When the kids left for college, you had big dreams for their unoccupied bedrooms. Your daughter’s room had potential to become the art studio you’ve always wanted. And your son’s room? Say Namaste to your new yoga studio.
Now, as you look back, you realize those rooms have barely changed. So moving toward retirement, you’re starting to wonder if you really need all the extra space. To help you make educated decisions about your retirement options, here are four things to consider as you decide if downsizing is the right choice for you:
The first step is deciding where you’d like to move. Consider these things:
- Where are your children/grandchildren living?
- Where are your friends spending their retirement?
- Do you like to travel a lot or do you prefer to stay close to home?
Consider the impact that a move will have on your quality of life, particularly your social life:
- If you’re thinking of moving far, does your new community have clubs and organizations to help you get involved?
- Consider your hobbies and interests. Are you moving to a place where you’ll be able to do the things you enjoy?
It’s important to understand that selling your home and moving into a smaller one doesn’t promise financial stability in retirement. Assemble these costs into a spreadsheet for your current home and a few homes in areas you’d like to move to get a good sense of how your expenses would change:
- Mortgage payments (this mortgage calculator can help)
- Utility costs
- Maintenance and upkeep
- Property tax
- Home insurance costs
- Cost of living expenses
4. Emotional needs
Finally, don’t discount your emotional attachment to your home. After all, it is where you raised your children. Your practical side (and your financial advisor) might be telling you that moving is a financially responsible decision. But if you think moving will make you unhappy, it’s worth discussing with your financial advisor to see if there are other options that could keep you in your home.
Deciding whether to downsize in retirement is a big question that is best answered after a lot of research, advice (seek out your financial, tax and legal advisors) and careful planning. What other things are you considering as you decide if downsizing is the right move for you?