How to Downsize with an Expensive Home
Finance expert David Phillips joins Suzanne to talk about how a family owning a million-dollar home can downsize most effectively, maximizing their money for the future. He recommends investing some of the proceeds from the sale into an annuity with a guaranteed income rider.
“Any time we sell something that we have gains, we’re going to have to pay taxes, and right now, the capital gains tax rate is the lowest it’s been in about 50 years. Depending on what state we live in. The most common idea right now is to take the money after the tax and secure guaranteed income for you for the rest of your life. Let’s say we downsize and we end up with $100,000. A 65-year-old could put in $100,000 and jointly create $6,000 a month in income for the rest of both lives. If we’re just by ourselves, a male $7,300 a female $7,000 a month. It’s called a fixed-indexed annuity with guaranteed income. Call Todd here at my office and say, hey, I want to look at guaranteed income for the rest of my life, and then he’ll show you the different options that are available.
Some Baby Boomers are downsizing to a continuing care retirement community or CCRC. Suzanne asked, “Let’s say you get a million dollars for your house and you end up having an entrance fee to a CCRC of 500,000. How does that work?” David explains, “You’re just basically converting your cash into a place where you don’t have to have income to satisfy expenses because you’re done. You still have your $400,000 that you can live off of plus your social security, which can actually pay your community fee, which is not much when you live in a CCRC.”
“One of the things you can do to prepare is get a long-term care policy right now, while you can. You have to look at all the options and that’s one of the options. Take some of the money and turn it into – we call it leverage care solutions or asset-based care plans. I wrote a book about that called “Leveraged Care Solutions,” and they can get that through our website.”
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Originally published January 30, 2024
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