Never Retire - The Logic Behind Waiting To Own A Home

It's all about having wiggle room with money across the lifespan

Whenever I write about my decision to rent, I get the typical you’re flushing your money down the toilet response.

It’s important to address this in the Never Retire context, particularly as a follow-up to our recent installments on buying a home as you enter relative old age, rather than in your so-called prime.

I tied the thinking on that strategy together in a free newsletter post earlier this week. Paid subscribers can access the full set of stories that led up to that installment in the Never Retire archive.

Thanks to everyone who upgraded or subscribed to the newsletter this week, presumably in response to the aforementioned strategy.

I think it resonates because it’s an alternative we don’t see discussed frequently. But also because it’s a potential solution to a conundrum many of us who have determined we’ll Never Retire (at least not traditionally) face.

From a practical standpoint (we’ll leave the other more intangible, psychological reasons for other days), many of us who embrace the reality that we’ll Never Retire do so because we see we’re unlikely to save enough money to comfortably fund a traditional retirement.

In my experience of this, it also ruled out home ownership.

I just don’t have the personal financial firepower to buy a house where I live—Los Angeles—if I also want to be able to live the life I wanna live now and for the duration. To do this alongside struggling to save for traditional retirement seemed like the most futile of efforts.

I just wasn’t going to follow that path, ignoring reality along the way only to realize when it was too late, I had a problem.

It’s objective math in LA and places like it. You’ll save money—often lots of it—renting, especially if you’re able to rent below market rate. Beyond that, renting means you don’t have to come up with a down payment (which is basically six figures or close to it here) and live cash poor/house rich while you service a 30-year mortgage.

All of this said, I’m not against home ownership.

In fact, it’s part of my long-term strategy.

I’m just against home ownership for now. For me.

Had I set my sights on owning a home in Los Angeles, I would have accomplished that goal.

However, I’m uncomfortable saving so much money only to turn around and spend it on a down payment, followed by a hefty monthly mortgage payment I would have to make every single month for 360 months.

I don’t want to live for my housing payment and stress about hitting it every 30 days.

I understand the opposite argument.

Buy the house when you’re young, build equity, and end up with a great, paid off asset when you traditionally retire.

If you can pull this off, more power to you.

My Dad did it in textbook fashion. If you can be proud of your parents, I have been beaming for my Father ever since the day he called me to say I paid off the house.

He’s from the Silent Generation. I’m a young Gen Xer. Two completely different experiences of life.

If I lived in a less expensive real estate market—like Buffalo, which is close to where I’m from—that’s what I would do. What my Dad did.

Because, given the price of housing there, I could do it and still have a nice cash surplus at the end of most months.

This is really what it comes down to.

Giving yourself personal financial wiggle room.

Now and going forward.

The cornerstone of my Never Retire strategy is—

• Maintain as low a cost of living as possible

• Fill pots of money each month to satisfy my near- and long-term needs and wants

• Save enough cash to buy a place to live in a city I want to live in as I enter relative old age

Simply put, I’m building the personal financial firepower now to be able to, in my fifties (or sooner!), purchase a property and eliminate my housing payment.

Through it all—from today until that part of the strategy unfolds—I’ll have wiggle room with money.

A nice comfortable cushion alongside the vision of lowering my cost of living even more when I want to work even less—in relative old age.

Taking on a mortgage would reduce and maybe even leave me with no wiggle room. No cash cushion. That’s a stressful thought.

So renters aren’t against home ownership.

It’s simply a stage of life thing, particularly in a Never Retire scenario.

When I become a homeowner, I will have drastically reduced my cost of living.

How many people can say that?

Probably not many today.

However, we’ll hopefully see that number grow, as new ways of managing money and work as they intersect with life emerge and increase in popularity as we continue to navigate a world that’s a lot different than the one our parents grew up in (no matter how old you are!).