2611: Place is Core to Financial Planning by Ryan Frederick of Here.life on Housing Decisions & Investment Potential

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[00:01:00] This is Optimal Finance Daily, Episode 2611. Place is Core to Financial Planning by Ryan

[00:01:07] Frederick of Here.Life, and I'm your host and personal finance enthusiast, Diania Merriam.

[00:01:14] And now, let's get right to it as we optimize your life.

[00:01:22] Place is Core to Financial Planning by Ryan Frederick of Here.Life.

[00:01:28] The importance of financial planning is increasing. With increasing longevity, less generous.

[00:01:34] Interish Pensions and Limitations of Social Security. Greater responsibility is falling on the individual to manage personal financial well-being. And note, experts expect half of kids born today in developed countries to live to at least a hundred years of age. Complexities of living longer. Don't forget about housing. But there's another factor driving the importance of financial planning. Complexity. There are more what-ifs that occur today. Some people are trying to live in this way.

[00:02:03] What if my investment returns are below assumptions? What if high inflation is here to stay? What if my or my partner's health deteriorates?

[00:02:13] What if I lose my spouse or my marriage dissolves? What if I outlive my financial means?

[00:02:20] Housing is one of the complex issues. Housing is a leading expense throughout life.

[00:02:26] We need a roof over our heads, and between high interest rates, rising costs of energy, increasing home insurance, and so on, that roof can be pricey.

[00:02:33] On the other hand, housing is also an investment for many people. Approximately 66% of people in the US own their home, with the average mortgage holder having about 185,000 in home equity.

[00:02:51] Housing is an investment whether you own your home or not.

[00:02:56] It turns out that housing may represent more of an investment in your future than you realize where we live and how we choose to engage where we live.

[00:03:05] how we choose to engage where we live.

[00:03:08] is a key driver in our healthy longevity. Our DNA only accounts for less than 10% of our longevity. Our lifestyle and environment are much more significant factors. Our place addresses not just our physical, psychological, and emotional needs, but also influences our sense of purpose, social connections, physical well-being, and of course, our financial well-being. Invariably, decisions about place involve trade-offs that

[00:03:37] impact your future self. One might optimize for low housing costs, for example, and choose to live

[00:03:44] in a small dwelling in a low-cost area. This approach may succeed in the minimizing housing expenses,

[00:03:51] but introduce other challenges that impact healthy longevity. Your new home may not be close to friends,

[00:03:58] or be a place where making new friends is easy. In this instance, you risk social isolation and

[00:04:04] loneliness. Areas of increasing concern that are known to materially impact are near and long-term

[00:04:11] health. On the other hand, one could rationally overspend on housing for a chapter in life to

[00:04:17] enhance overall well-being. For example, a person may be in a position where being active is particularly

[00:04:24] important. One may elect to move to a place such as a state like Colorado or a city like San Diego,

[00:04:30] where being active is part of the culture, and the weather and geography are supportive of

[00:04:35] outdoor pursuits year-round. Once an initial move is made, subsequent moves can be more

[00:04:41] is made within the area that are better aligned with long-term financial well-being, such as moving to a less expensive apartment or a shared house with roommates. We should be particularly mindful of situations that represent poor financial investments that are also poor investments in our healthy longevity. One of the most common examples in this category is when empty nesters or solo-agers remain in single family homes that no longer best fit their lives. In such instances,

[00:05:11] these homes can be expensive to operate and maintain, and often the equity value of their homes may not appreciate at the same pace as the broader stock market. In other words, they may not be additive to financial well-being. At the same time, these homes may create social isolation as friends move away and may not be as conducive for daily physical activity as other housing options. Some multi-story homes could be downright hazardous,

[00:05:40] particularly for older adults at risk of falling. Make place core to your financial planning. Fortunately,

[00:05:50] as financial planning takes on greater significance, opportunities for help are increasing too. There are

[00:05:56] many online tools for do-it-yourselfers and more financial planners and wealth advisors are broadening

[00:06:02] their set of services to help people consider the various factors to optimize the chances of living a

[00:06:08] long, financially secure life. Whether you decide to map out a plan on your own or work with an advisor,

[00:06:15] Be wise to make sure place is core to your financial planning. Determining where to live may be complex, but it may be the most important decision you'll make for each chapter of life.

[00:06:28] You just listened to the post titled "Place is Core to Financial Planning" by Ryan Frederick of Here.Life. And I'll be right back with my commentary.

[00:06:42] Wealth Simple is offering a 0.5% match when you transfer an account.

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[00:07:10] Do I have to say all that?

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[00:07:21] Whether you're skimming the treetops like Tarzan's long lost twin,

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[00:07:33] Whatever vacationer you are with Sunwing, you save more so you can do more.

[00:07:37] Book with your local travel agent.

[00:07:39] Or...

[00:07:39] I said it a couple of days ago in my commentary, and I'll say it again today.

[00:07:47] Health and relationships are the most...

[00:07:50] Most Important Things In Life I would first choose a place to live that is most beneficial

[00:07:55] for these two areas of life and then think creatively about how to make the finances work.

[00:08:02] The thing about money is that it's the only thing in life that you can completely mess

[00:08:06] up and have no long-term consequences. It's a completely dispassionate and impersonal tool.

[00:08:13] So when you sacrifice your health and relationships to prioritize a financial goal, it can be

[00:08:20] a dangerous game to play, especially if it's not necessary.

[00:08:26] If your circumstances are such that there really is no possible way to live near your

[00:08:31] loved ones, then you've got to do what you've got to do. Move somewhere affordable and have

[00:08:36] a season of life where you re-establish yourself in order to get where you want to be.

[00:08:42] But if you aren't destitute, I would caution you to think twice about prioritizing your

[00:08:47] finances over your health and relationships. You can always make more money or fix financial

[00:08:53] mistakes, but with your health and relationships, you can actually do irreparable damage.

[00:09:00] No one talks about how much money they saved on their deathbed, and your net worth isn't

[00:09:05] going to be carved into your tombstone. Find a living situation that makes sense financially,

[00:09:12] but that optimizes for the most important things in life.

[00:09:16] And that'll do it for today, have a great day and rest of your weekend, and I'll see

[00:09:20] you tomorrow, as usual, where your optimal life awaits.