If I ever write another book, and I hope to, it just might be about how our homes fit into our wealth plan and our retirement. I find that once people retire and feel comfortable that their finances will support their lifestyle, the next most important thing on their mind is their home. And once that is sorted out, the last piece is their estate. Often the two – their house planning and their estate planning – are connected.
Our homes are a major part of our wealth and our net worth. Many issues involving our homes arise post-retirement and most involve money. Should we renovate? Should we adapt it for old age? Should we downsize? Do we need to use the equity from it to fund our retirement?
As a family’s wealth advisor, I get brought into the discussion to help ensure that the path they choose makes financial sense. A lot of the time, they want me to put together a “business plan”, for lack of a better description, to support their decision-making.
But I find the biggest barrier to change is not financial at all. The most stressful part of dealing with their home is, well, their “stuff” …once again, for lack of a better description. They feel overwhelmed at the thought of heading to the basement or the garage to clear out all that has accumulated over the years.
Sometimes, it requires the input of others, such as their adult children who never fully moved out. There is often a difference of opinion about what should be kept and what should be discarded. Sometimes that conflict resides within an individual. “I don’t know why I’m keeping this, but I just can’t part with it”. Quite often, the whole thing just gets avoided.
If they are renovating or downsizing, they usually have no choice but to deal with their stuff and the task begrudgingly gets expedited. But when there are no imminent changes with the home, the task gets put off and starts to weigh on people when they think about their eventual demise. Most people feel compelled to deal with their stuff themselves and not burden their heirs with having to clean it up. They feel guilty if they leave the world and a mess behind for someone else to deal with.
I’ve said before that if someone leaves you their estate, what they are often leaving you is a really good-paying part-time job. “You get all my money and my worldly possessions. All you have to do is spend a whole bunch of hours over many months sorting through it and disposing of the useless things I never threw out”. It’s like they’re saying “I love you and you can have all my money…. But there’s a catch”.
So what should we do? Like any nagging problem we’ve been avoiding, just get started. Chip away at it. Have the family conversations to sort out who wants what, if they want it at all. You might not finish the job. But any progress is better than the status quo. And who knows, you might gain momentum and check one more thing off your to-do list.
Instead of trying to summon the power of one big thrust, just start wiggling so that the monkey’s fingers eventually lose their grip and he falls off your back. Then you can say, “I love you. You can have my money. And there’s no catch”.