Housing is one of the areas that new retirees often look into as they make the transition to this new phase of their lives. From evaluating your current home to moving to a new one, where you stay for the rest of your life can have a big impact on your retirement. While some retirees choose to purchase the dream house they couldn't buy during their younger years, others pride themselves on downsizing their homes. According to a study by Merrill Lynch and Age Wave, half of retirees swap their homes for a smaller one.
The idea of downsizing can cause some trepidation, as a move may mean leaving your decades-long comfort zone. But there are also advantages that may help you get over that resistance. Here are some of them:
A Smaller Home Means Less Maintenance
When you live in a larger home, you have more housework and other chores that need to be done, such as mowing lawns, trimming hedges and shoveling snow. While you're still physically independent, these tasks may not seem so daunting. However, what you can easily do in your 60s may not be so feasible when you reach your 80s. You may even need to hire some help just for your home's upkeep. By moving into a smaller home, like a condo, you can be spared from many of these maintenance chores and costs. That could lead to more free time for you so you can do the activities you really want to do.
Stop Paying for Extra Space
By this time, all your kids have probably moved out of your house and your large family home doesn't have the same purpose it once had. Even after you've paid off the mortgage, there are still expenses you have to take care of regularly, such as property taxes, home insurance, utilities and repairs. These are generally proportionate to the size of your property. On the other hand, when you choose to downsize, you can lower your monthly utility costs and expenditures. Although there is sentimental value that comes with living in your family home, maintaining those same expenses can dwindle your retirement savings faster than need be.
Boost Your Retirement Savings
Once you stop paying for unused space and cut down on unnecessary costs, you open the door for improved cash flow. Selling your old family house and the equity you've built can add significantly to your retirement savings. You can sell your family home and buy a smaller home or a condo with lower maintenance costs, then allot the remainder of your proceeds to your retirement nest.
See the World
One of the most common retirement leisure goals is traveling. If this is your plan, it could prove more expedient and cost efficient to keep a small house or condo. Whether you're spending a couple of weeks in another state with your grandkids or a month in Europe, paying for the upkeep of a large home while you're away can be costly. A smaller home can give you more flexibility.
Downsizing can be an exciting time for you and your spouse. The thrill of looking for a new home and making new friends can be the second wind you've been waiting for. It's like building your life again but this time with less pressure.