Dear Dave: What percentage of your total net worth should your personal residence be during retirement?
Dear Sue: Honestly, I don’t have a set percentage for this kind of thing. The larger your net worth, the smaller the percentage would be. Let’s say you’re worth $5 million. In this scenario, you wouldn’t want to have 50 percent in your home. But if you’re worth $150,000, you’re probably going to have more than 50 percent in your home.
So, the smaller your net worth is, the larger the percentage your home will likely be. That’s very reasonable, and it’s one way you can look at. You want to try to have as small a portion as possible.
Dear Dave: My husband and I are both 50, and we make about $50,000 a year. We have a little bit of debt, and recently my mother-in-law moved in with us due to health issues. We’ve always gotten by, but now we’re struggling with the additional expense.
Dear Jen: Anytime things get tight and something like that happens, it’s your wake-up call. It’s telling you that you’ve been kind of sloppy and disorganized with your finances in the past, but you’ve made just enough money to get away with it.
Chances are you’re going to have to cut back on some stuff, because you’ve chosen to take care of her. This is an honorable choice and a wonderful thing you’re doing, by the way.
With this added responsibility you’ve taken on you’re going to find yourselves on one end of the Sandwich Generation. They’re sandwiched between taking care of their parents and taking care of their grown kids. And the way you handle it is with a written budget.
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