Many people dream about financing a large sum of money from retirement by selling their house, getting a smaller place, and investing the remainder for income. This often works for older adults whose kids are already on their own, and they don’t need that much space for themselves. In this case, downsizing is the best way to finance your retirement and establish a more comfortable living situation.
When we talk about downsizing, it refers to the process of selling your current house and moving into a smaller, less expensive one. Aging people prefer to buy house and land packages close to their friends or relatives and are easy to maintain. So the decision to downsize often relates to individual circumstances.
If you’re preparing for your retirement and planning to save money, downsizing is the best option. But those who wait until they retire to downsize, the situation will be slightly different. Considering all the factors will help you determine if downsizing is the right path you should take. With that in mind, here are the things to consider when downsizing for retirement.
Family members, particularly children, have different reasons for moving out of their family home. Going to college, getting a job in the city, or having their own family are some reasons children choose to live separately. This leaves the parents with a larger property that’s too big and unnecessary for their living situation.
Retirees may choose to stay or move out from their current home, depending on how the situation suits them. But living in a house that’s too big for your needs means you’re likely to spend more than necessary, which includes the utilities, repairs, and the overall upkeep of the house.
Downsizing means having cheaper house maintenance, bills, council tax, and other housing expenses you can think of. Basically, the amount of savings you’ll get is massive. It’s also important to take note that retiring means cutting off your regular source of income. Since you’re no longer earning, you need to consider how your current finances can support your future, and this means you need to cut off areas you’re likely to spend more.
As you live longer in your current home, it will likely increase in value, and the mortgage is almost paid off. But buying a small, cheaper house offers plenty of equity, which you can use for other things (e.g. relaxing holiday at the beach!). This will also provide more options for a newer home, a faster buying chain, and mortgage-free living space.
As you grow older, health will be a defining factor in almost every decision. You have to look after your body and find the best living situation fit for your current needs. If you or your spouse have mobility issues, a two-story house probably is not the ideal place to live, especially for senior homeowners. Whether you have existing health issues or perfectly healthy, it’s important to look at the future.
When looking to downsize, it’s important to consider the house features to determine if it can accommodate its senior dwellers. These factors include ease of access to other rooms, availability of stairs, and assistance (e.g., handles or assistors).
While accessibility accommodations sound great, the cost is certainly high. But if the current house is bungalow-type or has fewer stairs, you may consider widening the doors for walks instead of completely getting rid of the house. Universal design standards make great home upgrades designed for all ages, including people with disabilities. This flexibility will let you enjoy your home as long as you wish without making any modifications or moving out in your later years.
Otherwise, if the senior is suffering serious health concerns, then consider moving to a senior healthcare facility rather than getting a new home for them.
Other reasons for downsizing
Proximity is another reason seniors choose to move to a new living space. Some choose to live near their family, a healthcare facility, and other accessible amenities (e.g., grocery store, fitness center, or spa).
Workspace needs are another factor to consider, especially for those who want to take a new hobby or a small business. Some choose to have a smaller house but with a bigger garden where they can gather fellow hobbyists, friends, or family members. Decluttering can also force seniors to move out because of the belongings left by their children. A clean, spacious home means lesser time to maintain.
As you retire, you hope to make wiser choices about your living situation that not only focus on making money. Downsizing can be a difficult decision, especially if you’ve already bonded with the house and the memories it holds. But taking this path will also open opportunities to find a better location, perhaps closer to your friends and family. Whatever your decision, always consider your health and well-being.