Seniors Avoid Money Troubles by Owning

Boomers may want to think again before selling their home and renting, a lawyer says. Otherwise, they may be giving up a significant amount in their retirement assets.
By: Susan E. Peterson: REALTOR® Magazine Online
Boomers thinking about downsizing are increasingly considering the possibility of selling the homestead and renting.

But Julian Zweber, a lawyer specializing in senior law, advises thinking analytically before making that decision. He says selling their home can mean a couple gives up a significant amount of security and stability in their retirement assets.

If a couple sells their home with the idea of investing the proceeds and living on the interest and renting, they are making a significant portion of their invested funds subject to “spend-down” rules before one spouse would qualify for Medicaid to cover nursing home care, Zweber points out.

"If you're married, you can protect your home, one car, household goods, [prepaid] funeral arrangements, and a certain amount of money," generally a maximum of $101,640, Zweber says.

People who have turned their home into a nest egg will have to spend that money, potentially leaving the healthier spouse with no place to live.

Other factors that favor holding onto the home rather than selling include the deductibility of mortgage interest and tax payments and the availability of reverse mortgages and home equity loans for emergency cash, Zweber notes.