Retirement Dilemma: To Borrow or to Sell? A 70-Something Couple Weighs $60K Home Repair Options

For many retirees, the dream of a mortgage-free home is a hard-won achievement. But when that home needs significant repairs or upgrades, a new financial puzzle emerges: dip into carefully nurtured investments or take on debt in one's golden years?

One couple, both in their early 70s, finds themselves grappling with this exact decision. They have a paid-off house, live comfortably on combined Social Security and pension income, and hold close to $1 million across IRA and taxable investment accounts, alongside a $30,000 emergency fund. Now, with an estimated $50,000 to $60,000 needed for long-deferred home improvements, they are seeking the most prudent path forward.

"The math is nuanced, especially for someone in their seventies," explains financial advisor Michael Thorne. "While borrowing costs for a home equity line of credit (HELOC) currently hover around 7.4%, the expected return on a conservatively allocated retirement portfolio is often closer to 4-5%. The spread is narrow, which changes the calculus."

Thorne and other advisors point to several critical considerations. First, taking on new long-term debt in one's 70s reduces financial flexibility at a life stage where unexpected health costs can arise. Second, Required Minimum Distributions (RMDs) from traditional IRAs, which begin at age 73, will increase taxable income. Adding loan payments on top of that could strain a fixed-income budget.

The consensus advice leans toward funding the renovations from their taxable investment accounts. "By selling assets held long-term, they would realize capital gains taxed at a favorable rate, rather than ordinary income from IRA withdrawals," Thorne notes. He suggests spreading the sales across two tax years to minimize the tax hit and using a portion—but not all—of their emergency fund to reduce the amount needing to be liquidated, thereby preserving a cash safety net.

A small, short-term HELOC might only be advisable if a single-year stock sale would create an unusually large tax burden. Even then, it should be a bridge strategy, paid off quickly with investment proceeds.

"Ultimately, this is about risk management and peace of mind," concludes retirement planner Sarah Chen. "For retirees, eliminating the stress of a new monthly debt obligation often outweighs a potential marginal gain from keeping funds invested in a volatile market. They've earned the right to enjoy their home without financial worry."

The couple's situation underscores a broader trend of older Americans 'aging in place' and the complex financial trade-offs involved in maintaining their largest asset—their home—while preserving their retirement nest egg.

Reader Reactions

Robert G., 68, retired teacher: "We faced a similar choice last year. We opted to sell some stocks from a brokerage account. It was simpler, no debt hanging over us, and the tax impact was less than we feared. Peace of mind is priceless at this age."

Linda P., 71, former nurse: "This is terrifying. The market is so unpredictable. What if they sell during a dip and then it rebounds? Maybe a small loan is the lesser evil, even with the interest. You can't get those lost investment years back."

David K., 45, financial analyst: "The analysis misses intergenerational planning. If leaving an inheritance is a goal, taking a loan preserves the portfolio for heirs. If not, liquidating is cleaner. It's not just math; it's about legacy intentions."

Maureen R., 69, retiree: "7.4% for a HELOC? That's usury for seniors on fixed incomes! The system is broken. They saved, they were responsible, and now they're penalized for needing basic home repairs. They should use their money and tell the banks to get lost."