When leaving the military, many people want to buy a house. It’s a perfectly normal desire. Often, it’s been a long-term dream to put down roots and buy their “forever” home. No more crazy landlords, white walls, and unpacking every two years!
Unfortunately, the “forever home” is usually a myth. Acting on this desire can have some seriously negative long-term consequences. For the vast majority of military families, it’s smarter to rent for a year or two. Then consider whether buying a house is the right choice for your particular situation at that particular time. There are three main reasons why this is true: employment instability, stress and decision-making, and financial upheaval.
This post is part of The Comprehensive Military Retirement Checklist. Be sure to read all the other posts that go with the checklist, too!
As with all information on this website, this is not an official source. We gather and distill information so that’s easy to access and understand, but we can’t share every possible variation and exception. Always refer to official sources and verify that information provided applies to your unique situation.
Employment Instability
43% of veterans leave their first post-separation job within the first year. Does that surprise you? It surprised me. And lest you think that those 43% are somehow outliers, an additional 21% of veterans leave their first post-separation job the second year. The path to a forever second career is rarely straight or simple.
Plus, those job changes often come with geographic moves: The same study reported that over 37% of veterans currently lived in a different state from where they originally settled when leaving the military. These two facts are important to know when making the decision to buy a house.
Tying yourself to a house (and probably a mortgage) limits your options, financially and geographically. What do you do if you buy a house and then discover that your first job isn’t the one you want to be in forever?
- remain in a job that you don’t like because you have a house there
- limit your job search to the area of your home
- sell the house (probably at a loss since it has been such a short period of ownership)
- turn it into a rental property (keeping in mind that most “forever” homes aren’t great rentals)
Imagine being stuck in a job that isn’t right, and facing these options. Compare that to the relative freedom of waiting until your lease ends or exercising a break-lease option, and moving on without the burden of that real estate. Which one seems better to you?
While nothing in life is guaranteed, you should assume that the first few years after leaving the military will be a little unsettled. It just doesn't make sense to buy a house when life is unsettled. Click To TweetStress and Decision-Making
Leaving the military is one of the largest transitions that most folks will make in their lives. For civilians, retirement from a job ranks 10th on the list of the 100 biggest stressors. For military families, the transition to civilian life is more complicated than just a retirement or job change. It combines a wide variety of financial and emotional stressors, possibly including but not limited to:
- retirement
- a major change in financial state
- changing to a new field of employment
- change of housing situation
- spouse beginning or stopping working outside the home, or a spouse switching jobs
- change of location
- starting or stopping an educational program
- change to working hours, social activities, and recreational pursuits
Scientifically and anecdotally, transition is a challenging time for nearly everyone involved: the service member who is separating or retiring, the spouse, and the affected children. The impact is compounded when multiple family members are dealing with these stressors, and each is also trying to help the other. There’s no doubt that transition is hard all around.
You’re Just Not Thinking Completely Straight
This brings us to the next point: Our brains are hard-wired to make decisions differently when we’re under stress. It’s a survival mechanism that helps prevent analysis paralysis and allows us to identify the fastest way to security. Unfortunately, society has programmed Americans to believe that homeownership represents security while discounting the amount of insecurity that comes with the responsibility of having a mortgage and actually owning a home.
You’ve probably heard the common wisdom, “Don’t make any major life decisions for the first year after (fill in the blank.)” The same logic applies to the transition from military to civilian life.
There are a lot of major decisions that HAVE to be made during the transition or retirement process: Should you choose the Survivor Benefit Plan? Where do you want to live, and what do you want that life to look like? Will you work, and will your location be decided by the job or will your job search be decided by the location? Allow yourself to focus on the decisions that HAVE to be made, and give yourself the time to adjust to your new life before tying yourself to a house.
Financial Upheaval
The first few years after leaving the military can be financially chaotic. You may or may not have retirement pay, or be working through the process for disability compensation. Or you could have a long job hunt, or you may take lower-paying work until you find something more suited to your skills and experience. Perhaps you might choose to go to school before returning to work full-time. A spouse may leave or return to the workforce, or finding that another move means yet another career change.
With all this financial change, it’s hard to pinpoint how much house you can actually afford. Hopefully, you’ve completed the 12-month post-retirement budget that is (allegedly) required during the (supposedly mandatory) transition program offered by the military. But let’s be realistic: those budgets, while useful, are just guesses. Leaving the military can come with a lot of financial surprises.
Buying a house is typically the largest purchase anyone will make in their life. Buying a house when your budget is built on guesses is a bad idea.
Stepping Back and Stepping Surely
I absolutely understand the desire to buy a house and never move again. Just yesterday, I asked, “I wonder how long we would have to live in this house before every single item was unpacked and put away in the right place?” I have no idea the answer, but I know we haven’t reached that point yet, and I hope that happens someday. Plus, it’s nice to think of painting without having to worry about painting back, or starting an amazing garden, or whatever “homeowner” dreams you’ve been stacking up.
As big as those dreams may be, give yourself just another year or two before you jump into a house. Make the conscious decision to rent for a year or two, and use that time to discover how the next phase of your life is really going to shape up. You’ll be well-positioned to adjust to the inevitable surprises without the burden of a house, and then you’ll be a in a great place to decide when (or whether) to buy that “forever” home. When you are ready to make that purchase, you’ll be emotionally and financially prepared to make a great decision and choose a house that truly works for you. How awesome will that be?
That is some sound advice. I hear so many people asking how they can get a VA loan right before or right after retirement. I think the right answer is, don’t get one. Rent. You have all the right reasons. It will become a bad financial decision. You will become a reluctant landlord. We all know the facebook group that is full of military landlords that hate their house and regret buying.
Of course, if you are buying an investment property that will cash flow well be a good rental, that is a separate issue.
If you are buying your forever home with vaulted ceilings, french trim, and sub-zero freezer, you are going to regret it!
Awesome post.
Agreed! 100%! We fit A LOT of the statistics you mentioned. We are not in the state we were in when we retired from the military. My husband quit his first job after the Navy and is now in college full-time.
So many changes happen after retirement – changes that are still felt two year after!
Great post.
Thanks, Cyndia! I hope retirement is working out despite all the changes 🙂
Absolutely agree with you!!! It is a great post.
There is this other thing that happens when you have whole communities of military people who retired and bought their forever homes in the same place. Eventually, a subculture develops that can be very supportive because everyone is in a similar situation and your neigbhors tend to understand you a little better. Some people find it stifling because it seems you never get away from your military identity. Others find comfort in it because it is as if only the dress code has changed. In our little town, the police chief, the fire chief, the mayor and three city councilmembers are former Navy submariners. So are most of the math teachers, science teachers, and coaches at the high school and middle school. They bought forever homes here, rode out the economic uncertainty of retirement, and found satisfying jobs that enabled them to stay here. In a lot of ways, the economy of this town was built by the people who bought their forever homes in this little place, and figured out a way to make it work. It’s a different look at your argument, but here, it works.
My husband is 1.5 years out before retirement. This very subject is something that we have been discussing for at least 2 years already. We both know what region we want to be in and which state we end up depends on the job offers received, to which he has already started receiving. We can’t wrap our heads around renting when we know what we want. It is so hard for us to rent because we have three dogs and a cat. Respectfully, do you think there are exceptions to your advice to rent instead of buy? We know we don’t want anything extravagant, something modest, not too big because our kids are grown but we want land. I don’t think those are over the top expectations; I think it is rather smart. I am by no means debating any of you, just trying to look at all possibilities in ways other than my own so I can be educated on my decision, so please don’t bash me for my post but teach me why you feel different.
There are always exceptions to everything. Let’s say you know exactly where you’re going to live and you’re not job hunting. Or perhaps you own your own business and you can live wherever you want.
However, you say that you know what region you want to be in – what happens if you buy a house in one part of that region and he gets a job in another part of that reason? Or if you wait for him to start a job – what happens if that job doesn’t work out? (The statistics say that it won’t be his forever job.)
This post is just my opinion, but I feel pretty strongly that the facts speak for themselves.
Ms. Horrell,
Your opinion and reply is greatly appreciated. Thank you for responding so quickly. We will take your views into consideration.
Lita