Downsizing Your Home in Retirement
Downsizing your home in retirement is a lifestyle more and more retirees are starting to adopt. In fact, downsizing has plenty of benefits for senior living and overall quality of life. If this is something you are considering, we're here to help you make up your mind. In this article, you'll find out the benefits of downsizing in retirement and the most common mistakes to avoid during this process.
Benefits of downsizing your home in retirement
Once you reach your retirement, your personal finances will most likely change, and you'll start having a lower monthly income. This might lead you to think more about your finances and find different ways to save money.
One of the best ways to achieve this is to downsize your home in retirement. Why? Continue reading as you'll find out about just some of the many benefits of downsizing.
A smaller home means a cheaper home
Take a good look around your home. Now that your kids moved out and probably started families of their own, there is so much unused space that only generates costs for you. On top of that, that extra space also needs to be regularly cleaned and taken care of.
When you move to a smaller home, all expenses proportionally go down. First of all, your monthly mortgage rate can be significantly lower, which is probably enough reason on its own. But not just that - you'll pay much less for your utilities and taxes, too. Oh, and your insurance costs will go down, as well.
Living in a smaller home also means less maintenance and potential issues to repair. That is not advantageous just for financial reasons but also having less work to do around your home will enhance your quality of life. As you age, you'll find many tasks to be more and more challenging to handle, and moving to a smaller home will minimize them.
You'll be more organized
We all tend to gather many positions that have great sentimental value to us, regardless of their cost. Those belongings become even more precious when you retire as they stand as reminders and memories of your life. Moving to a smaller home means you probably won't have enough room for all of them and that you'll have to find ways to maximize storage in your home.
Downsizing will give you a perfect reason and excuse to declutter your things. Even if you don't want to get rid of most of your stuff, it's not a reason enough to back out from downsizing. There are plenty of alternative storing options; you just need to think outside the box.
For instance, the moving team from evolutionmovingdfw.com advised that renting a storage unit is a great way to make up for the lack of storage space in your home. As units can be climate-controlled, you'll also be sure your belongings are kept most safely.
Move to a place you always wanted
Moving to a smaller home could give you the perfect opportunity to move to a location you've always dreamed of. Whether that place is where you're living at the moment or on the opposite end of the country, retirement is the perfect time to make that dream come true for you.
However, before you start searching for your dream beach house or an apartment in the city where you'll be closer to your kids, make sure to hire a great real estate agent to help you. Real estate transactions can get complicated, so you want to have an experienced ally on your side. In fact, you should never buy or sell without a real estate agent as that's the only way to avoid making expensive mistakes.
Mistakes to avoid when downsizing your home in retirement
Downsizing in retirement is a great idea, but only if done right. You can make a profit from your home sale and simplify your life, but only if you make sure to avoid the following mistakes:
● Don't overestimate your home's worth. It's easy to get carried away and start imagining how you're going to sell your home at an astronomical price. However, it's crucial to stay realistic. Research your home's value and the costs of smaller homes you might consider moving to. That way, you'll be able to set your budget.
● Don't underestimate your needs. You don't want to end up living in a cramped studio apartment where there isn't enough room for storing things. Even though you can always rent a storage unit and solve the problem with storage space in your small apartment, you still want to enable yourself some comfort. After all, retirement is meant to be enjoyed.
● Don't ignore the tax implications. Instead, do your research and determine how much money you'll need to set aside for taxes. Even though you probably won't owe any money on the income property (unless you sell your home for an enormous price), you should still factor in other tax considerations.
● Don't forget the closing costs. People tend to overlook the closing costs as they're too focused on profits they will make out of the sale. As closing costs can be 6% and sometimes higher, you should definitely consider them when downsizing your home. Having them in mind will allow you to set a more realistic budget.
The bottom line
Even though downsizing your home in retirement can be an emotional and overwhelming process, it's probably your best option. We won't lie - it will be difficult to leave your family home and adjust to a smaller living space. However, as soon as you start feeling the many benefits downsizing will have on your quality of life, you'll be certain you've made the best decision in your life.
Contributor: Tanya Douglas
Assistant Content Writer