Should you purchase a larger home in your neighborhood when your mortgage is close to paid off, or should you focus on saving for retirement? The answer is, it depends on your age, your children’s ages, your overall financial picture, and when you want to retire. Ask yourself, what do you have for debt? How much are you contributing to your children’s college education? Do you have a savings and how much? What do you have for life insurance? Next, prioritize your goals in terms of immediate, short-term, and longer term. Once you have a clear picture of your goals and the costs involved, you will be able to decide with more certainty if buying the larger house is the way to go.
- A homeowner has a two-bedroom home and wants to know if buying a larger home would be a wise investment or should he just save the money on retirement.
- According to Gene McGovern, a financial planner, the question the homeowner asks boils down to opportunity cost – the value of something foregone to gain something else.
- To answer that question, the financial planner would need details about the asker’s personal and financial situation like age, number and ages of children, and marital status.
“We’re glad you’re in good financial shape, but we’re even more glad that you’re looking to the future as part of your question.”