The Benefits of Downsizing When You Retire

If you’re taking a look at your expenses as you retire, saving money where you can has a lot of appeal.

When you think about cutting down on your spending, odds are you think of frequent purchases, like groceries, gas, etc. But when you downsize your house, you often end up downsizing the bills that come with it, like your mortgage payment, energy costs, and maintenance requirements. As Realtor.com shares: “A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”

That windfall is thanks to your home equity. If you’ve been in your house for a while, odds are you’ve built up a considerable amount of equity. And it’s something you can use to help you buy a home that better fits your needs today. Daniel Hunt, CFA at Morgan Stanley, explains: “Home equity can be a significant source of wealth for retirees, often representing a large portion of their net worth. . . . Retirement planning can be complex, but your home equity shouldn’t be overlooked.”

What This Means for You

If you’re thinking about downsizing, ask yourself these questions:

• Do the original reasons I bought my current house still stand, or have my needs changed?
• Do I really need and want the space I have right now, or could something smaller be a better fit?
• What are my housing expenses now, and how much do I want to save by downsizing?

We can vouch for the benefits of downsizing. The equity we had in our home allowed us to have a substantial down payment for our new place. Our utility bills are smaller; insurance is less expensive, and because we moved to a condo, our HOA fee is less than what we would be paying to have our driveway cleared, lawn mowed, etc. The amenities that the HOA fee supports is a plus, too!

So, let’s connect and talk about your options for saving money on home expenses when you downsize and retire. Downsizing is challenging, but we can share with you our experiences so the process can be as easy as possible for you.

Mari and Hank