When it comes time to retire, it’s common to move to a smaller home. This is good for your finances, giving you the money you need to achieve travel goals and pursue hobbies. Plus, downsizing your home for retirement will often be easier to maintain as you age. However, this process can have a few potential pitfalls that you might not be aware of. These are some tips you can use to avoid problems and ensure the downsizing process goes smoothly.
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Understanding the Finances of Downsizing
One of the most common reasons why retirees want to downsize homes for retirement is to unlock value from the property. When done right, this can be enough to fund your retirement. But achieving this goal will require a nuanced understanding of the costs associated with downsizing.
First, you’ll need to accurately understand how much your existing home will be worth. Unfortunately, it can be easy to overestimate the value of the property. It’s a good idea to talk to a local real estate agent or turn to an app like Zillow, to get a more accurate understanding.
The next thing to consider is what you are looking for in a new property. It can help to make a clear wish list, so you can narrow down the houses to find the right one for you. We’ll discuss some of the things you should be looking for in a new home a little later. During this stage, talk with a real estate agent about these goals. Then ask how much a house that ticks these boxes will cost. Sometimes, you might need to forgo a few inclusions to get a better deal.
It’s easy to think that the difference between the cost of the old property and the new one will be profit. But this isn’t true. There is a range of other costs that you need to factor in. For example, you need to think about closing fees and moving costs. It’s also important to talk to an accountant about tax obligations. There are a few ways they can reduce the amount of tax you pay. For example, you might want to use a strategy like tax harvesting.
Once you have an understanding of how much you are going to be spending, you can decide whether downsizing is the right approach for you. If you decide it is, it’s time to start the process.
Start Gathering Your Belongings
Once you’ve decided you want to start downsizing your home for retirement, it’s time to start packing everything up. This can be a challenge. All our lives, we’ve been accumulating things. When it’s time to downsize, you need to think about which items you can part with. There are a few tips you can use during this process.
First, it’s a good idea to set clear deadlines. Many experts say this can take between three months to a year to get ready to downsize. During this process, you want to go from one room to the next. Focus on clearing up one area at a time.
As you look at each item, you’ll need to decide whether it’s going with you, or whether you are going to let it go. There are a few things you can do with items you don’t want to take with you. If it’s broken, send it to the landfill. But if it’s still good, you can donate it to charity or sell it online for a few extra dollars. This article has more tips on how you can sort through sentimental items. If you’re concerned about being able to move your belongings on your own you may consider hiring movers to help you.
Dealing With the Emotions of Downsizing
Leaving an old home, and a lifetime of memories behind can be difficult. It’s a good idea to have someone that you can talk to during this challenging time. Your family members will be able to give you more clarity, giving you an extra boost to help you leave your old life behind. They can also listen to your concerns and help you process the highs and lows of downsizing for retirement.
Finding a New Home
When you are looking for a new home, there are a few things you should consider to find the right property for you. These include:
- Get the right location. Many people downsize to be closer to their loved ones as they age. This can be a great way of making sure that you have a strong support network. In some cases, they even move in with their family members.
- Think about your lifestyle. It’s a good idea to consider your needs as you age. You will often require more medical attention and have to be closer to hospital services. Sometimes, it might be best to move into a nursing home, so you can get doctors with the touch of a button.
- Inclusions. Sometimes, you will want a guest bedroom, in case your friends or families decide to stay with you. Or you might want a pool or deck.
Setting up Your New Home
Once you have your new home, it’s time to get it set up properly. Ideally, you should have reduced the number of items you have, so you should be able to fit everything in its place. If you are struggling with this area, you can check out these home organization tips.
It’s also important to consider how you will move through the house. For example, you might want to put a chair in the shower, so you can sit down while you wash. It can also be a good idea to use a lift chair. These make it easier for you to sit down and get to your feet again. To learn more about how they can benefit you, check out this list of zero gravity massage chairs.
Conclusion
Downsizing your home for retirement can be a difficult time. It can be emotional to leave your old home behind and hard to decide what to take with you. But it will be worth it in the end. You’ll be left with a sizeable amount of cash, so you can afford to enjoy your retirement years. If you’re looking to get help for your move, be sure to check out UniMovers for labor-only moving services.
Ashlyn is a homegrown Iowan (go Cyclones!). She graduated from Coe College in Cedar Rapids, Iowa in 2023 with a degree in Business Administration, Marketing, Public Relations, and Communications. Now, she serves as UniMovers' Community Outreach Manager. In her free time, she loves to try new restaurants, travel, watch baseball, and spend time with her dog!
To get in contact with her regarding blog partnerships at UniMovers please email blog@unimovers.com.
