One of the common steps taken by people nearing or reaching retirement is downsizing the family home. In fact, downsizing is almost sure to be a part of the advice many advisers give their clients and some family members give their parents. What is interesting about downsizing is that most of the usual assumptions about the step are either misleading or wholly inaccurate.
Saving money is an oft-cited reason for downsizing, as one could save on the costs of operating and maintaining a large home as well as obtain net cash upon the sale of the larger, existing home and acquisition of a smaller and so less expensive home. In fact, depending on the location and type of home acquired, there may be no cash left over and equal or higher operating costs due to the owner’s outsourcing of services the homeowner used to perform. In addition, care must be taken to control the costs associated with the two transactions as fees, moving costs and the like can be very substantial.
A better reason for downsizing might be to get rid of many of the accumulated possessions of a lifetime so as to simplify things for you during retirement and for your heirs upon your eventual demise. Nothing like a move to force you to at least consider all those things you have been holding onto all these years, not to mention foisted upon you by your parents, aunts and uncles and so on. If you are fortunate, younger family members may assist in this process and may even accept some of those things you want to pass along. Other recipients to consider include consignment stores, Goodwill or the Salvation Army, other charities, your recycling bin and even the trash. You may well be surprised how little others would want much of what you have.
Another benefit of downsizing may be the flexibility of choosing a destination – it can be in the same neighborhood you are in now or in another state entirely. Lots of choices here, if you are so inclined, and research and planning can make the change a very positive step emotionally as well as financially. A related benefit in terms of flexibility is that one usually has a reasonable window of time in which to investigate this step and bring the plan to fruition when it is convenient. While you are still working, this may not be easy to fit into your schedule but once ready to retire, it is worth the time to do it right.
Finally, it may help to keep in mind that it is not so much about downsizing per se but instead about what is right for you and your family as you move forward.