Downsizing as a Part of your Retirement Strategy

by Achieva Financial
May May 28

Your home is one of your largest assets and can be leveraged as part of your retirement plan. “Downsizing” in relation to retirement generally means that you are selling a large family home and are moving into a smaller home for the “empty nest” stage of your life. This means you’ll have less space, furniture, appliances, and stuff in general. Downsizing can also be applied to your vehicles, as you may find you can get away with a single vehicle or a smaller vehicle than you did during your working years. The decision to sell and relocate for retirement can be an emotional roller coaster and a big financial event, so here are a few tips to help you successfully downsize while still living comfortably.

Understand your goals – Before you think about selling your home and where you might want to move, establish what your goals are for this next phase of your life. Are you looking to save on mortgage payments and be closer to grandchildren, for instance? This can help guide you in an otherwise overwhelming process.

Timing is everything – Choosing when you want to downsize is important, but the answer depends on your retirement strategy and goals. Downsizing early during your retirement could help you cut back on expenses, such as utilities and taxes, if your goals are financially driven. If your goals are lifestyle driven, then selling and moving to a smaller property would require less work and upkeep, freeing up your time for your hobbies or to spend time with loved ones. However, there are also advantages to waiting to downsize. Depending on the real estate market in your area, you might want to wait to sell your home and buy a new one at a better price. Delaying downsizing could also help preserve your wealth for later on in your retirement. If you’re unsure, Achieva’s retirement calculator can help you assess where you’re at and where you want to be!

De-clutter your life – Downsizing your home generally means downsizing your stuff. Chances are, you’ve accumulated a lot of things while living in your family home. Purging your belongings, especially those with sentimental value, can be an emotional and overwhelming thing to do, so do not feel pressured to clear out your whole house all at once. Instead, make a plan to do one room or section at a time, and get help from friends and family! You can donate your unwanted items, such as furniture, to charity, or sell them for some extra money to help cushion your relocation expenses.