Your home will likely mean many things over the course of your time living in it — dinners with friends, milestones with your children and/or partner, and a place of refuge when you need a break from the outside world.
But eventually, your needs change, and the rooms that housed those memories may no longer fit the lifestyle you want. If this sounds like you, you’re not alone. More than half of all retirees who move end up downsizing.
Here are just a few reasons why downsizing might be your next move.
Your Monthly Housing Costs Are Through the Roof
One of the most common reasons to downsize is that it will probably save you money. The average household should spend no more than 30 percent of its income on housing, including property taxes, interest on the mortgage, and maintenance. More than that, and you’re considered “financially burdened.”
But that’s not always easy, depending on your zip code. In some regions, retirees routinely pay 40 percent or more on housing every month, and as many as 64 percent cite this as the reason for downsizing.
You Have Little (or No) Cash on Hand
Retirement can be a time to make big plans, whether it’s that hiking excursion to Machu Picchu, a classic car, or regular trips to see the grandkids. Most of these ideas have one thing in common: They cost money. The more you pour into your house, the less you’ll have for these retirement pursuits.
Consider downsizing in advance of retirement (say, five or 10 years) and you’ll put away thousands of extra dollars each year toward family, friends, and fun.
You’re Overwhelmed by Home Maintenance
On average, you’ll probably spend as much as 4 percent of your home’s annual value on regular maintenance. The smaller the home, the lower this price tag will be.
It can be tempting to keep your current home for its sentimental value, but over time, those feelings can have a real cost. In addition to maintenance, consider property taxes, pricey homeowners insurance, and the preparation costs for an eventual sale.
It’s Out of Touch with Your Lifestyle
If there are fewer people living in your house, chances are you are using fewer rooms regularly. If it’s just you and your partner, those extra bedrooms, bathrooms, and playrooms are just sitting idle. Why should you still pay to light, heat, and cool them?
And the building itself may not be ideal for older residents. You just may not be able to handle stairs or steep driveways, not to mention shoveling snow or trimming hedges. Accessible houses can be difficult to find when only 6.6 million homes in the U.S. conform to accessibility standards. So the more time you allow to find a new home, the better.
You Don’t Need to Live Near a Job Anymore
Gone are the days when your career defines where you live. When you retire, the wide world of housing choices is at your feet. Take this opportunity to shop for homes in neighborhoods or states with lower utilities and taxes. This may allow you to opt for a home that's similar in size to or larger than where you live now. Nineteen percent of retired homeowners moved to a home of similar size, and a full 30 percent actually bought a bigger home.
Smaller Home, Better Life
Retirement is full of changes, and downsizing your home may be the biggest of them all. It brings up many questions: How small is too small? When should I make the move? How much mortgage can my retirement income handle?
The good news is that you don’t have to navigate these new waters alone. USALLIANCE’s mortgage calculator is a great place to get your bearings and start to answer some of these questions. A thoughtful downsizing strategy can save money in the short term and set the table for a more vibrant, exciting lifestyle down the road.
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