Is Downsizing Right for You?

Updated on Oct 15 2019

Many seniors still live in their family home after their children are grown as they are reluctant to sell for either sentimental or financial reasons. What many don’t realize, though, is that moving to a smaller home can save you thousands of dollars a year in taxes, utility costs and insurance. Not to mention, that’s all money you could invest in retirement.

Keeping up with a big house can also take a toll. However, there are many things to consider when it comes time to assess your retirement finances and whether your current living situation is right for you. Considering your long-term needs will help you properly plan for retirement.

The Benefits of Downsizing

There comes a time when a big house with lots of ‘stuff’ becomes too much, making downsizing a tempting option. Tangible benefits are easy to see:

  • A smaller mortgage
  • Lower utilities and property insurance
  • An equity nest egg to potentially invest

Intangible benefits may include:

  • Less upkeep
  • More freedom to do things not tied to possessions

Cleaning, yardwork and maintenance take time and energy. Downsizing your home can be the first step to a minimal and stream-lined life that frees-up time for the following:

  1. Leisure activities
  2. Spending time with your family
  3. Getting more rest
  4. Enjoying your smaller, easier to keep-up space
  5. Social activities

Paring down your living lifestyle can help you from over-spending, over-charging and over-buying for a larger home. This retirement assessment and planning questionnaire can help you determine whether downsizing makes sense for you. If you are starting to feel overwhelmed with your large, family home because of all the work it requires to keep-up, downsizing may be your best option.

Is Senior Living Right for You?

Whether you’re planning your retirement or are already retired, you should consider whether senior living should be part of your retirement budget. Here are a few things to consider:

1. Staying Social as You Age

Downsizing isn’t just about finances. If you are retired or are retiring and you live alone, moving to a smaller home, condo or apartment in a retirement community may give you the social interaction you didn’t realize you’ve been missing. In fact, a large part of happiness is leading an active social calendar, so it’s important to stay connected with others – especially if you’re retired or have lost a spouse.

2. Changing Health, Energy and Mobility as You Age

Something else to consider is that as you age, you most likely won’t be able to keep up with your large, family home as your health declines. Most seniors don’t like to think about this scary reality, but by being proactive and planning your living arrangements you can plan a move to a retirement community or continuing care living community as your situation changes. Planning in advance ensures you get the care and living situation you choose, instead of putting your loved ones in a difficult situation down the road—that you ultimately may not be happy with the living arrangement.

Downsizing and Timing

There are many factors to consider in regard to downsizing. You want to live in a house you can afford that also makes sense for your retirement situation. Real estate is all about timing, so consider the housing market in addition to your personal situation. A fiduciary or financial advisor can provide an expert financial perspective on whether downsizing makes sense in your unique situation.

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