What Does Your Retirement Downsizing Look Like?

The experts agree that there are two main areas of consideration when figuring out how you live after retirement – your financial situation and your emotions. Do you scale down? It may cost less to live smaller. Should you rent a home or apartment instead of purchasing a smaller home? As we age, health becomes a factor to consider also. Is your home accessible for your physical changes, or do you need assistance in daily living? A lot of number crunching is in order, but don’t forget to weigh in with your heart.

For each person and family, the answers to all these considerations are going to be different. Making the right decision is an involved process and only you hold the key to the information that will help you arrive at the proper decision for you.

Financial Picture

What Does Your Retirement Downsizing Look Like?
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What does your financial picture look like at retirement? Do you own your home outright or are you paying a mortgage and if so, how much? As you head into maturity, it is a good idea to not be overextended financially with a big nut to cover each month as you prepare to reduce your income stream. But maybe your home has appreciated considerably over the course of ownership. It might be time to think about selling it for a good profit; then you can invest in a more modestly priced and smaller home.

Of course, you have to figure out all the costs involved if you decide to sell your home and downsize. You will have lots of costs to consider, including upgrades before putting your home on the market. And don’t forget about real estate agent commissions and capital gains taxes, which could cut into your profit.

Downsizing to a smaller home or even to renting might make more sense. Selling may provide you with a much-needed nest egg to and allow you to live more inexpensively and to possibly free up money that can be used to invest rather than spend each month on living expenses.

Emotional Picture

What Does Your Retirement Downsizing Look Like?
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Don’t underestimate your feelings about how and where you live. Sure, the warmth of a sunny and temperate climate may appeal as we age, but will you actually like a different climate than what you have become accustomed to? Starting over can be daunting for many. After years of living in a certain area, you have established friends and a familiarity that you may not be able to replicate in a new place.

And then, there is family to consider; how far away do you really want to be from children and grandchildren, especially if you are close-knit or may need to help one another? Is there a child who may be interested in purchasing the family home from you down the road? You may be outgrowing a home that would be perfect for them to raise their family in.

If your retirement downsizing calls for a long-distance move, renting is something to consider before taking the buying plunge. This way, if things don’t work out for whatever reason, untangling will probably not have as big a financial impact as having to unload a home.

Be aware that in our culture, we are often hard-wired to want to “own” and not just rent our piece of the American Dream. Transitioning from a large home to a more manageable smaller one as you mature is one thing but switching from a homeowner to a renter can be particularly difficult after a long stint as a homeowner. Are you ready to not have complete say over what you do with your property and to live in close proximity to others, especially strangers?

If you and your partner are in good health and ready to enjoy the freedom to travel and lead a more recreational lifestyle, downsizing makes a lot of sense. As does having a home for the kids and grandkids to visit you.

Learn more in these related articles:

Tips for Making a Small Space Feel Large

Matching Your Mortgage with Your Goals

 

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