Downsizing? 4 things to consider
Whether you are an empty nester, or just want a simpler life, the decision to downsize may be the fresh start you’ve been craving.
According to a TD Ameritrade survey, 49% of millennial parents and 54% of boomer grandparents would be willing to live a simpler lifestyle if it would help their retirement savings last longer. For about a quarter of parents and grandparents, that means making the move to a smaller home.
A smaller space offers greater savings, a clutter-free life and more free time to pursue your dreams. It sounds great, but you may not be completely sure downsizing is for you. If you’re still on the fence, here are four questions to ask yourself.
What are the financial and social pros and cons of downsizing?There is more to life than just money, so do a gut check to make sure that this move is aligned with what you value most. Not what “should” be important to you, but what “is” important to you. If that includes hosting out of town guests, throwing fun dinner parties or being near family, then it needs to be included on your list. And then there’s the money aspect. How much are you looking to actually save with this move? Will selling your home trigger a possible capital gains tax?
How do you want to live?Take a moment to think about how much room you’ll realistically need, not just now, but in the future. Is it possible you may need room to take care of a loved one or accommodate adult children/grandchildren moving back in?
What are the unexpected costs to downsizing?Smaller space means less clutter, but what are you going to do with all your stuff? Sell, donate, trash or get a storage unit? Is your furniture to large for the new space? Will you need to budget for new furniture? How much will it cost to move? What about getting your current house ready to sell? It’s important to budget for any repairs that may be needed.
Is the downsized housing inventory affordable? Do your research and find out if smaller really does mean more affordable. Depending where you live, that cozy house or condo may end up costing you just as much, or more than your current home.
