Retire to a Vacation Retreat

If you love to vacation there, wouldn’t it be a nice reward after a successful career to retire there permanently?

Many real estate agents report they are seeing more buyers purchasing a second home now, spurred by lower prices, with the plan to make it a full-time retirement residence later.

“Vacation homes commonly do become retirement choices,” confirms Mary Lu Abbott, editor of Where To Retire magazine.

But beware of becoming smitten too quickly. “It’s often easy to fall in love with a destination on a first visit. But before buying a second home, you really need to go back several times and see how a place ‘wears’ on you, whether you’re still excited about going there and whether it has a variety of attractions to suit your interests,” Abbott says.

And put your love through a test, she adds. “It’s important to check it out from a resident’s perspective rather than as a vacationer,” Abbott recommends. Visit during different seasons. Critically look at the amenities and services, like medical care, cultural and educational opportunities, outdoor recreation and proximity to an airport.

And most importantly, investigate the cost of living and all of the taxes that will apply when you live there.

Consider that buying a second home now could have an impact your retirement savings, says Carol Friedhoff, a Dublin, Ohio, financial planner.

Yes, home prices could be down in some areas from what they were in the peak of the boom. But it is hard to gauge what the price appreciation will be going forward, Friedhoff says. Assuming a three percent annual appreciation on the home, which Friedhoff says is a historical average, you may come out ahead if you don’t believe you can grow your savings by that much.

Moreover, if the cost of renting to spend your vacation time now at this spot would cost more than what you’ll be spending to own the place, that could tip the scales in favor of owning, Friedhoff says.