Downsizing Your Home for Retirement: What You Need to Know

Downsizing your home for retirement can be both a special and stressful time! Your life is changing rapidly as you are preparing for the next phase of your life. While it may seem daunting to move out of your “forever home”, it doesn’t have to be scary. Here are the basics of downsizing and what you need to know: 

1. Consider when is the right time to downsize your home
2. Location matters when you are downsizing your home
3. Decluttering your home

Consider when is the right time to downsize your home

When you are downsizing your home for retirement, you need to consider the exact reasons why you want to downsize. Is it:

• To be closer to family?
• Make a profit and invest the difference?
• Cut back on expenses?
• Live a more nomadic lifestyle?

All of these factors should be in play whenever you consider selling your “forever home.” When choosing a new home to fit your new lifestyle consider the risk management factors for retirement. Your plan for retirement could be thrown by the wayside should you sell your home before you are ready. Talk with your spouse or loved ones about what you want to do and see in your golden years. 

How will downsizing your home help your living situation and still allow you to live life to the fullest? Most people see dollar signs, but you need to weigh things like appliances, tax obligations, and ease of access to medical care.

However, the markets around your current home will have a large effect on how much home you can afford in the future. When looking to sell your home, do your research. Get an actual appraisal for your home and see how much it is worth.

This will let you know the lowest you can sell the home for, without leaving you in the red. This is actually one of the ways that downsizing your home can go bad, as Greg Daugherty points out in an Investopedia article:

“It’s easy to fantasize about the high price your house will fetch. Perhaps the neighbors down the street sold theirs for an extravagant sum—or so they said—and were last seen packing their new Bentley and heading for Acapulco. Chances are that you don’t know three important things: what they actually netted from the deal, how their home differs from yours in qualities prospective buyers most value, and whether the real estate market at that point was better or worse than it is now.”

To get a better understanding of what you can afford, use a retirement calculator to make sure that not only will you have enough expenses to live when you downsize your home, but you’ll have fun, too! Subtract expenses from your monthly income like:

• Groceries
• Medical bills
• Taxes
• Debt payments
• Traveling expenses
• Vet payments (if you own a pet)
• Phone bill
• Clothing
• Utilities
• And other items 

Location matters when you are downsizing your home

When you were shopping for a home the first time you may have heard the phrase “location, location, location”. It’s no different whenever you reach retirement age. It’s still one of the most important factors in buying real estate. Whether you want to live in a condo for easy maintenance or move to a small home, location will always play a large factor. The location will affect:

• Price point
• Weather conditions
• Ease of living
• Neighborhood
• Access to healthcare
• Whether you can pay in cash or have to settle for a new mortgage

It’s the right time to downsize your home when you want to live a simpler lifestyle. This means you’re going to have to give up items and declutter your new home. 

Location can help you achieve that by living closer to your family, living without a mortgage, or being closer to a beach or metropolitan area. 

One of the many reasons to downsize your home is so that your location can work to the betterment of you. That means not having to deal with crappy weather, high property taxes, or annoying neighbors. Makes sure to stay away from the worst states for retirement finances. If you find the right location at the best price then it might be time to sell your house. 

Decluttering Your Home

Whether you have downsized your home or not, decluttering your home now will help you move quickly and easily. in addition, whenever you move to your new property, decluttering your home will help you move around easier and safer. 

Your family can help simplify this process. Consult with your children and siblings to give away items that are precious. If you have a bunch of items that are valuable, but you don’t need them any more, consider a yard sale. You’ll recoup some money and declutter your home!

So, are you thinking about downsizing your home for retirement? Want a realtor that can help you find the perfect property for this next great adventure? MWT Realty has your back! We can help you find the best property for your lifestyle and for you to enjoy your golden years. Contact us today and let us help you!