The idea of downsizing your home for retirement is thought about by nearly every homeowner after they turn 55. Many of you think about the benefits of downsizing like simplifying your life, having more money for travel, house upgrades, and overall financial freedom, and are instantly sold on the idea.
But there are some of you out there who still have questions about downsizing a home. You might be wondering things such as:
- Why Downsize?
- Should I downsize before retirement?
- When is the right time to downsize?
- What’s the best way to downsize your home?
- Where can I find home downsizing services near me?
- Is there a downsize home checklist I can follow?
In this article, we’ve set out to answer all of these questions. Plus, we provide you an easy to follow home downsizing checklist and access to downsizing consultants who can help you make the move! After all, home downsizing is extremely rewarding to Baby Boomers ready to live their best life.
How to Know When It’s the Right Time to Downsize Your Home
Many people choose to downsize for the many benefits and stress it takes away from their lives. In this section, we’ll review a few common indicators that tell you it’s time to consider downsizing a home.
1. Your Kids Have Moved Away
Many Baby Boomers utilize home downsizing services because their children have moved out and they don’t need the extra space. When children go away to college, the parents undergo a transition process and part of that process may include downsizing to a smaller home.
Downsizing offers financial flexibility and stability as well as fewer responsibilities and expenses. Additionally, many want to be closer to their grown children and grandchildren, and will move according to where their children are living.
Some empty nesters choose to downsize to cities or active suburbs where they have close access to shopping, dining, cultural events, and public transportation. According to a 2013 study by the Urban Land Institute, 72 percent of Baby Boomers said they would rather live in a smaller home with a short commute than live in a large home with a long commute.
Once your children have moved away, you could opt for resort-style living in a patio home or condominium at a golf community. The maintenance in these private communities is often covered and you’re around others whose children have also flown from the coop.
2. The Mortgage Payment Exceeds 30% of Your Income
Another group of Baby Boomers consider downsizing their home to save money. A larger home typically comes with a larger mortgage payment. If your home mortgage exceeds 30% of your income, you should definitely consider downsizing. By doing so, you can cut back expenses and put that money towards your nest egg or activities you love.
One of the things you should consider as part of your home downsizing checklist is to figure out your debt-to-income ratio. You can use an online DTI calculator, or you can calculate it yourself. The debt-to-income ratio, or DTI, is the amount of monthly debt you owe compared with your monthly gross (before tax) income. If you have a DTI that exceeds 30%, then you need to consider downsizing to save money.
3. You Realize You Can Move into a Nicer and Newer Home
As you look around your large, empty home and wonder why you still need all this space, also think about this: you could be living in a brand-new, beautiful home for the same or less cost.
Many people think that newer construction homes are out of reach for their budgets. But many new homes with around 1,500 square feet are available for prices similar to older, larger homes. So, it’s entirely possible to sell your current larger home and take the proceeds from the sale and purchase a smaller brand-new home.
The Benefits of Home Downsizing
Greater Cash Flow
This is one of the main reasons people choose to downsize in retirement. Having money left over each month to pay for needs and desires makes your life easier and happier. You could even pay cash for the smaller home from the profit of selling your existing home.
Being free of a mortgage altogether reduces your financial burden and allows you to buy items you’ve always wanted but never could afford.
Fewer Household Chores and More Time for Activities
Retirement downsizing is all about freeing up your time and energy for doing the things you love. With a smaller home, you’ll have fewer household chores and more hours in the day to do the things you enjoy like golf, traveling, or relaxing at the beach. Smaller homes have less space to clean and maintain.
Less Costly Utility Bills
A downsized home means a smaller living space with fewer areas to heat or cool. Many people who own large homes with vaulted ceilings struggle to meet their expensive utility bills each month. The smaller square footage of a downsize home will translate into lower energy costs.
Less Space Will Reduce Consumption
If you don’t have space, you won’t buy unnecessary items. This means you’ll be spending less money on consumer goods and items that you don’t need.
The smaller your home, the less responsibility and maintenance. You’ll have more money available to do the things that make you happy. This reduces stress and can increase quality and length of life. Money problems and hectic schedules are often the main causes of unhappiness. You can avoid that stress by downsizing to a home and budget that’s more manageable and financially liberating.
Brand New Home
Owning a new home, you’ll have the finest and latest appliances, countertops, and fixtures. This will seem like a luxury although the home is smaller. This also translates into fewer things to fix around the house.
The great thing about buying a new construction home is that you feel as if you have more usable space. These homes often have spacious open floor plans not to mention energy-efficient features. So, you can save energy as well as space. This is important because many people are often concerned that a smaller home will mean less space to entertain for parties and get-togethers with friends.
Many newly built homes come standard with spacious kitchens. You can use a large kitchen island for casual dining and leave your dining room for formal events or for another purpose entirely. New construction builders will work with you on choosing the right floor plan for your requirements.
Make sure to ask the builder for a floor plan beforehand so you can plan out how much space you’ll need in each room for your furniture. Also, ask the builder about flex room options in the floor plan.
How to Downsize Your Home Without Stress – The Home Downsizing Checklist
To help you downsize your home, we’ve put together an easy to follow home downsizing checklist!
1. Work with a home downsizing consultant or specialist to find the perfect home
To make your transition and moving process smoother and stress-free, consider hiring a home downsizing specialist. Some real estate agents specialize in downsizing, so ask the realtors you interview if they offer this service.
If not, there are people who do this for a living, including our licensed downsizing specialists here on the Retire Better Now real estate team. We can help you plan your move, sell your home and help you buy a home with the best floor plan for your needs.
2. Determine the space of the new home and get rid of what you don’t need
Decide on how many bedrooms you want in your downsized home. Do you want space for visitors or grandchildren? Do you want enough storage for old keepsakes? This is a good time to determine what you really need to hang onto.
Decluttering is one of the hardest things to do in the downsizing process. It’s difficult to part with so much of your past, but you’ll end up having to donate or give away some of it in order to downsize. Try to focus on the future goals you plan to pursue. This will help you push forward through the decluttering process. If you feel rushed, then consider renting a storage unit to hold items that you need more time to ponder.
3. Remind yourself that change is good
When you start to doubt your decision, think about the benefits of home downsizing and the goals you had in mind for the future.
Perhaps you wanted the freedom to travel to all those places you dreamed of but never had the money to do so. Maybe when you sell your larger home and purchase a smaller one, your dreams of world travel will be a reality. Remember that once you downsize, your mortgage and utility bills can be lower.
Other home downsizing benefits to remind yourself of are: less maintenance, less space to clean, lower utility bills, newly built home, shorter commute, good walk ability score, good neighbors, and more.
Other Items on the Home Downsizing Checklist
- Sort and label all of your home possessions for moving, selling, donating, throwing away or storage
- Hire a professional moving company to handle the heavy lifting
- Think about where you would love to live, then work with a downsizing specialist to make it happen
- Buy that smaller home and life happier with less stress!
Are You Ready to Downsize Your Home?
Downsizing your home has many benefits that can help you live a better life. If you’re ready to speak with a licensed downsizing expert, click here.