The senior years leading up to retirement can bring a lot of changes. Changes in your income, goals, and everyday life are sure to happen. Downsizing your home could be the answer to many of the things life is sure to throw your way.
Regardless of whether you’re downsizing your home, these are five reasons you should consider doing so.
Less space to manage
According to the National Association of Realtors, in 1950, the average square footage for a single-family home was 1,000 square feet or less. However, today, 2,600 square feet is average for a single-family home according to the U.S. Census Bureau, and families are generally smaller than they were in 1950. Therefore, most people are living beyond their necessities today.
If you are an empty-nester and no longer need that large home and find most of your rooms are never used and filled with clutter, perhaps downsizing is a smart move. Downsizing your home could mean having less space to clean, a smaller yard to maintain, and only having rooms with a purpose that isn’t to hold clutter. If you’re looking for smaller square footage or a little to no maintenance home, consider renting an apartment or moving to a retirement community where maintenance, such as yard work, is done for you.
Save on monthly bills
Downsizing your home in your senior years could save you hundreds on monthly bills. Swapping a high mortgage payment for a lower rent payment or eliminating homeowner’s insurance premiums and taxes are only a few ways downsizing could save you money every month.
Nearly 26 million seniors over the age of 50 still have a mortgage, according to AARP. The average 30-year fixed mortgage payment was about $1,300 in 2020, while the average rent payment for a one-bedroom apartment was about $1,000. In addition to the $300 you’d save on housing expenses, you’d likely save on utility costs and maintenance costs.
If you sell your home and pay off your mortgage and rent an apartment, you could take the difference from your mortgage and rent payment and put that towards other debt. For example, if the difference between your two payments is $300, instead of paying that $300 for housing, add it to your monthly student loan or credit card payment.
Whether you still have a mortgage, or you’ve paid off your mortgage, look into how much profit you’d make by selling your larger home and either purchasing or renting a smaller space. For example, if you make a profit of $50,000 and choose to rent, you could put that profit in a retirement savings fund, pay off other debt, or pocket it.
On the other hand, if you’re able, you could rent or purchase a smaller space without selling your home and turn your home into a rental property. This extra income could more than cover your new rent payment if you already paid off your home. If you take this route, consider hiring a management company to manage your rental property.
Have better mobility
Many seniors find that the homes they lived in for so long are no longer meeting their lifestyle needs. If you grow to have mobility issues, you may consider downsizing to a house with fewer steps, bigger doorways, larger bathrooms and showers, and a more open floorplan.
Moving to a senior apartment complex with handicap accommodations and elevators or a retirement community could eliminate any mobility issues you were having before in your home.
Be closer to family
After retirement, you may want to move closer to your adult kids or grandkids. Selling your home and downsizing to a smaller house, apartment, or even RV could be the perfect solution to getting closer to family. If you decide to purchase in your new area this late in life, you’ll want to make sure it’s somewhere you’ll want to spend the rest of your days. If you want a more flexible, less tied down lifestyle, consider an apartment or RV.
Another option that could save you a ton of money, get you closer to family, and eliminate monthly housing expenses, is moving in with your adult children. If they have space and are willing to house you, this could be a win-win situation for you and them.
How to downsize in your senior years
Before you move, you’ll want to get rid of a lot of your meaningless belongings. Considering the plan is to move somewhere with less square footage, you won’t want to take the clutter that you’ve accumulated over the years with you. Ways to declutter include having a garage sale, donating items, throwing away worthless things, and simply organizing your belongings into storage totes.
You’ll also want to consider all of your options before downsizing carefully. Make sure downsizing is both the most logical and cost-effective option for this time of your life. For most people, downsizing in their senior years is the most cost-effective move.