You\u2019ve finally arrived and can retire after a lifetime of sacrifices and hard work professionally, it\u2019s time to relax, travel, pursue hobbies, and visit grandchildren. But retiring also implies downsizing so that things are more manageable including your finances because your retirement check won\u2019t be as large as your former paycheck.<\/p>\n
With longer lifespans, a pension, social security, and savings will rarely match a previous full salary, and this can mean added financial pressure. To reduce pressure financially, it\u2019s advisable to begin downsizing immediately upon entering retirement by looking for ways to reduce monthly expenditures.<\/p>\n
Choosing to go Small<\/strong><\/p>\n For some retirees, choosing to go small is not a question of choice but necessity, and even when it is not mandatory, it often is a wiser path to follow. Most downsizing begins with your home, but multiple necessities, such as home insurance and auto insurance, offer specific products for senior citizens. There are multiple opportunities for a senior discount for homeowners\u2019 insurance.<\/p>\n You can also look for an insurer that offers an average insurance bundle including car and home insurance. As part of downsizing for retirement, these are just a few of the things that seniors can benefit from.<\/p>\n Where and how to Begin Your Retirement Downsizing<\/strong><\/p>\n Downsizing is daunting, but don\u2019t allow the thought to overwhelm you. Undoing a large home and selling it for a smaller solution has a cost both economically and emotionally. The need to sell a home, find a new one and then move all your possessions is complicated. There\u2019s no way around this.<\/p>\n Why do you Want to Downsize and Move?<\/strong><\/p>\n Determining your reasons for moving is the perfect beginning of the process. Common reasons include :<\/p>\n \u2022 To be closer to adult children and grandchildren, or family in general Be clear on your reasons for moving and evaluate the pros and cons so you feel good about your decision.<\/p>\n Selling Your Current Home<\/strong><\/p>\n When selling your home for retirement, get information about taxes and how they may affect any government benefits you receive. Both the IRS and some states apply capital gains tax on any difference between what your home cost and what you are selling it for.<\/p>\n When you sell your home it will increase your income, so a sudden influx of cash may disqualify you for disability and Medicaid. Consult a legal or tax professional to assist you.<\/p>\n How to Select a new Living Space<\/strong><\/p>\n When beginning your strategy for downsizing, begin by deciding on these aspects of your move :<\/p>\n \u2022 Where you prefer to live (same location or a new area) All these considerations need to be fully discussed with a spouse or immediate family for your support network. Any children should be involved in the process for support and to prevent potential conflict later.<\/p>\n Financial Downsizing<\/strong><\/p>\n The principal reason for downsizing in retirement is to save money. Some important financial advantages of downsizing include :<\/p>\n \u2022 Less expensive mortgage payment, especially if your current home isn\u2019t paid off However, note that selling a home and moving doesn\u2019t come cheaply. Before making the move get estimates from :<\/p>\n \u2022 Moving companies Material Downsizing<\/strong><\/p>\n So, you\u2019re moving and now you need to downsize your actual possessions, and this may be the task that proves to be the most overwhelming. What do you keep and what do you give away?<\/p>\n \u2022 If it seems to be too great a task physically or emotionally, consider hiring an expert to help you wade through downsizing. Professionals offer multiple services tailored to any budget. The Sooner you Start, the Better<\/strong><\/p>\n Know that downsizing will be physically exhausting and an emotional rollercoaster. You\u2019ll be wading through a lifetime of memories, and that\u2019s okay. Downsizing also requires time, so the sooner you start, the better.<\/p>\n You may want to do it in a month but six months to a couple of years is a better estimate and will allow you time for adjustment and for managing physical exertion. Allocate time weekly to work on downsizing and begin with spaces or rooms you no longer use.<\/p>\n Consider a storage unit if you can\u2019t part with all of your possessions but remember to budget the cost. In the end, you are parting with a considerable chunk of life, so exert discipline to get the job done, but do so gently.<\/p>\n
\n\u2022 To reduce expenses
\n\u2022 Declining health
\n\u2022 Loss of a Spouse
\n\u2022 Financial problems<\/p>\n
\n\u2022 What kind of home do you want to live in (small, condo, one floor, retirement community, assisted living, or other?)
\n\u2022 How large of a space do you need
\n\u2022 The amount of time and money you can commit to moving
\n\u2022 What things or conditions are indispensable and what you\u2019re willing to sacrifice<\/p>\n
\n\u2022 Increased monthly cash flow. If your house is paid for, any profit can be added to your nest egg.
\n\u2022 Less maintenance and cleaning
\n\u2022 Smaller utility bills<\/p>\n
\n\u2022 Homeowners Association fees, condo fees, or retirement community fees depending on where you want to move to
\n\u2022 Homeowners insurance
\n\u2022 Property taxes
\n\u2022 Real estate agency fees with commissions and closing costs
\n\u2022 Getting your home ready to sell with any necessary repair work
\n\u2022 Things you may need to purchase for your new home<\/p>\n
\n\u2022 Know the spaces of your new smaller home. Select furniture that you plan on taking with you and measure it for your new home, so there are no surprises.
\n\u2022 Plan on eliminating as much as 75% of your current possessions. Be realistic about what you can take with you and stick with it.
\n\u2022 Make a plan for doing one room at a time. Do not move forward until you have completed the room you began.
\n\u2022 Donate or sell things you no longer need, it\u2019s a way to raise some extra cash for your move.
\n\u2022 Know that downsizing will take an emotional toll on you so invite a family member or close friend to support you in saying goodbye to objects filled with memories.<\/p>\n