As our lives change, our needs for our homes change. The house that was perfect when you were in your 20s may become too small when you’re in your 30s and 40s and having a family. As your children move out and you approach retirement, you might choose to downsize to a smaller home that is easier to take care of and potentially less expensive. Though it’s intended to help you reach your retirement goals, the process of downsizing often isn’t as simple as selling one home and buying another.
Choosing a Location
The process of choosing where you’ll live when you retire can start when you’re relatively young. While an important part of choosing a location is finding a place where you think you will enjoy living because it fits your lifestyle, you may also want to pay attention to cost of living concerns. Some parts of the country have lower housing costs and lower taxes than others. Weather differences could also come into play, both from the perspective of your lifestyle and your health.
Choosing a Home
When you downsize, you may be looking for a different type of home than you previously occupied. If aging is a concern, you may look for a property that is only one level and does not have stairs. Large bathrooms or hallways may also be important to you for accessibility. On the other hand, you may want to consider living in a condo or townhome community where some of your maintenance services are taken care of for you. Some retirees choose to go to a senior-oriented community where they can benefit from activities and shared amenities, as well.
Sale and Purchase Considerations
Selling your old home and buying a new one is something you may have already done a few times when you were younger. But, if you’re already retired and buying a home, getting a mortgage might be more difficult if you don’t have a regular income or substantial savings.
Though your timing might be flexible, having a gap between homes or owning two homes at once could be expensive, especially if you’ve been living mortgage-free and now have to pay rent, or if you suddenly have to pay two mortgages at once. Depending on your situation, and the local real estate market, you may want to build a strategy before moving forward with the transaction.
Dealing with Possessions
Part of downsizing your home is also usually downsizing your possessions. It’s likely that all of the things that you’ve built up over the years won’t fit into your new, smaller home. Before renting the biggest dumpster you can find, though, there are many ways to squeeze value out of the possessions that you don’t want to bring with you. The first is to offer them to other relatives who may want a piece of your home for theirs and are willing to offer you money. The next is to sell them, whether online, at a yard sale or through an antiques dealer. You can also donate them to not-for-profit organizations and claim a tax deduction for their fair market value. Once you’ve finished that, consider relisting any leftover items again.
About the Author
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc. © 2014 ConsumerInfo.com, Inc. All rights reserved.