Well this was an interesting scenario I heard from a real person. When it comes to money I think we all want to make decisions that yield the best return on investment. At the same time, it needs to meet our lifestyle demands too. So imagine this scenario. Throughout the years you have developed a decent savings and pretty much have everything set accommodation wise such as your own house. You are now retired at say 60 years old and living on a small fixed monthly income.
Now for whatever reason you lost your house and have say $250,000 left in the savings. So, you need to find a new home. The problem is that you canâ€™t buy a house for $250,000 and so you need to go for something smaller such as a Condo. The issue is everything costs at least $200,000 which means you will have $50,000 left. Assuming you donâ€™t work to generate an income and just rely mostly on your small monthly income, you will last about 3 to 5 years if you are still in a â€œretirementâ€ mode. You want to live by yourself too and so sharing accommodations is out of the question.
Now the other option is to not own any property but rather just rent a place at like $800 to $1200 a month. So theoretically, if you insist in being in a retirement mode still this can bring you a long ways further if you are not expecting to be around for like another 20+ years.
However, the person mentioned that idea was out of the question as it was stupid to pay that much for rent and not own the property. In a situation like that would you still personally be so dead set on an investment kind of mentality?
For me personally, if I had to choose between these two only I would probably go with the renting route. Although, realistically for myself if I was given a choice I would go with a hybrid route where you would have to semi come out of retirement and do something to generate a decent cash flow again.