While reading the Business section of the Chicago Tribune last week, I came across Jane Bennett Clark’s article, “The surprising costs of downsizing your home.” Although I am some years away from retirement, it’s a conversation I’ve heard from financial literacy colleagues and financial planners. The recommendation is for soon retirees to consider the “simplify your life in retirement” perspective. Why? Let’s look at just four of the basics that downsizing your home for retirement would offer:
Benefit #1: Lower monthly and annual expenses associated with the house.
Benefit #2: If you perform the outside maintenance and opt for a living arrangement like a townhome or condo, no more manual labor!
Benefit #3: Depending on your lifestyle, you may choose a smaller living square footage.
Benefit #4: Move and get situated for senior living BEFORE you get too old and moving is more difficult to do.
What I found valuable in Clark’s article, and in several others which we have shared below in our Tips to Read, is reminding readers of the many overt and hidden costs tied to downsizing your home for retirement. Check out the following list of costs to consider:
1. Association fees
2. Travel costs to see family and friends (if you move far away)
3. Is it a home that you can “age in place?” for the long-term?
4. Cost of the realtor’s commission (between 5-6 percent of your home’s sale price).
5. Repairs and fix-up costs to prepare your home for sale
Certainly, the idea of simplifying your lifestyle as you enter retirement is a rock solid notion. And, I do agree that making a change in your home situation should be done sooner than later. I have heard and seen, over the years, numerous situations where individuals remained in a home too long. It became a financial burden and a challenge to the adult children.
I applaud Clark and other writers who have addressed the counter side of downsizing your home, more specifically the costs associated with doing it. As with all financial decisions, there are many elements that make up that money decision. I can see the value of researching and understanding these related costs long before the decision for moving needs to be made.
If you have a loved one in your life circle who is considering downsizing for retirement, we encourage you to help them on this journey. Share this post with them. Perform some of the due diligence yourself and provide them the information.
We have provided a selection of reading for you to get you started. Plus, we included some links to blogs we’ve written related to home living.
Tips to Read:
The Surprising Costs of Downsizing Your Home, by Jane Bennett Clark, Kiplinger, From Kiplinger’s Personal Finance, May 2016
4 Hidden Costs of Selling Your Home, by Maurie Backman, The Motley Fool, April 17, 2016
4 questions to ask before downsizing your home, by Joseph F. Coughlin, MarketWatch.com, February 20, 2013 (Although a dated article, the questions posed by Coughlin are still applicable today!)
When you have the opportunity, review the selection of posts discussing topics related to selling your home!