Widowhood, retirement and mortgage

I have a major dilemma that is causing me much anguish and I don’t know who to turn to…more than anything, I’m embarrassed.

I became a widow, very suddenly, in November of 2019. Unfortunately, my husband and I have very little life insurance. We were two weeks away from closing on our forever home. I made the decision to back out of the house deal, because it was too much home for just me. My brother was going to do a land deal and build me a house. The land deal fell through and the prices of building material began to rise. I decided to simply purchase a home and now, house prices are out of control. I am 6o and a teacher, however, I have only been teaching for 12 years…I want to make it to at least 15 years. According to my calculations, I will make right at $3200 a month. At this age, can I afford even a small home on this market and make mortgage payments on this income? I can’t afford a financial advisor and I;m just desperate. Even renting is out of sight.

Sorry for your loss.

There’s not really enough information for anyone to make a well-informed guess about buying a home. Among many things, It depends on how much you’ll have to pay for a house in your area;
… how much money you have for a down payment;
… how much income you have now while you are working;
… how much of your income you can afford to pay for your home now;
…and how much income you expect to have in retirement.
Also very important is whether you can make a substantial down payment and still have an adequate amount of savings in liquid assets for emergencies – including things like a job loss or cut in pay.

To me it is not clear whether that $3200 is how much you expect as a pension, or whether it includes social security, and/or whether it includes RMDs from retirement plans such as 401(k)s and IRAs.

Especially if you retire before Medicare age, another big question is whether you will have health insurance paid for or subsidized by a pension until you qualify for Medicare.

Another question is about your future Social Security income. While some teachers in some states may not be contributing to social security, presumably you will have some, assuming you worked at least enough quarters before you started teaching. Or you may qualify for SS based on some percentage of your deceased spouse’s SS contributions.

Probably the biggest question is how much you’ll have to pay for a home in your area. In my neck of the woods in the suburbs a few miles across the river from Atlanta, as well as in another state I’m familair with, it would be virtually impossible to find even a small house that could be bought with $3200 per month income – unless you have a HUGE amount for a down payment that can reduce the balance to be financed.

While you may have enough income now to qualify for the mortgage loan – and to afford it now – a big payment with increasing taxes, insurance, maintenance and repairs over the years may be a burden assuming you will have less income in retirement.

Can you provide more details?

jimb

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In addition to what Jim says below, call social security and see what you would receive at 62 and at full retirement age and at age 70 on your own retirement benefit, and at age 60 and full retirement age as a surviving spouse. Depending on whether you paid social security taxes on your teaching income or not, it can affect those numbers.