Controlling Retirement Housing Costs

Housing is the biggest expense of most retirees, according to the Department of Labor. But don’t take that literally. Most of the cost is what Labor estimates as owners’ equivalent rent, not a cash expense. Even so, this article gives the details and some advice on how to reduce the cost. The best advice is to eliminate your mortgage and have the house in good repair before retirement. Another tip: Don’t think downsizing is an automatic money saver. Important details count.

To be fair, the dollar amount spent on housing and home-related expenses decreases with age. But the share of these costs in household budgets remain stable at between 40% to 45%, depending on age group, EBRI said in a release.

Consider: Households age 60-64 spent on average $18,720 or 43% of total expenses on housing in 2011, adjusted for 2013 dollars; households age 65-74 spent $14,732 or 42%; and households age 75-plus spent $13,111 or 44%. Or put another way: you’ll need roughly $250,000 set aside at age 65 to pay for 20 years of housing expenses.