Downsizing for Retirement
As we approach retirement age we have to start thinking about our next home less like an investment and more like a living expense.
Likely you’ll only purchase one home after you retire. While you may consider purchasing a home with more space for all your family to come, the expense of it would be unreasonable. Instead, it is ideal to use the equity you’ve built in your current home to purchase something smaller. After helping hundreds of pre-retirees and retirees downsize into a home that fits their lifestyle more we have found these 5 factors to be the most important when deciding if downsizing is right for you.
Consider the cost of homeownership
As you age your ability to keep up a home decreases. No longer will you be able to reach and stretch to fix or clean certain areas of your home. If your home is older or too large for your family this could be an important issue. Now you have to start hiring cleaners, handymen, and other professionals to aid you in the process of taking care of your home. When you are living on a fixed income these expenses do start to add up.
Often it is beneficial if you can move closer to family and into a smaller home. Less home to take care of can mean less expense for those professionals and if your family is willing to come help that could eliminate the cost altogether. Let’s not forget the other expenses either. The cost of property tax on a larger home, possible HOA fees, gardening and other outdoor upkeep, the utilities associated with keeping a larger house warm or cold. All of these are important factors in deciding if downsizing is beneficial to you.
Think about the non-financial costs
A pre-retiree or retiree selling a home that you have lived in for a long time has an emotional cost that needs to be considered. However, there is a quality of life that can come with downsizing to a new location. Will you be moving to the sun-filled area of the US where life is easier and more enjoyable? Moving to a location that primarily serves retirees means that all their services are made specifically for their community. More handicap parking may be available as well as an increase in the number and variety of medical providers.
Or if you are moving closer to the family that also could increase your quality of life. How these factors weigh against any emotional cost of selling needs to be thought about prior to making a move.
Remember a house is no longer a long term investment
You will likely only buy a single home before or at the beginning of retirement. Being that this home could be the last property you own with no intention of selling it you no longer have to think about how the market is going to change in the next 5-10 years. This gives you the freedom to choose a home based on affordability as well as desirability for you and only you. You no longer have to consider school district or proximity to an office. You can choose a smaller condo or townhome in an area with amazing restaurants and movie theaters without regard to anything else. This relates back to the quality of life, which you are now in a position to consider more heavily with regards to a home purchase.
Calculate the cost of selling and buying
Even if you own a home outright there is a cost to selling. You may need to make repairs to put your home on the market. Not to mention the cost of advertising the home. If you decide to employ a realtor’s help you will also have to pay the realtor fees. Costs of selling add up on any home. Plus there are the moving costs. Add these costs up and use that information in conjunction with the other factors before making a decision to downsize.
Rentals are still an option
Especially if you are moving to a new area it is commonly recommended to rent for a year to find out if you actually like living in that particular location. Most cities have a hidden gem. A place where you fit in perfectly and offers all the amenities you desire. It can be tricky finding that gem without knowing much about the area. Renting is a way around that. Plus there is less upkeep cost in renting a home, considering in home maintenance and grounds are typically kept by the property management company.
All these factors will help you in making your decision to downsize if you are a pre-retiree or a retiree. There may be other factors you need to consider based on your specific situation as well. Keep in mind that if you are in a situation that you need to sell your home fast and with as little effort as possible that we are here to support you in moving to your new home. Give us a call at (877)-990-7774.