Senior Spotlight: Is There Still An Upside To Downsizing?
Recent media headlines have pointed out what can go wrong when downsizing, but there is still much that can go right!
There is no one size or type of retirement that fits all. That’s why when we see headlines that only point out one side of the story – we get a little suspicious! While more and more retirees are choosing to age in place, there is still a time and place (and countless good reasons) to downsize. Below we reveal 3 headlines that have emerged in the last 3 months – and reveal the key take-a-ways without the negativity.
Downsizing in Retirement: Expenses They Didn’t Expect
Moving is expensive. Period. And downsizing is no different. This article tells the story of retirees who spent more than they expected on preparing their home for sale, renting in the interim or paying a higher mortgage rate than they had anticipated on their new home. What the headline doesn’t tell you is that virtually every one of these issues can be avoided if your agent sets realistic expectations, if you compare your short-term costs with long-term savings and if you have a plan in place for where you want to go. If your home sells in a day or a week before you have your next place lined up, if your budget has no wiggle room for a rise in interest rates or a delay in closing – than you may be setting yourself up for some stress.
The biggest lesson revealed from one seller, “We got caught with our pants down. We had not decided where we wanted to live yet.”
5 Reasons You May Not Want to Downsize in Retirement
This article from AARP was written at the end of summer and places a heavy emphasis on home affordability. We happen to agree; no one should move if the plan does not make sense and ‘cents’. If you cannot afford the type of property you are seeking, spending what you can afford on renovations to create a lifelong home is an option worthy of consideration. Other reasons listed in this read are also great points. You may choose not to downsize if you don’t have to, if your adult children are moving home, if you want to put your equity to work or if you prefer to age in place. The only thing the article fails to mention is if downsizing could dramatically improve your quality of life. That reason could outweigh all the others – so please don’t be so fixed on the practicalities that you forget what life is all about – really living!
What still holds true in this market is that “Downsizing your home in retirement can free up cash and lessen the burden of managing a large abode.” That leaves time and money for what really matters – to you.
For Retirees, Downsizing to a Smaller Home Isn’t the Cash Grab It Once Was
Originally published at the beginning of summer, this article from Money lists considerations why downsizing is not as profitable as it used to be. Rising home prices, inflation & moving costs, interest rates… the current market means that the ROI on downsizing may not be as high as it used to be. However, the author points out that beyond the emotional and personal benefits – there are still financial perks IF you plan carefully. Ideas include moving to an area with lower property taxes, leasing your current home (and creating cash flow) and using that income to rent something smaller, or watching and waiting for interest rates and home prices to hit the best balance for you.
The very best advice this article offers is: “Just make sure you talk to your financial advisor or tax professional before pulling the trigger.”
All my best,
Bobbi
Bobbi Decker
DRE#00607999
Broker Associate
650.346.5352 cell
650.577.3127 efax
www.bobbidecker.com
NAR Instructor….“Designations Create Distinctions”
CIPS, SRS, ABR, CRS, SRES, GRI, CLHMS, REI, AHWD, RSPS, MSLG
Bobbi Decker & Associates fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. For more information, please visit: http://portal.hud.gov/
Bobbi's Blog
