Examining Retirement Options for Homeowners: Is Now the Time to Downsize?

Many hardworking men and women long for the simplicity and relaxation that retirement can bring. However, for homeowners, retirement can also bring questions and concerns about maintaining the house that they’ve called home throughout some of the most important times in their lives.

Retirees often consider downsizing the home that they may have built and raised their families in. Instead, they may opt for a smaller home, apartment or condominium that is less expensive to maintain.

When it comes to retiring and downsizing a home, the right time to do so is always in question. According to a Wall Street Journal report, sometimes it actually can pay a homeowner to downsize their home soon after retiring rather than waiting until they are older. But, the decision to downsize is undoubtedly personal; so, if you’re retiring, how do you know if downsizing is the right choice for you?

Here are five things for retirees to consider when it comes to downsizing:

1. Would a smaller home mean smaller bills?

If you raised your family in a spacious four-bedroom, single-family home that had plenty of room for your children and pets to frolic and play as they grew up, you are accustomed to the size of the utility bills and taxes that came along with that home. Because retirement often equals living on a fixed income, it may the perfect time to evaluate if those bills will be more of a burden at this point in your life.

2. Would less home equal less home maintenance?

Similar to the large utility bills and taxes that often accompany owning a large home, the maintenance that goes along with that home is typically large as well. As you are reaching retirement age, consider whether you want to be taking on the yard work and other home maintenance tasks that your home requires. When you consider downsizing, keep in mind that some condominiums and apartment complexes include maintenance as part of their on-site amenities. So, it could be possible to eliminate those tasks completely, but that may or may not carry a fee.

3. Could selling now equal more retirement cash later?

Since real estate is often about timing, why should selling your home around retirement be any different? If you are considering downsizing, think about the temperature of the current real estate market. It is a hot sellers’ market? That could mean an extra nest egg in your retirement fund when you sell. If you are planning to buy a smaller home right away, consider how that hot sellers’ market might negatively impact your purchase, too.          

Entering retirement means that you may be downsizing your income; so, if you are still carrying a mortgage on the house that you’ve called home for so many years, think about how that mortgage payment may affect your finances. If you downsize to a smaller home, condominium or apartment, you likely will also be downsizing or even eliminating that mortgage payment altogether. Selling your home when you retire could be an excellent way to tap into your home’s equity and buy your next home outright.

4. Are you ready to move now or will you ever be?

Without a doubt, it was easier to do a lot of things when we were all 20 years younger. Of course, moving is one of those things that doesn’t get any easier with age, either. If you feel like you might not be ready to downsize your home right now, but know that you will be in the future, consider how your health may factor into the moving process. You can always pay for moving help, but that will be another expense down the road. Whether your retirement destination is across town or across the country, be sure to calculate moving costs into your downsizing decision.

5. Who would be affected by your downsizing decision?

When you consider how the moving process may impact you now or later in life, it may be wise to consider what kind of an impact it may have on your family and friends as well. If you wait to downsize or decide that you don’t want to downsize at all, you could unintentionally be putting a burden on your children, other family member or friends who may be helping with the process of selling your home or moving you at a later date. Though they may not be directly impacted by your downsizing decision now, they could may major players if you decide to put it off.

But, isn’t retirement supposed to be relaxing?

Thankfully, there is help for retirees when it comes to making the decision to downsize. Certainly, it is important to consult with a financial advisor who will help you look over your assets and expenditures to see what downsizing might do for your financial picture.

If you decide that the time is right for you to downsize to a smaller home, think about the things that are most important to you as you move. Is it proximity to family and friends or warm weather that entices you? What kind of recreation do you want to have nearby? Do you see yourself living an active community life or relaxing in a quiet neighborhood? Once you decide, your real estate agent will be able to help you find a home that perfectly suits your needs and interests.

For help in selling your home and downsizing to a new home, contact an experienced Prudential Preferred Realty agent today.