Right-Sizing Your Life: Exploring the Advantages of Downsizing in Retirement

As you assess your expenses in retirement, finding ways to save money becomes increasingly appealing. One traditional and widely embraced method is downsizing to a smaller home.

Typically, when contemplating expense reduction, one might consider everyday purchases such as groceries and other consumables. However, downsizing your residence often results in a reduction of associated bills, including mortgage payments, energy expenses, and maintenance requirements. Realtor.com elaborates on this aspect:

"A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”

That windfall is thanks to your home equity. If you’ve been in your house for a while, odds are you’ve built up a considerable amount of equity. And that equity is something you can use to help you buy a home that better fits your needs today. Daniel Hunt, CFA at Morgan Stanleyexplains:

Home equity can be a significant source of wealth for retirees, often representing a large portion of their net worth. . . . Retirement planning can be complex, but your home equity shouldn't be overlooked.”

And when you’re ready to use that equity to fuel your next move, your real estate agent will be your guide through every step of the process. That includes setting the right price for your current house when you sell, finding the home that best fits your evolving needs, and understanding what you can afford at today’s mortgage rate.

What This Means for You

If you’re thinking about downsizing, ask yourself these questions:

  • Do the original reasons I bought my current house still stand, or have my needs changed since then?
  • Do I really need and want the space I have right now, or could somewhere smaller be a better fit?
  • What are my housing expenses right now, and how much do I want to try to save by downsizing?

Then, meet with a real estate agent to get an answer to this one: What are my options in the market right now? A local real estate agent can walk you through how much equity you have in your house and how it positions you to win when you downsize.

Bottom Line

Want to save money in retirement? Consider downsizing – it could really help you out. When you’re ready, let’s connect about your goals in the housing market this year.

340 Properties
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$575,000
Neighborhood: Vicenza Ph 1
3
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2
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1,683
Sq.Ft.
2022
Year Built
2
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A4607240
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$225,000
Neighborhood: Citrus Highlands
3
Beds
2
Baths
1,362
Sq.Ft.
1979
Year Built
2
Days on Site
T3517395
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$390,000
Neighborhood: Toscana Isles Carriage Homes P
3
Beds
2
Baths
1,661
Sq.Ft.
2018
Year Built
3
Days on Site
A4606943
MLS
$537,000
Neighborhood: Vicenza Phase 1
3
Beds
2
Baths
1,536
Sq.Ft.
2022
Year Built
4
Days on Site
A4606835
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$580,000
Neighborhood: Mission Estates
3
Beds
2
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1,856
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2002
Year Built
4
Days on Site
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$800,000
Neighborhood: Hidden Bay Estates
3
Beds
2
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1,903
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2017
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5
Days on Site
N6132241
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$439,000
Neighborhood: Sorrento East
2
Beds
2
Baths
1,458
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1984
Year Built
5
Days on Site
A4606861
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$530,840
Neighborhood: Magnolia Bay
3
Beds
2
Baths
1,654
Sq.Ft.
2024
Year Built
5
Days on Site
O6191480
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$580,260
Neighborhood: Magnolia Bay
4
Beds
3
Baths
2,190
Sq.Ft.
2024
Year Built
5
Days on Site
O6191479
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$580,260
Neighborhood: Magnolia Bay
4
Beds
3
Baths
2,190
Sq.Ft.
2024
Year Built
5
Days on Site
O6191478
MLS
$389,000
Neighborhood: Venetian Golf & River Club
2
Beds
2
Baths
1,100
Sq.Ft.
2003
Year Built
5
Days on Site
N6132291
MLS
$570,000
Neighborhood: Toscana Isles
2
Beds
2
Baths
1,796
Sq.Ft.
2022
Year Built
5
Days on Site
A4607141
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