As many adults reach retirement age some begin to ask the question, “Should I downsize my house?” There are many good reasons to downsize, but it’s not for everyone. If you’re considering downsizing, ask yourself the following questions to help determine if it’s the right move for you.
Do I need all this space?
Are you an empty-nester left with extra bedrooms and large living spaces you aren’t in need of anymore? If so, it might be time to downsize. On the other hand, if you find that you’re entertaining often or have frequent house guests, the extra space may be exactly what you need!
Do I need more money to invest for retirement?
If you’re reaching retirement age and you don’t feel secure with the amount of money you have saved, you might want to consider downsizing. The profit you make on the sale of your home and the money you will save on a lower house payment could be added to retirement accounts. If you and your financial advisor feel secure with your retirement funds, then you don’t need to downsize for this reason.
Can I afford my current house payment on a fixed income?
Most retirees live on a fixed income. What will your budget be in retirement? Consider if you’ll be able to make your current house payment and the bills associated with your current house (utilities, maintenance, etc) on the budget you’ll have in retirement—not on the income you have coming in now. Remember, you’ll likely have different bills in retirement such as medical, travel, health and life insurance, and estate planning.
Would I like more money to spend on travel/recreation?
Do you plan to spend your retirement years trekking around the globe or hitting the golf course? If you plan to travel more frequently or increase time spent on hobbies, downsizing your house might be a good idea. The sale of your home and the cost savings of a smaller house will allow you more money to spend on travel and recreation.
Do I want a lower maintenance home?
From landscaping to repairs to cleaning—a house takes a lot of upkeep. Downsizing is one way to spend less time upkeeping a home. A smaller house with a smaller yard means fewer spaces to clean and less grass to mow. Many condo developments and housing communities offer landscaping and repair services. If you want to spend less time maintaining a home, it might be time to downsize.
Do I have equity in my current home?
Before you make the move to a smaller home, you first need to be sure that you have enough equity in your current home to make a profit when you sell. If you don’t have enough equity to put towards a large down payment on a smaller home—or pay cash for it—it probably doesn’t make good financial sense to downsize right now. Talk with a knowledgeable Realtor in your area to find out how much your current home is worth. You can also get an idea on prices for the kind of home you’d like to downsize to in the area you’d like to move.
If you’d like to speak to a qualified Realtor in Central Indiana about downsizing, please contact the Ferris Property Group at (317) 530-3050. For an instant property valuation, click here.