8 Unique ways to reduce your housing costs in retirement

One-third of the average American household's budget consists of housing cost. This cost is the largest expense that most families bear each month. If, those families want to save enough money to secure their retired life, they should reduce their living costs, especially housing costs. So, it makes sense to analyze and reduce your housing costs in retirement.

1. Managing Your mortgage

Pay off your mortgage before your retirement, if possible. If you have several years until retirement, try to refinance it with a 15-year fixed rate mortgage. Presently, the interest rates are near all-time lows these days.

2. Downsize your home loan

Downsize to a smaller house where you can reduce your utility bills, maintenance bills, and also the housing taxes. You can also be able to extract some home equity and use that to increase retirement income.

3. Moving to another place

You can move to a place where other costs are low. Living costs such as transportation, healthcare, or food costs can be lower in different states and different cities. So, moving out of the suburbs and living in a city could be much expensive and a not so pocket-friendly idea.

You should move to a less expensive part of the country directly. If you have difficulties to find such places, you can log into several websites to find best places to retire. For an example - Panama, Costa Rica and some South American and European countries have few places where the cost of living is pretty low.

4. Looking for renting as an option

You can rent out your rooms for a steady monthly income. If you own a big house, you can use your unused rooms for rent. You can allow students or a small family to stay in your house. In return, you can earn some extra money that you can save for the future.

5. Sharing rooms with people

You can share rooms with other retirees. Practically, you may not share the cost of housing, but you can share your insurance costs, utility bills, and food expenses.

6. Choosing reverse mortgage

You can consider a reverse mortgage program to earn after retirement. This option is perfect for you if you own a house and plan to stay there for many years. If you didn't or don't plan to buy long-term care insurance, then you should keep your home equity in reserve. You can use that equity in the future when you need to pay high bills for long-term care.

7. Living with children

You can move in with one of your children. This might be a very critical and emotional decision for you and your children. You children may feel uncomfortable living with you, as they have their own lifestyle, priorities, and housing expenses. This is upto you - would you like to become a burden to your child's family?

8. Selling home

You can sell your home and rent one which fits your needs. A place with less square footage or a home in a senior community may do the tricks.

You can use a "buy vs. rent" calculator and compare both the options. Compare all housing costs of buying or renting. Don’t forget to include the assets you'd use for a down payment.

To analyze this situation as a retiree and as an owner of a home, estimate the surplus money you'd be getting from selling your house. Of course you need to subtract selling costs to know the net amount. Use that money as the down payment on a smaller, downsized house. Then compare that option to the cost of renting a home or apartment.