Your home is more than just a house.
It’s where you started your life with your spouse, raised your family, hosted holiday parties, played catch, built snowmen, planted a garden, and spent evenings on the porch watching the sunset
And, perhaps most recently, it’s where you celebrated your retirement.
That’s why deciding where you’re going to live now is about more than just money. It’s a question of how you want to spend your golden years, and who with.
Let’s look at some ways that downsizing might improve your ROL in retirement, as well as some reasons you might be better off staying put.
The Financial Case for Downsizing
Your home is one of your greatest financial assets. If you have other retirement goals that are more important to you than retiring in place, selling might allow you to:
- Boost Your Nest Egg: Above-average mortgage rates have dominated the housing conversation lately, but many analysts believe there are still more buyers than sellers right now. If your home has appreciated, market conditions might bump up its value even further. And if you sell your during a year when you’re earning low taxable income, you might reduce your capital gains liability as well.
- Reduce Monthly Expenses: A smaller home almost always means smaller utility bills. Renting during retirement will also take property taxes and homeowners insurance off your monthly budget.
- Cut Maintenance Costs: Less grass to mow, fewer rooms for your housecleaning service to tend to, and fewer household repairs will also save you money. Those costs could go down even further if you decide to rent.
The Lifestyle Benefits of Downsizing
Your house was the perfect home when you were raising your kids and working. But your life has changed now. Downsizing might be a better fit for your retirement years, especially if you want to:
- Move Closer to Friends and Family: Why only see your loved ones on holidays and special occasions? Make your loved ones an important part of your weekly retirement routine — especially if new grandbabies are in the picture!
- Spare Yourself Some Aches and Pains: Do you really want to spend your senior years marching up and down the stairs, pulling weeds, and cleaning empty rooms?
- Make a Fresh Start: Your home is full of memories. But it’s also full of stuff. Pair downsizing with decluttering and you’ll start retirement with a blank slate and a lot more closet space.
The Case for Retiring in Place
Downsizing might look good on your balance sheet, but there are some other “costs” to consider as well, such as:
- The Emotional Toll: The time, money, and emotions that you’ve invested in your home can make moving out very difficult. Seniors who are already struggling with the transition to retirement might experience downsizing as yet another sad ending, making it even harder to get excited about a new chapter.
- Losing Your Social Network: If you’re moving away from friends, family, and neighbors, you might struggle to make new connections. And if the only person you know in your new town is your spouse, you migh put unrealistic expectations on the time you spend together.
- A Minor Windfall: The real estate market is still a market. Your house might not sell for what you’re hoping for. Commissions, closing costs, moving expenses and furnishing your new home will all eat into your profits as well. And given today’s mortgage rates, your smaller home might come with a higher monthly price tag than you were expecting.
Whether or not you decide to downsize, where you live will have a big impact on the rest of your Life-Centered Financial Plan. Let’s meet to work through our Retirement Coaching Tools and get a clearer picture of where you see yourself living out your golden years.
