Time to rethink downsizing
Jackie Schoelerman | June 30, 2022
Seller
Jackie Schoelerman | June 30, 2022
Seller
Not everyone has the ambition of living in a mansion, and even those who do occasionally consider moving to a smaller house. It’s crucial to time your move. Many people, put off making a decision too long and wind up with large homes that require too much work. Understanding if and when to downsize is crucial. Even a few years’ worth of postponing downsizing can cost you tens of thousands of dollars. Due to health problems or mobility limitations, it might also be significantly more difficult later in age. Because of this, we’ve put together this useful list of 10 telltale signals that it’s time to downsize. We want to allay your worries, end your uncertainty, and give you the power to recognize when you’re making the right choice.
In United States According to the National Housing Authority, which was founded in 1937, you shouldn’t spend more than 30% of your monthly income on housing.
According to the U.S., paying more than 30% makes you “financially stressed.” You are considered “severely burdened” by the Department of Housing and Urban Development (HUD) if you pay more than 50% of the rent.
Therefore, it’s simple to fall into one of those groups if you encounter a large decrease in income, whether through retirement, wage reductions, or job loss. This may indicate that it’s time to downsize to a home with a more manageable mortgage.
After retirement, a lot of people want to have more time for travel. However, it’s a solid sign you should downsize to something more reasonable if you’re utilizing your savings to cover your housing costs. You can save tens of thousands of dollars annually by planning ahead and reducing five to ten years before retirement.
For instance, you would receive $3,000 in money from the sale of your current property and save $3,250 in housing costs each year if you moved into a home that cost $100,000 less than it. Your household will have an extra $31,250 in savings in five years, and by the time you’re ready to retire, that amount will have doubled to $62,500 in ten years.
One of the main reasons seniors want to downsize is to free themselves from the upkeep burden. Time-consuming chores like doing small repairs, painting, mowing the yard, and shoveling snow aren’t what most people envision when they picture a carefree retirement. Even worse, as people age, these tasks could become too taxing physically.
It can be too expensive to hire painters, mowing crews, or handymen.
Since it shouldn’t require significant repairs, you can save money on preparations by selling your house while it’s still in good condition. A lifetime’s worth of maintenance costs will also be avoided.
While some elderly people want to “age in place” in the house they’ve loved for years, they may run into difficulties as they age, such as:
Many older citizens desire a one-level residence with wheelchair-accessible hallways, zero-step entry, walk-in showers with benches, and close proximity to medical facilities, clinics, and public transit. Jones discusses older homeowners’ wish to downsize from “a two-storey monstrous house to a single story.”
Due to a lack of cheap housing that satisfies the needs of older citizens, especially the 43 percent who have mobility restrictions, these qualities are difficult to come by. Only 3.5 percent of American homes have these features, and only 0.9 percent have electrical controls that are within a wheelchair user’s reach, according to the most available figures, which date back to 2011.
Moving to a retirement community has social benefits in addition to financial ones. If you live in the same place for a long period, you will inevitably see your neighbors relocate or pass away, which may leave you alone and possibly lonely. Between 25% and 60% of senior Americans experience this problem.
Your quality of life can be improved by moving to a senior living community, which can offer that social network in addition to other things like transportation, activities, support, and security. This can help you avoid health problems associated with depression.
As a general rule, communities that offer services, amenities, and activities tend to charge more, so be sure to find out what your budget will allow.
Up to 51% of older employees had less than $50,000 saved for retirement. In order to pay their costs, some seniors use the equity in their homes, either through a home equity line of credit (HELOC) or a reverse mortgage.
It’s not an endless pool of money, though. As Kennedy puts it, “a source of income that will last the balance of your life,” homeowners should be advised to convert their home equity into that.
Downsizing to a less expensive home might be one method to do that. For instance, downsizing ten to fifteen years before retirement might save you $40,000 a year in housing expenditures if you pay $4,200 a month for your mortgage, principle interest, taxes, and insurance
Not only retirees are free from geographically bound career obligations. More workers now operate remotely from home than before the global epidemic began. This gives people the freedom to live anywhere they desire, among other advantages.
Parents who no longer have children have no reason to reside in desirable school districts, expanding their options for where to buy a new house in a less expensive area.
Some homeowners can choose a more inexpensive area where homes are not only less expensive, but also where property taxes, utilities, and sales taxes are lower, without even having to downsize.
Their bedrooms may only be used on rare occasions once the children have grown up and moved out. But you still have to maintain them by cleaning, heating, and cooling them, as well as by paying insurance and property taxes.
You might not require a home office if you are retired. Maybe your new way of life keeps you too busy to use a home theater or game room. Although they might not fit your retirement plans, amenities like these, along with swimming pools, three-car garages, workout facilities, and fire pits, are excellent selling points.
Many Baby Boomers who have retired opt to relocate near their grown children. In actuality, after selling their property, this group is the most likely to relocate farthest. According to the National Association of Realtors®, the trend of relocating close to family started before the pandemic and hasn’t stopped since.
The Silent Generation, however, is more inclined than Baby Boomers (53 percent) to purchase a property close to family and friends.
While some older citizens relocate long miles to be close to their grandchildren, others downsize to a condo or senior community in their present city, allowing them to travel to see their loved ones and take in other places.
When it comes to housing alternatives, seniors have several choices. The advantages of age-restricted neighborhoods have already been covered.
We can occasionally be forced to make lifestyle changes. There are independent living communities, assisted living communities, and nursing facilities where those who require a certain amount of care due to physical or medical problems can find it.
Divorcing couples may decide it is more cost-effective to downsize to a smaller, more inexpensive property because they no longer need the large house to accommodate a large family.
Some elderly people move in with their adult offspring, which can benefit both generations by offering built-in childcare and cheaper accommodation. As an alternative, elder home sharing might offer the advantages of cost- and social-sharing.
Some seniors choose to live in an RV for one, two, or three “gap years.” Describe it as a desire to travel. It may be a cost-effective choice that gives individuals the freedom to uproot their roots and move whenever they like.
Keep in mind that not only seniors should downsize. Moving into a smaller, more affordable, and low-maintenance home frees up money and time to spend on other things. Working fewer hours can still allow you to pay off your mortgage more quickly. By lowering or eliminating your mortgage payments, you may be able to pay off credit cards and other debt or even retire earlier.
Or, you might just use the extra cash to go on vacation or do things you enjoy, like going to your favorite restaurants frequently, enrolling in lessons, or taking up a new hobby.
Practically speaking, downsizing can enable you to set aside money for unexpected expenses (or retirement). If you care about the environment, a smaller home requires less fossil fuel to heat and cool.
You might simply wish to simplify your life and save yourself the time and work required to maintain a large home. This is one of the things that started the tiny home trend, coupled with cost savings.
Remote work doesn’t just give you expanded flexibility for your career. If you’re no longer tied to a location because of your office, you have a great opportunity to expand your housing search. Let’s connect to explore how this can open up your options.
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