The family home is a place where memories are made, but as we get older, the large space we shared with others may become too expensive and challenging for us to maintain. According to a recent survey conducted by TD Ameritrade, 42% of Americans plan to downsize when they retire. Downsizing allows seniors to live in a smaller, more comfortable space, retaining their independence and reducing the burden of caring for a property. Other reasons for downsizing to a smaller property include:
- Being closer to family
- Moving to a senior living community
- Relocating to a warmer climate
Downsizing offers seniors a chance to live where they want, in a smaller, more affordable property, freeing up funds so they can enjoy their retirement and have the lifestyle they always wanted.
Tips for Downsizing as a Senior
For many, the thought of moving can be quite stressful, especially if they’ve lived in the same family home for many years and have accumulated a lot of possessions. Planning your move carefully when you downsize can make the process go more smoothly and can be something that you look forward to. It’s wise to start planning for downsizing early, so that the move is as stress-free as possible. Keep in mind the following tips as you plan for your move:
- Tackle one room at a time: Start decluttering your home one room at a time. Begin smaller rooms, such as clearing out the bathroom or bedroom, then move on to bigger rooms and areas where you store belongings, such as the garage or attic.
- Pack the items you really want to keep: Rather than thinking about what to get rid of, try packing the possessions you really want to keep. Once you’ve saved those items, you may find it easier to let go of other things.
- Only keep possessions you really love: If you’ve carried something with you through many moves, and it’s always sat in a box, why move it again? It may seem difficult to be ruthless about your packing, but you will feel much happier in your new home surrounded only by items that bring you joy.
- Give some great gifts now: If you have some antiques that your kids or grandkids love to look at when they come to visit, consider giving them away now. You’ll get to enjoy giving a much-wanted gift, and make them happy too.
- Plan for your new space: Instead of making this move all about getting rid of stuff, think about what you’ll gain. That wonderful new kitchen with the finishes and appliances that will inspire you to start cooking and baking again. That manageable garden that you’ll love to tend during the summer months. The bright and airy living room that you’ve already measured so you know your sofa will look great there. Focus on the positives.
Frequently Asked Questions About Downsizing
How should I choose my new home?
Put yourself first when it comes to making decisions about moving. Think about the climate, the cost of living and the community, as well as the home itself. You’ll hopefully be spending many years in your new home, so you need to choose somewhere that works well for you.
Think about your needs now, and what your needs may be over the long-term. Make sure your new home is accessible so you can get around easily, and that it’s suitably sized. Would you like somewhere small that’s easy to clean and heat, or would you prefer a place with an extra room or two for putting up guests overnight?
How will I pay my moving expenses?
One challenge that many seniors face is finding the funds to cover a move. There are many costs to consider, including:
- Surveys
- Appraisals
- Legal fees
- Repairs and cleaning services
- Moving services
- Personal travel expenses
- Real estate agent fees
You may be able to have some of these costs deducted from the sale price of the house at closing, while others may need to be paid up front. If you’re no longer working and are relying on a retirement income, you may have difficulty paying these expenses.
Reverse mortgages and bridge loans are two options for people who need to unlock the equity in their homes to allow them to downsize.
Reverse mortgages offer a line of credit or a monthly payment that’s secured against the value of a home and repaid when the property is sold.
Bridge loans are similar, but are offered for a shorter time frame of a few months to one year. They’re typically provided as a lump sum, and are repayable in full following the sale of the property.
Will downsizing really save me money?
Downsizing can save you money in several ways:
- Smaller properties typically cost less to heat and cool
- Property taxes are usually lower on a smaller property
- It’s easier to maintain a smaller home, so operating and repair costs are usually lower
- You may be able to relocate to an area with a lower cost of living
- You may be able to buy a smaller property outright, and avoid having a mortgage payment
Downsizing can be a good way to make use of the home equity you’ve built up over the years, reducing your monthly operating costs and freeing up cash to use for living expenses, travel, or pursuing your favorite hobbies during your retirement.
