If you’ve made the decision to downsize to a smaller home, you may be wondering what comes next. Downsizing is a popular trend among retirees—and for a good reason—but it’s not a one-size-fits-all solution. That’s why it’s important to consider all your options carefully, along with how this move will affect your finances. Here are some tips for downsizing to help you get started.
How Downsizing Impacts Your Budget
Saving money isn’t the only reason to downsize, but it certainly is a good one. For one thing, downsizing will likely lower or eliminate your mortgage payments. If the proceeds from selling your house are more than the cost of a smaller one, you could pay with cash and forgo a mortgage loan altogether. If you still need a mortgage, it will likely be less than what you are paying for a larger home now. If not, it doesn’t mean downsizing is a bad idea—it is one thing to consider in the overall calculation of costs when making your decision to downsize or not.
Your utility bills will also likely be reduced. This is not only due to having a smaller home, but many contemporary properties have energy-efficient features that are good for both the environment and your budget.
Buying a smaller home can certainly save you money, but it’s what you can do with the savings that may have the biggest impact. The cash you save each month might be put to use investing, for example. While there is no guarantee that your dollars will grow, a few strategic investments now may help you continue to build your financial legacy for your family. It will also help you establish a nest egg to pay for assisted living in the future if necessary.
Finding a Place to Call Home
Many seniors realize they could save money and improve their quality of life by downsizing, but you may still wonder what type of living arrangement is best. Fortunately, you have many options. Buying a smaller home or condo or moving to assisted living are the most popular. But what you choose is determined by your needs.
Geoff Williams of U.S. News & World Report touts the benefits of condominiums, citing less yard work, relatively low cost, and a sense of community. Similarly, a retirement community offers these benefits and more. Most independent and assisted living facilities will offer you nutritious meals and access to amenities, such as a hair salon or fitness center, right on campus.
If you ultimately choose to buy a single-family home, you’ll enjoy more personal space and can build equity. Before you make a decision, consider looking at the cost of independent living, renting an apartment or condo, and paying a traditional mortgage. A mortgage calculator can help you determine what you might expect to pay if you choose to buy.
Decluttering, Packing, Moving and Minimizing Stress
Downsizing your home requires downsizing possessions, too, which can be stressful if you don’t tackle it with a plan. This should include everything from which items to keep to who will help you do the physical labor of packing and moving.
Even if you feel emotional about leaving your old life behind and parting with possessions at first, once it’s done and you settle into your new home, it will feel good to start fresh with a clutter-free life. If you’re still not convinced, you should know that decluttering is an excellent way to stave off anxiety.
Make Moving a Positive Experience
Moving on from your family home is certainly a major change, but that doesn’t mean it can’t be a positive experience. Look at this as an opportunity to craft your ideal life in retirement, full of all that matters to you most. Just make sure you go into it with a plan and our tips for downsizing.