An important decision that you want to get right
Is Downsizing In Retirement Right for You?
by Paige Estigarribia
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If you are in the process of planning for retirement, or even if you're already retired, the thought of downsizing may have crossed your mind once or twice. Should you downsize once you hit retirement? We were curious about whether this is a good idea, so we reached out to Sharon Greenthal of Empty House Full Mind to give us her thoughts on whether downsizing is a good idea. Here's what she had to say:
Q: Why might someone decide that downsizing in retirement is a good idea?
Ms. Greenthal: Downsizing is a good idea for many reasons. The top three are lowering expenses by reducing cost of housing, managing a smaller (often one story) home, and having less maintenance by eliminating a yard (condo living).
Q: If you choose to downsize, what are some things you should plan for?
Ms. Greenthal: The biggest challenge is purging your belongings. It's not easy to decide what to get rid of and what to keep if your downsized home will be significantly smaller. If you are unsure how to go about this, there are professional organizers who can help you with the process. If you want to try to do it on your own, plan to tackle one room per week, and sort into keep, toss, and donate piles. Consider a small storage unit for things you simply can't part with.
Q: When is downsizing not a good idea?
Ms. Greenthal: In some instances, having a large home is a plus for retirees. For example, if there is outside caregiving needed, it's helpful to have a spare bedroom and bathroom. If family lives long distances away, it might be a good idea to have room for them to visit. If finances are not an issue, keeping the family home is often a preferable choice for children and grandchildren. And finally, there's no reason not to stay put if you are comfortable where you are and don't desire change.
Q: What kinds of cost benefits can come with downsizing?
Ms. Greenthal: The cost benefits can be many. Laws vary from state to state, but tax breaks can be significant when downsizing. If you are able to use the equity in your current home to pay cash for your smaller place you will save thousands of dollars in loan fees and mortgage interest payments. The expense of running a larger home (everything from electricity to cleaning supplies) will be reduced also.
Q: What are some things people may forget to consider when they are thinking of downsizing?
Ms. Greenthal: Things to keep in mind that may not be considered include lack of storage, loss of privacy and separate space from a spouse or partner, and entertaining space. Everything will be different from the type of sunlight you see each day to the noise you hear outside your bedroom window. If you don't have grandchildren now, you might in the future, and you might wish you had more room when they come along.
Sharon Greenthal is a writer and editor focusing on parenting, midlife, empty nesting and marriage. Sharon is the Young Adults Expert on About.com. Sharon blogs at Empty House Full Mind, and can be found on Facebook and Twitter.
Paige Estigarribia is a writer for The Dollar Stretcher who enjoys writing about food, frugal living, and money-saving tips. Visit Paige on Google+.
Take the Next Step:
- Discover the financial benefits of living in a mobile or manufactured home.
- Will your new retired lifestyle cause you to look at money differently?
- Too much stuff and not enough storage? These creative storage solutions will help you store more stuff in less space.
- Determine if debt could derail your retirement and what you can do about it now. Our checklist can help you. Afterall, one of the most important ingredients for a comfortable retirement is to be debt free when you retire.
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