For many of you, your homes are filled with memories of raising a family. It’s also where you figured to spend your retirement years. But with the children grown and starting families of their own, you are on your own now.
The house was paid off years ago, and maybe it’s even your biggest asset. But do you really need all the space? The kids’ old bedrooms upstairs are never used, and you seem to live more and more of your lives on the ground floor.
Maybe it’s time to downsize?
No time like the present
Although letting go of a home in which you have lived 30 years or more can be difficult emotionally, the financial benefits can be substantial according to The Wall Street Journal. The advantages might seem small at first, but accumulating over time, they’ll likely extend the life of your nest egg, allowing you to enjoy retirement without worrying so much about finances.
Forbes echoes those sentiments, saying a large house in a good school district- with corresponding high taxes- was great when the children were going to school, but it makes no financial sense now. Americans, Forbes says, have been home rich but financially poor because of all that capital- all that non-productive capital- tied up in their homes.
And that home costs money. There’s regular maintenance and upkeep you can’t neglect, heating and cooling costs, landscaping… the list goes on and on. With a home, the WSJ says, that list of expenses is hidden. Moving into a condo or rental unit can be less expensive because you will know what the costs are going to be upfront; association, maintenance, and other fees are built in.
The housing market has slowly started to recover from the crash in 2008 and has shown gains in some areas, but there’s no way to predict if that will continue. Waiting for the market to keep going up could leave you waiting, period.
Besides, CNN Money reports, there are many ways to downsize and save money to make retirement more enjoyable.
Move into a smaller house. With the money you make by selling a paid-off home, you can buy a smaller one in cash and stick that extra money into your retirement nest egg. And a smaller home will be cheaper to heat and maintain.
Move out of town. Although only 10 percent of retirees pull up stakes and head out, it can be a prudent move, especially if you live in an expensive city. The savings gained in lower property taxes alone can make this an attractive choice. And with email, social networking sites and good old telephone calls, it’s easy to keep in touch with relatives several states away.
Read the fine print. If you are considering moving into a retirement condo or gated community, you should be aware of the fees that can add up. Without doing due diligence, you might end up paying more than you can afford. Finding one that fits into your budget and makes you comfortable is key.
CNN Money’s final suggestion is one that appeals to people that don’t want to leave friends and neighbors and want to keep a place where the kids (and grandkids) are always welcome.
Invest in staying put. People can make the improvements the house needs while they’re still working. Replace inefficient appliances with energy-saving models, install double- or triple-pane windows, and upgrade the heating and cooling systems.
Letting go of a long-time family home can be a difficult task, especially if there is a large amount of emotional sentiment attached to that home. However, downsizing can be an extremely wise decision that reaps numerous financial benefits in the future for those nearing retirement. If you have more questions about downsizing or making other structural decisions to your life as retirement looms closer, don’t hesitate to call us at (919) 443-3035 or contact us online to schedule a consultation. This appointment comes at no charge to you as we hope to assist you in any way possible as you begin to plan your future. We hope to serve as a beneficial tool to all those who are living in the Triangle and are searching for guidance.