Many seniors look at downsizing as a way to simplify their life. They no longer need the three bedroom house with two car garage and are looking at de-cluttering and freeing up the time they spend maintaining a home that is too big for them. There are also many financial benefits to downsizing when entering retirement. Here are a few reasons why downsizing your home can help ensure that you remain financially sustainable into retirement.
Downsizing your home can make you money
It is not uncommon for people to have a lot of equity tied up in their home. Now that your family is grown and you don’t need the extra space, why keep all that money invested in something you don’t need? If selling your home will turn you a tidy profit, after selling and moving costs, this can be a great way to boost your income during retirement. It will add to your savings and hopefully generate a higher level of investment income on your larger nest egg.
Save on household expenses
Generally, a smaller home will cost less to upkeep. The property taxes should be less (unless you move to a place that has a higher tax rate) and utility bills should be lower. This will free up some of your retirement income and let you draw it out at a slower rate. Another option is to use the extra cash to finance something you’ve always wanted to do. Maybe it will pay for art classes or the golf club membership you’ve always wanted. Downsizing your home can be the difference between living your retired life to the fullest and just getting by.
Pay off debt
The money you make downsizing your home could help you pay off any debt you may still have. Whether it be your mortgage, line of credit or credit card debt, the profit on the sale of your house could help you wipe it out and head into retirement in the black.
Financially, downsizing your home is generally a good idea. Freeing up cash so you can live life to the fullest in retirement is ideal and downsizing your home is a small price to pay for more financial freedom as you age.
Category: General, Selling Your Home, Finding a New Home, Moving