Retirement Housing Considerations

As you approach retirement, you undoubtedly will be thinking a lot about your future housing arrangements. Here are some questions you may want to ask yourself as you’re considering your retirement housing options:

1. Where do you want to live?
   

   • Would you like to be closer to friends and/or family?
   • Have you always wanted to live in a particular area of the country?
   • Is it important to have access to several quality health care facilities?
   • Can you afford to live in your current community? Or should you consider moving to a community with a lower cost of living?
   • Do you want to have a wide variety of employment and/or volunteer opportunities?
   • Is it important to live in a community with a low crime rate?
   • Would you rather live in an area with a different climate?
   • Are you looking for a community that provides plenty of opportunities for outdoor recreation? Do you want to be close to golf courses, parks, bicycle trails and bodies of water?
   • Do you enjoy having easy access to cultural activities? Would you like to be close to theaters, museums, art galleries and libraries?
   • Is public transportation important?
   • Would you like to live close to grocery stores, department stores, hardware stores and other retail outlets?
   • Should you rent or own?
   • Will your retirement benefits, Social Security and personal savings be enough to cover your monthly rent or mortgage payments without straining your budget?
   • Should you purchase a home outright with a lump sum? Or would it be financially smarter to take on a mortgage and make monthly payments?
   • If you’re considering moving to an unfamiliar community, should you rent housing for a year or two while you decide if you like the area and/or choose the right neighborhood?
   • Are you anticipating other moves in the future?
   

2. What kind of housing would be best?
   

   • Do you want the independence and privacy offered by a house? Do you enjoy gardening and other yard work? Do you want a big yard?
   • Would you rather have yard work and maintenance tasks handled by someone else? If so, would you consider moving into a condominium, co-op or other similar housing?
   • Should your new home be wheelchair-accessible?
   • Do you mind going up and down stairs?
   • Would you like to live in a building with a security guard, video surveillance and other security features?
   • Should you consider checking out assisted-living facilities or other types of retirement housing? Do you want to live in a housing facility that offers you independence now but that can provide assistance if you eventually require it?
   

3. What happens to the clergy housing exclusion at retirement?
   

   Throughout their active ministry, most clergy exclude a housing allowance from their gross income when paying federal income taxes. The good news is that this housing exclusion is available after you retire. At that time, though, your annual conference will become the church entity that determines if your pension payments are designated for the housing exclusion.

   You’ll be able to exclude from your taxable income all or a portion of the pension distributions you receive from sources covered by your annual conference’s housing resolution (published in the conference journal). The portion of such distributions you may exclude is equal to the smallest of the following amounts:

   • the amount designated as a housing exclusion by your annual conference for the tax year in question;
   • the amount spent for your housing (mortgage principal and interest, utilities, taxes, insurance, furnishings, maintenance, etc.); or
   • the current fair rental value of your home, including furnishings, plus the current-year cost of your utilities (whether you own or rent your home).

   For more detailed information about the housing allowance and a housing allowance exclusion worksheet, please see our Are You on Track to Retire? brochure (clergy version).

Use These Handy Housing Calculators

General Board participants have access to the Ernst & Young Financial Planning Center website at no cost. This site offers a wealth of resources, including calculators on various housing-related topics, such as:

• renting vs. buying,
• mortgage loans,
• mortgage debt consolidation,
• adjustable rate mortgages (ARMs) vs. fixed-rate mortgages, and
• fixed-rate mortgages vs. interest-only mortgages.

For more information about these and other topics, visit the Ernst & Young Financial Planning Center website (company code: gbophb; company program: gbophb).

You also may be eligible to speak to an Ernst & Young financial planner at no charge about how to structure your home purchase to maximize use of the clergy housing allowance.