Buying a second home for retirement, vacation, or investment was part of my retirement planning. Read how my decision considered both retirement financial planning, and the other issues that go towards living life to its fullest in retirement.
when I was in my mid fifties, I was being urged to consider buying a second
home, for vacation, and ultimately retirement. The Celtic Tiger in Ireland was roaring,
money was cheap, and everyone - taxi drivers and developers - were talking
about the property boom. It was difficult not to envy those who were sitting on
a substantial equity interest in their main residence, and a considerable
increase in value on their holiday home in Spain/Portugal/Bulgaria/West
Cork/Kerry, or anywhere!
Wouldn’t it be great to have a holiday home? And such a good investment, sure you couldn’t go wrong with ‘bricks and mortar’. But had I missed the boat? Some naysayers were talking of a property bubble.
Well I didn’t buy at that time. Partly through inertia, but also for reasons that proved to be advantageous, with hindsight. I’ve always been conservative and prudent with money. I didn’t have a lot of cash and I was reluctant to take on a second mortgage. I was so looking forward to having repaid my mortgage and being debt free at 60. My late father, who was a saver on a modest income, would have approved.
Also, as a Finance Director I questioned the sustainability of the extended bull run on all asset classes. I had never experienced this in a career spanning 35 years. But wouldn’t it be nice to have a holiday home?
I wasn’t ready to invest. It didn’t suit my life
stage. I wouldn’t have enough time to enjoy it. I was busy at work, and
weekends were filled with hobbies and activities that required me to be in a
variety of locations - golf, hill
walking, GAA and other sporting interests. I was active in my community and
with friends. My children were in their late teens, exams were a constraint,
and they were on the threshold of doing their own thing at weekends and on
I enjoyed the occasional family weekends away in Kerry, Galway, or Wexford, the golf trips with my golf society or favourite four ball, and the 10 days annual leave in Spain, Portugal, or the Canaries. And what about the occasional wonderful long haul trips to California, Hong Kong, Australia, Africa, Thailand, and Argentina!
But the main reason for not committing to a holiday home investment was that I wasn’t sure then what way I wanted to live in retirement. Now I appreciate what I want, as you will discover if you read My Own Backyard.
Is buying a second home for retirement, vacation, or investment part of your retirement planning? A second home could provide excitement and flexibility for your retirement years. Whatever your reason, you are making a real estate purchase and need to exercise the appropriate level of care. With careful planning, this could be a valuable and significant option.
The following comments may assist you in making that decision:
Are you going to use it as a retirement home, or a place for vacation? If you view it as a vacation home with potential to earn income, don't count on that income to help you pay for the house.
Your idea of a perfect retirement/vacation location, e.g. beach, or mountain, with or without a retirement community, or neighbors, will not be attractive to some renters.
Investment experts advise that you should never look at the decision primarily as an investment. A vacation house will never provide the returns of a diversified portfolio.
Get advice to figure out what you can afford. And consider the cost of running the house, including maintenance and utilities.
Retiring to the dream location you love to visit? It may be a very different experience to live there permanently. What’s it like at different times of the year?
Do you want a part-time vacation home or a year-round home that you can move into after you retire?
Consider other types of property options, including condominiums of retirement communities, and these also include some significant benefits.
With careful planning buying a second home for retirement could fulfill a dream retirement or vacation location, and provide an additional source of income.
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