When it comes to deciding how and where we want to live when we retire, one of the words we hear most often is “downsizing.” It almost seems as if selling your larger home and moving into a smaller domicile was some sort of retirement rule. The reality, however, is not that simple, as this recent article from the USNews website suggests. Before you decide to shrink your square footage, consider these downsizing myths – they might make you think twice.
Downsizing is no Panacea
“If you’re thinking of moving during retirement,” says USNews, “it is likely to a smaller place. Three out of four Americans say they would downsize their home to reduce ongoing costs and benefit from the equity,” according to a recent Bank of America Merrill Lynch study. “But before you sell off extra furniture and downsize, it’s important to note that less home doesn’t always lead to an ideal solution,” the article goes on. “You might find unexpected financial and emotional challenges after making the switch.” In other words, if you buy into the notion that downsizing is some sort of panacea, you might be disappointed.
So in order to learn what USNews calls “the realities you might encounter when you reduce square footage during the golden years,” here are the magazine’s six downsizing myths. Take a look and see if any of these might cause you to re-think your housing plans.
Downsizing Myths 1 – 3
- Downsizing Myth number one: Selling will always lead to a financial windfall. Here in the Puget Sound region where AgingOptions is headquartered, real estate is red hot, and most homes do sell quickly. But as USNews warns, it might take longer than you expect, and depending on your home’s location and condition, you might have to put some money into pre-sale repairs. We would add one more warning: those online real estate estimates might not be accurate. Don’t count on selling your home for the inflated value some popular websites promise.
- Downsizing Myth number two: A small place means lower living expenses. This one can come as a shock. Selling a big rural home to move closer to the city will almost always mean higher costs per square foot. That smaller place might also be in an area where taxes, utilities and insurance cost much more than in your former home. Also, remember that some places that welcome retirees also demand homeowner’s fees or condo association dues. These hidden costs can add significantly to your monthly outlay.
- Downsizing Myth number three: Everyone ought to downsize in retirement. This has to be a personal choice. “While most retirees consider moving at one point, it’s important to evaluate your own situation before making a change,” says USNews. “You might be more comfortable in the large home, especially if you’ve lived there for years and are familiar with where everything is. If you enjoy hosting frequent dinner parties or card groups, staying in the bigger place might make sense.”
Downsizing Myths 4 – 6
- Downsizing Myth number four: Downsizing is the only way to boost your finances. Before you decide that you have to move to cut expenses, make a careful evaluation of the money you spend. Can you cut back here and there and improve your cash flow? Can you rent out a room in your current home? With some creative thinking you might discover you can manage just fine by staying put.
- Downsizing Myth number five: You won’t miss the extra space. “Switching from life in a 4,000-square-foot home to a 900-square-foot place can be more difficult than expected,” says USNews. “You might find certain issues with tighter spaces, such as not having enough bedrooms for grandkids who come to visit or less room to display your family heirlooms.” Again, this has to be a personal choice based on your lifestyle and priorities. Perhaps you can downsize, but not so drastically, so you still have space for the things that matter to you.
- Downsizing Myth number six: You’ll earn extra cash selling your excess stuff. Boy, can this one be an unpleasant surprise! “If you plan to sell extra furniture, antiques or china to help cover moving costs,” USNews warns, “be careful not to overestimate the proceeds. With an increasing number of boomers retiring, the supply of antiques and collectibles has greatly increased, bringing the price of some of these goods down.” For a clever but sobering look at the reality of getting rid of unwanted furniture and other heirlooms, check out this NextAvenue article from last year called “Sorry, Nobody Wants Your Parents’ Stuff.” It’s an eye-opener.
Don’t Decide in a Vacuum
Is downsizing right for you? The answer could be “yes, definitely.” Like you, we’ve talked with dozens if not hundreds of couples and individuals who say that the decision to move to a smaller place was the best one they ever made. The point we at AgingOptions feel the need to emphasize, however, is that your housing choices should not be made in a vacuum – instead the choice of where and how live in retirement is a central part of an overall LifePlan that helps you age on your own terms, with your assets and independence protected. Along with housing options, an AgingOptions LifePlan helps you evaluate and choose the medical coverage that’s best for you, both for today and for tomorrow. A LifePlan secures your future in a robust legal framework to preserve your interests. Your financial strategy is part of your LifePlan, and we also help ensure that your family will be supportive of your wishes and equipped to carry them out. It truly is your blueprint to build the retirement of your dreams.
We hope we’ve piqued your interest in the LifePlanning process from AgingOptions, and if we have that you’ll join Rajiv Nagaich soon for a free, information-packed LifePlanning Seminar. For a calendar of upcoming seminars, click here to visit our Live Events page where you can also sign up online for the seminar of your choice. Health, housing, finance, family and legal – all five can be woven together into a safe and solid plan for your retirement future. We’ll look forward to meeting you at a LifePlanning Seminar soon. Age on!
(originally reported at https://money.usnews.com)