Downsizing can free up funds for your retirement and cut down on day-to-day expenses. But do the pros really outweigh the cons?

What will your life look like once you retire? Do you plan to travel? Visit grandchildren more often? Maybe retirement is something you do more on paper because you still plan to work. Whatever your particular retirement looks like, you have to think about your home. Some people elect to downsize from a house that was once full of kids. Others would stay forever, if possible. Here’s a look at which option might be right for you.

The Benefit of Selling

There are plenty of reasons to put your house up for sale. If you own your home outright or have a lot of equity, selling could be the boost your retirement accounts need. Many people today are going into retirement without enough money saved. To avoid being caught in a future housing crisis, selling while the market is healthy might be wise.
Homes, of course, come with maintenance. The older your home, the more maintenance it’s likely to require. And the larger it is, the more time and money you’ll have to sink into taking care of it.
What about utilities? Did you purchase your home to meet the needs of a larger family? Are all of those extra rooms now only used when grown children or grandchildren come to visit? You’re still paying to heat and cool them. Plus, the larger your house, the more property taxes you’re paying on it. Are you wasting crucial retirement funds on a large house when you’re really only using a few of the rooms?
As you age, your home might have a feature that could become a real problem: stairs. Stairs can create mobility challenges for seniors later in life. You may be forced to remodel your home if you choose to stay in it through retirement.
Think back on when you were looking for the perfect home. You might have looked for one in the best school district, near the office or in a more affluent neighborhood. As a retiree, some of what you were looking for then may not apply now. Moving even a small distance could dramatically lower your property taxes or put you closer to things (or people) that are important to you now – like your children and grandchildren.
Alternatively, you could be looking to move to an entirely different state or country. You could plan to sell your home and rent for a year to see if you really enjoy living in that new area. Sometimes what you thought would be the perfect place to retire to ends up not being the fit you thought it would be.

Why You Might Want to Stay Put

All this depends on the equity you have in your home. If you didn’t or no longer have a mortgage – or you’re close to paying it off – carefully weigh the financial implications of both decisions. If your equity is low or you’re nowhere near owning the home outright, you may lower your payment by selling and then renting. Don’t forget that renting often means that all the maintenance and possibly some of the utilities are included in your rent.

The Bottom Line

In retirement planning, there is no one answer. It all depends on you and your financial picture. That’s why it’s so important to find a financial advisor/planner whom you trust to help walk you through decisions like this. He or she will know the questions to ask and can show you how each decision looks on paper. After that, it’s ultimately up to you.


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