Important Considerations When Downsizing for Retirement

Important Considerations When Downsizing for Retirement

Important Considerations When Downsizing for Retirement

When you think of your preparations for retirement, do they involve downsizing your life in some way? 

For most Americans, we envision our golden years as a period of life where we can finally enjoy fewer obligations, less stress, and the opportunity to do more of what we love. To get there, that may mean a smaller house that requires less upkeep, a move to a milder climate, or simply decluttering our homes so they’re more livable. Whatever this scaling down means for you, you’re probably hoping that life will be easier and you’ll reap some decent savings, too, right? In this two-part companion sequence, we first take a look at some important things to consider when downsizing. Next month, we’ll provide helpful advice for those who are considering moving out of state. Doing your homework and preparing in advance can save you time, money and headaches down the road. Let’s start by exploring some common pros, cons, and smart tips for downsizing.   

You’re likely to have less upkeep.

If you’re not a fan of cutting a sprawling lawn, fixing the roof or cleaning a large home regularly, there’s something to be said for a smaller dwelling. You’ll probably have to spend less time on upkeep, and depending upon the type of residence you choose, the outdoor maintenance may even be included. Many senior living communities offer housekeeping services, meal preparation, and transportation, reducing the need for cleaning, cooking and auto maintenance. You may indeed be happier when you’re no longer overwhelmed by the demands of a larger home.

It takes some effort.

While the grass may look greener on the other side of the fence, there’s a lot to consider when scaling back your life. Let’s face it: moving is a pain. All of the cleaning, packing and preparations, changing addresses, setting up and canceling utilities, getting rid of unwanted items and parting with cherished possessions…the list goes on and on. It’s a hassle and it doesn’t get any easier with age. If you’ve determined that a move is in your retirement plans, make the task less burdensome by setting a moving date goal well in advance, noting to-do tasks on a calendar, and cleaning and packing in increments. And don’t forget to do plenty of due diligence so you can make the best choice the first time. The last thing most people want to do is go through the massive undertaking of picking up their lives multiple times as senior citizens.                                                

There is no ‘perfect’ place to live.

That chic new waterfront condo may seem great until you find that you can hear your neighbor playing his tuba every night at midnight. No matter where you live in retirement, there will be good things and not so good things. The keys are to set your priorities, and to decide what you can live with and what’s a deal breaker. With that in mind, you can find your slice of heaven on earth that suits your preferences and lifestyle.

You may save a bundle, or not as much as you think you will.

Depending upon where you move, you may very well find a great new home in an area with a lower cost of living. But it’s important to look at the big financial picture. Upscale condominiums and townhomes can be pricey, and you may wind up paying a small fortune in recurring  condo fees, as well. When you’re calculating expected savings, consider taxes, utilities and maintenance, too. Don’t forget to include things like a higher utility bill for air conditioning if you’re moving to a much warmer climate, whether property taxes are higher in your new location, and if seeing your grandchildren will now require plane fare. There are also expenses involved in selling your home and buying a new one. If you wind up paying thousands in real estate and closing costs, plus more to a moving company, how long will it take you to recoup those expenses?  And if you’re living mortgage-free in your current home, a new mortgage means a new fixed cost. With so many financial implications at play, saving money shouldn’t be your primary motivation for downsizing.

Your precious ‘stuff’ will need a new home.

Older Americans, particularly baby boomers, tend to accumulate a lot of possessions. Getting rid of all those things you’ve collected over the years can be emotionally challenging. Don’t assume that your children will want your stuff, either. Studies show that millennials and Gen Xers prefer minimal furnishings that are suitable to their mobile, disposable lifestyles. Your Chippendale china closet may be gorgeous and valuable, but there’s a good chance your kids won’t be as enamored with it as you are. Gifting items to others or donating to your favorite charity is a good way to repurpose useful things that you no longer need. Be sure to obtain receipts when making charitable donations so you’ll have them for tax time.

Will you be close enough to what matters?

If you’re considering a move to a more distant location, give careful thought to your social circle, including your children, grandchildren, other family members, and friends. Isolation is a common issue for seniors, so for most retirees, living in proximity to loved ones has definite value. Access to other important facets of your lifestyle, such as health care, religious organizations, clubs, favorite shopping and dining establishments, should also be evaluated.

Consider you needs for privacy.

Think carefully about how important solitude and “me time” are to you and your partner before you decide to scale down your house. Some homeowners who have downsized say they feel cramped because there’s less space in which to maneuver. It's also harder to enjoy private, quiet time when needed because a smaller floor plan offers fewer options for sanctuary. Converting a spare room into a ‘man cave’ or adding a ‘she shed’ can provide privacy for those who crave it.

Look to the future.

How long do you anticipate living in your new home? If you want to be there long term, are you new digs suited for an elderly lifestyle? Your needs at 65 are likely to be far different than they will be at 85. Eyesight and hearing may become impaired. The stairs you climb easily now may be impossible when you’re older, so carefully evaluate accessibility and practicality if you’re planning to make it your long-term residence.

Downsizing your home for retirement is a major undertaking, but with the proper research and planning, it can be a productive, life enhancing adventure.

If moving out of state is on your radar, you won’t want to miss our upcoming companion article in this two-part sequence. Check back next month when FAI’s Principal and Senior Advisor, Mark Stinson, CPA, CFP ®, MBA, offers up his advice for retirees who are contemplating a long-distance move.

About FAI Wealth Management, Inc.: Located in Columbia, Maryland, FAI focuses on helping clients create the financial future they desire by protecting their wealth, making the most of their assets, and planning for life's uncertainties. The firm combines fee-only, fiduciary-driven guidance with highly personalized, consultative financial planning and investment services that enable individuals, families, and businesses to navigate complex life transitions. Founded in 1987, FAI currently manages more than $350 million in client assets nationwide. For more information about FAI Wealth Management, please visit the website at https://www.faiwealth.com or call 410.715.9200.

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