Should I Downsize For Retirement?|6 Steps To Take Now
As you see the light at the end of your working years, you may ask yourself whether you should downsize for retirement. It’s not too early to start planning ahead to make your transition smooth and is the most probable solution.
Recently we moved across the country for a temporary job opportunity. We packed up a small trailer with the items that were most necessary and left a home full of a few decades worth of accumulated belongings. As we are living in a small apartment in New York, we are practicing how to live with less. It has been a real eye-opener as to what we really need to live comfortably and happy as well as do we like living in a smaller space.
The sooner you make a decision the better, as it is easier to move at 65 under your own will than at 70 plus. Even if you don’t want to sell your home or move, downsizing your belongings can have benefits as less stuff is less to maintain and clean. It also is less burdensome to take care of now than in the future. Downsizing can be a life-enhancing adventure and a fresh start! Follow these 6 steps to downsize for retirement.
Benefits of Downsizing for Retirement
There are many benefits to consider when deciding if downsizing your current residence makes sense to you.
- By moving to a smaller home, there is less home and yard maintenance. That may be something to look at as you may want to travel more or as you age. Do you look forward to letting someone else shovel snow or maintain the pool and garden?
- Perhaps you would like to lower your taxes as you move forward.
- The kids are all grown and out of the house, do you really need or want all that extra living space?
- Staying in a large home is costly with maintenance and taxes.
- According to studies, out of retired homeowner expenditures, 30% are house related. A smaller home may have fewer maintenance costs.
- A smaller home is generally less expensive to heat and cool than a 2 story home with stairs.
Determine if downsizing is for you and follow these steps to assist you.
1 Prioritize Your Lifestyle Goals
Now is the time to dream what your future holds. Visualize what your day to day priorities will be in your new life. Write your goals down so that you may move toward them and take steps to make them possible. Its never to early to start!
- Will you want to be near family and friends to spend time with them or watch your grandchildren?
- Do you want to travel frequently? Consider a low cost, maintenance free condominium near an airport or freeway.
- Have you always wanted to tour the country in an RV?
- What hobbies do you want to pursue? Do you want to live in a golf course community or a simpler life in the country?
2 Know Your Number
Once you know the lifestyle you would like to achieve, use the following retirement calculators to plan ahead and know your number. This will help you decide if you should downsize for your retirement.
- The Vanguard Cost Worksheet will help you estimate your monthly expenses in retirement.
- The Smart Assets Retirement Calculator tells you how much money you will need to retire.
3 Where do You want to live?
Deciding where you want to live can take years to determine with thoughtful consideration. Go ahead and start now even if you aren’t planning to retire anytime soon.
- Will you want to move closer to friends and family? Please note that there is no guarantee that your children will stay put once you move to be near them. Remember they may be in a career building stage in their lives and will move to where there is an opportunity for their family.
- Do you want to stay in your community or move to another town? Once you leave your career, is this the place you want to live?
- How much space will you require? Do you want to have the extra bedrooms for visitors or does having your family and friends stay in a hotel when they visit once a year make sense?
- Do you want to live in a warmer climate?
If you decide you want to move to a new city, take an extended trip to the area and check out your perceived idea of the area. Bring the list of your lifestyle goals to make sure you are looking at the right amenities for yourself. Also, be sure to analyze if this area or housing type fits within your number as determined by the above calculators. A smaller house is not always a less expensive option to where you are now depending on the area of choice!
4 Decide Which Property Type Works For You
Take a look at these downsize retirement property options and decide which is the best fit for you. Consider these questions:
- What features are important to you in your home?
- Do you want a garage, covered parking, or parking close to the door?
- Do you want a floor plan without stairs?
- Open layouts offer a more open feel and are easier to maneuver should a time come for a walker or wheelchair.
- Do you want a low maintenance option or a manageable single family home?
- How much are the property taxes?
- If choosing a condominium or preplanned community, what amenities are important to you?
- What will the HOA fees be?
- Also, consider the cost of moving when making your decision. Aging in place may be the best answer if it saves you money and energy.
5 Downsize Your Belongings
Whether you are moving or not, downsizing your belongings is of great benefit! Not only will you not have as much to maintain and clean, but it is also refreshing to only have the things that you love and mean the most to you. While this may seem to be a daunting task, take it in small steps going through a closet or room at a time. Decluttering takes time! I find it amazing how much stuff I have accumulated through the years while living in one place.
If you are having difficulty parting from family heirlooms, give some away to family or close friends. While doing this slowly, you have time to evaluate and change your mind on some items if you want. Follow this system to assist in this overwhelming task.
- Purchase some colored stickers and gather some boxes.
- As you go through each closet or room label with the stickers.
- White-Keep
- Blue- Charity
- Yellow- Gift for friend or family member. Ask your children what they would like for themselves.
- Red- Toss
- Green- Sell
- Once you have decided which things you are donating to charity, why not have a yard sale? Some more valuable items may be sold on eBay. The proceeds can go toward your moving expenses or sprucing up your place if you are staying.
- The items left after the estate sale will be going to charity. Take photos of everything you are donating and attach to the receipt from your favorite charity.
- Be sure to include your donation receipts in your tax return at the end of the year.
- Consider uploading pictures, scrapbooks, and childhood artwork to cloud storage. Then give away or toss the physical keepsakes.
6 Timing
Talk to a reputable real estate agent to determine when is the best time to sell your property. Plan in advance to know your next steps. What are your long haul finances and how long do you need to prepare? What location, size of the property, whether you want to rent or own. That way when the opportune time to sell comes up, you are ready to take action. Meanwhile, start the decluttering process now.
Final Thoughts on Downsizing for Retirement
Retirement is a new chapter. A new home and location offer an adventure to embark on an exciting new chapter. Have fun considering the possibilities!
If this article was of value to you, please share it with others. You may also enjoy A Positive Attitude Makeover to prepare now for retirement.
