Should You Downsize for Retirement?

You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven’t fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it’s time to downsize.

For those who own their home, selling it upon retiring can make a lot of sense – but not in every situation. Since it can be difficult to decide if moving is the best option let's explore some. of the benefits and downsides to downsizing in San Diego.

If keeping your home will destroy your retirement security, then selling is a no-brainer. But if you fall into a gray area where you could keep your house, but might end up with more savings or lower costs if you sell, you need to decide if you'd rather sacrifice in other ways to stay in your property or if downsizing could be the best choice for improving your life as a retiree.

Downsizing Can Lower housing expenses could put more cash in your pocket.

If your home isn’t paid off yet, have you considered how much money is going toward the home loan? When you took out your mortgage, your lender likely wanted your monthly payment to amount to no more than 28% of your total gross income, or no more than 36% of your total monthly debt repayments.

What percentage of your gross income are you devoting to your mortgage payments today? Even if your home loan is 15 or 20 years old, you still may be devoting a significant part of your gross income to it. When you move to a smaller home, your mortgage expenses may lessen (or disappear) and your cash flow may greatly increase.

You might even be able to buy a smaller home with cash (if finances permit) and cut your tax liability. Optionally, that smaller home could be in a state or region with lower income taxes and a lower cost of living.

The lifestyle reasons to downsize (or not). Maybe your home is too much to keep up, or maybe you don’t want to climb stairs anymore. Maybe a condo or an over-55 community appeals to you. Maybe you want to be where it seldom snows.

On the other hand, you may want and need the familiarity of your current home and your immediate neighborhood (not to mention the friends close by).

Run the numbers as accurately as you think you can before you make a move. Downsizing always seems to have a hidden cost or two, but for many retirees, it can open a door to long-term savings. Other seniors may find it cheaper to age in place.

Contact me today to understand your options when you are thinking about downsizing in San Diego.