Retirement Advice on Why Downsizing a Home Makes Sense After Retiring

Written by , May 30, 2012

Retirement Advice on Why Downsizing a Home Makes Sense After RetiringFor most people, buying a home will probably be the most important transaction they’ll ever undertake in their lives. Chances are the second most important transaction will be selling that home later in life. Furthermore, if someone has owned their home for a long time (and they’ve either paid off their mortgage, had their home value appreciate, or both) it might be the single largest transaction in terms of dollar value.

One common reason that people sell their homes is because they’re downsizing for retirement. With the children raised and no longer living at home, many new retirees find a number of factors that lead them to conclude that they might not want to continue living in such a large home.

Here’s some retirement advice on why downsizing a home after retirement is a good idea.

  • Downsizing Can Be Easier. When many people transition into retirement, they want to start using their new free time to do things like visit more with their families, travel and focus on their hobbies. The last thing they want to do is spend their time and energy keeping up their big homes and yards. By downsizing to a smaller home (or perhaps even a townhome or condominium), retirees can reduce the time they have to spend keeping their homes in good shape. A smaller home also means less housework to do on the inside.
  • Downsizing Can Save Money. In addition to the expenses associated with upkeep and maintenance, a large home costs you money in a number of other ways. Larger homes cost more to heat in the winter and cool in the summer, cost more to insure, and come with a higher annual property tax bill. By downsizing to a smaller home a retiree can realize significant savings.
  • Downsizing Can Help You Start a New Life. Retirement is one of the best opportunities that many people will ever have to change their lifestyles. Sometimes, after a life spent raising a family in a particular part of the country, empty nesters want to move to a completely new part of the country (or perhaps even a new country altogether) and begin a new life. Downsizing can make this easier and more affordable.
  • Downsizing Can Help You Better Manage Your Estate. One of the least pleasant aspects of retirement is planning for what happens to your wealth after you pass away. Unfortunately, one of the most difficult things to plan for is how to pass along a large house. It can be difficult to divide a home between more than one heir, and homes that are sold as a result of a person’s death often sell for significantly less than market value. By voluntarily downsizing, a retiree can liquidate some of their wealth and make estate planning easier.
  • Along with the many other decisions that new retirees face, one is likely to be whether or not to downsize to a smaller home. By considering all of the pluses and minuses of such a decision, you’ll be able to make the right decision for you and your family.

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