Consider These 3 Things Before Downsizing Your Home
Posted by Ocean Wealth
Retirement is always a time of personal reflection. As it edges closer, people start assessing their past, present, and most importantly, future. They think about how much time they’re going to spend with family and friends, where they want to travel, and even their current living situation.
With the kids all grown up and out of the house, is it necessary to keep an old family home complete with a sprawling property? It’s a difficult question to propose. On one hand, there’s sentimental value attached to a home you’ve lived in for any significant period of time. On the other hand, it might not make practical or financial sense to stay in it after you stop working.
Part of retirement planning comes with asking yourself that difficult question about downsizing your home. Depending on what your goals in retirement are, you may find that it’s necessary in order for you to move forward. That said, we know it’s far from an easy decision to make. We’re here to help guide you through some of the things you should consider before downsizing your home in retirement.
Are You Mentally Prepared for a Downsize?
This is one of those deep philosophical questions you may never get a real answer to, but it’s critical to consider: are you in the right frame of mind to sell your home?
Take some time to really nail down what makes you happy. If it’s travelling and spending less time at home, then your answer is pretty simple. However, if your home is a personal sanctuary, you might need to ask more questions before making a decision.
Think about where you want to be in retirement. Some people want to be away on a beach in a foreign country, and others want to be tucked away in their cozy bedroom. There’s no wrong answer, only what makes the most sense to you.
Shrinking Mortgage Anxiety
Paying off your mortgage is often seen as a light at the end of the tunnel for many working professionals. It signifies financial freedom that stems from not having any more debt attached to your place of residence. In reality, however, this process can take a long time and people often still owe money on their mortgages in retirement.
Downsizing your current home to a cheaper home can either eliminate your mortgage entirely or at least give you a much smaller one. The entire dynamics of your monthly budget have the potential to change as a result. You’ll become more flush with money to do the things you love and ease the financial pressure you might feel in retirement.
You still have to be careful in this process, though. You could sell your larger home and buy a smaller one, but that doesn’t necessarily mean you’ll save a bunch of money. Consider the location and age of your new home (even if it’s smaller) because the financial commitment might not be exactly what you think it is.
Location, Location, Location
You don’t have to “downsize” your home in the literal sense. Sometimes, downsizing can mean moving to a different region to save money, but also maintaining your personal standard of home living.
For example, let’s say you own a home located in the Kitsilano neighbourhood of Vancouver. As one of the most expensive neighbourhoods in the city, selling a home in this area doesn’t mean you’ll need to get a smaller one. You could get a bigger home further from the west coast if location isn’t a necessity for you.
This all goes back to thinking about where you want to be in retirement. Maybe you’re attached to a certain region, or you have family and friends nearby. If not, this may be a great opportunity to get some money and move to a great home in a different region at the same time.
Our trusted team of experienced financial advisors can help with your retirement planning needs and help determine if downsizing your home is right for you. Contact us today!