling, disconnect the disposal from its electrical outlet and then test the outlet itself by plugging in a hair dryer or small lamp. If the dryer or lamp doesn't work, replacing the faulty outlet with a new one is a relatively easy and inexpensive task that you probably can perform on your own.
Conversely, if the disposal hums when you turn it on but makes weird noises or doesn't grind, it's probably jammed. Unplug the unit from its electrical outlet, and insert a hex wrench - one was probably included in the box when you first purchased the appliance - and wriggle it in the hexagonal hole on the bottom of the unit.
Some new disposals cost as little as $50 or $60, but better-quality ones start at about $150, according to the price-tracking website CostOwl.com.
Q. We bought our first home last spring. We filed our federal tax return a few weeks ago and our fat deductions for mortgage interest and the like is earning us a big refund. How long will it take for the check to arrive?
A. The Internal Revenue Service recently stated that about 90 percent of all refunds are issued within 21 days after a completed return is received, so your check should be in your mailbox soon.
The fastest and easiest way to check the status of your refund is to visit the agency's website, www.irs.gov, and click the "Where's My Refund?" link on the right-hand side of its home page. Folks who don't have access to the internet can get the information by calling the IRS at (800) 829-1954.
Either way, you'll get the update after providing your Social Security or Tax ID number, your filing status and the exact amount of the refund you are owed.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405. Net proceeds will be sent to the American Red Cross.
© 2017, Cowles Syndicate Inc.