Just because most of our parents and grandparents are stuck in the 9-to-5 loop until they are 60 years of age, doesn’t mean that the younger lot will follow suit! In fact, “Grind in your 20‘s, build in your 30’s and chill in your 40’s.” happens to be the motto of every millennial out there. And these youngsters are leaving no stones unturned to pursue it to the fullest. Individuals nowadays begin to plan their retirement from very early on in their career, making buying a retirement home not a very distant dream. Now, it is quite normal to wonder whether you should consider purchasing a home before you retire. To help you out in its pursuit, we have curated the top 4 reasons why you shouldn’t think of delaying the process!
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Real estate enthusiast Ray Brown had stressed, “The best time to buy a home is always five years ago.” On that note, here’s why you should consider getting a retirement home early in your career.
It will serve as a source of rental income:
Purchasing a second home early in your career will serve as a source of income if you decide to sublet it. With the extra bucks flowing in, you can either use it to pay off your housing loan EMIs or decide to invest in your savings corpus for a more secured retirement living. Experts recommend home buyers to purchase a ready-to-move-in property if they wish to generate income from it right away!
Doing so, you will be able to lease the home more quickly instead of waiting around for the construction to finish.
You can pay off the loan amount before retirement:
Hefty EMIs and retirement is a combination that is not much desirable for anyone. So, to be EMI free in your later life, be nifty with your retirement home planning. To begin with, buy your dream home at least 10 years before you actually retire. This way, you will be able to pay off a significant share of the borrowed sum comfortably before retirement.
However, let’s us warn you against the immediate impact of purchasing a home on your investment portfolio and long-term financial goals in general. You need to evaluate them carefully before making any concrete decision.
You can avail of tax benefits:
Which is the most dreaded season in a year?
THE TAX SEASON
While paying taxes is an undesirable task for you as a salaried or self-employed person, you can save significantly on it as a homebuyer. Section 80C of the Income Tax Act guarantees tax benefits of up to Rs. 1.5 lakh on principal amount in the form of deductions. Furthermore, Under Section 24b, you will be entitled to tax deductions of up to Rs. 2 lakhs on interest pay-outs.
As someone who is planning an early retirement, you can also consider putting your money into retirement-friendly investment schemes like – National Pension System, Public Provident Fund, etc.
It will help to hedge risks and emergencies:
Home is where you feel the safest! The statement also stands true when it comes to providing security against unwarranted situations. Typically, buying a second home not only extends security but also provide peace of mind. To elaborate, individuals who purchase their retirement home early in their career can combat the impact of inflation successfully. It is because the net value of a property tends to appreciate over time and proves to be a safe investment choice for cushioning emergencies.
But, before you proceed to plan early retirement in India, or think about house hunting hear us out! An asset like a home usually takes a long time to liquidate. It is mostly because of the high cost involved. However, to make the process simpler and draw the attention of prospective tenants, purchase a house that is in an easily accessible area. Also, make sure the property is close to hospitals, retail centre, market, school, etc. Other than these, set some time apart for maintaining the property to keep its value intact for a long time.
Nonetheless, if FOMO drives your decision of purchasing a retirement house, you better reconsider it! Fear should never serve as the sole reason why you decide to buy a house. You should note that purchasing a home and planning early retirement in India will require you to build coherent strategies. For example, the first thing that you will require to do is start saving up! Starting early will proffer you the advantage of streamlining and adjusting savings as per your needs. So, ask yourself how to retire early and formulate plans like buying a retirement home, going on a world tour, etc. accordingly!