If you haven’t managed to save up enough to make the best of your retirement, downsizing is a path you can take to unlock some much needed finances. Most retirees secure their retirement income through downsizing and moving to a smaller property that not only costs less to maintain, but is also located in an area that delivers more comfort and satisfaction.
Rather than getting yourself worried and wondering, “When can I retire to get social security benefits?” you could start today by choosing the option of downsizing your home. Here are assured steps to achieve success with that objective.
- Have clear goals for downsizing after retirement
The typical person has two goals for pursuing a downsizing after retirement. There’s usually the financial goal which is to make profit by releasing equity from the home. The other is a lifestyle goal, which is often aimed at moving to another home in order to conveniently switch to a different lifestyle. An example is downsizing so you can move to a better neighbourhood or somewhere closer to your family.
It’s important to know your goals and keep them in mind throughout the downsizing process so that the results you are after are what you actually accomplish.
- There’s a right time to downsize. (Don’t leave it too late and or do it too early)
Timing is essential. If you sell your bigger home when the property market is down, you are going to end up with a bad deal that might end up severely compromising your goals. When attempting to sell your home at the right time, there are a host of factors to consider such as interest rates, worth of your property, the economy, and others.
Also, if you choose to downsize long before your retirement, you have to learn how to properly manage your finances in order to avoid exhausting your resources before retirement. It’s usually best to delay downsizing until you need the money or are capable of saving/managing finances for the long haul.
- Pick ideal home and location for relocation
Downsizing doesn’t necessarily have to imply a downgrade. You can move to a more serene neighbourhood, or a quainter home that offers more comforts than your former home, but with less space to manage. Therefore, carefully consider your options to ensure you are getting a good deal. There are lots of things to think about looking for a new home location such as weather, neighbourhood, access to medical care, cost, view, et cetera.
- Have a realistic perspective on real estate costs
Selling and buying a home can be unpredictable and expensive. Sometimes, what you expect isn’t what you get. To get the best results when trying to sell your home, consult reputable real estate agents who can help appraise your home and let you know how much you realistically stand to gain upon sale. They can also propose ways to boost your home resale value.
When looking for a home to buy, do the necessary research to know what options are available and how much they’ll actually cost. Without a realistic idea of how much a home will cost, you might be in for a rude shock and sad results.
- Try out the new location
If your goal has always been to downsize after retirement, there’s a high chance that you already have a good idea of where you’d like to relocate to. If that’s the case, why not try out the proposed location before taking the final leap. You could try vacationing in the area for a while so you can get a realistic feel of the environment and determine if it is really the right option for you.
If the location proves not to be all you thought it would, there’s no harm in exploring new choices and trying them out as well.
- Compare maintenance costs
Downsizing isn’t just about switching to a house that costs less. The new home must be cost effective in every ramification and that includes costing less to maintain. If you downsize to a smaller house that costs more or equal to maintain, you haven’t actually accomplished anything with your downsizing plan.
- Consider taxes
If you are relocating to another city, state or distant location, it’ll be smart to move to one that has a more friendly tax scheme in place. It can be a great ease on your finances if your new home makes it possible for you to pay less on taxes.
- Don’t forget that downsizing possessions can also cut costs
So, you’ve moved to a smaller house, but, heck, you still own three fuel-guzzling SUVs? It’s almost like trying to store water in a basket.
Rather than focus solely on downsizing your home, how about also looking to downsize on your possessions? Things you don’t actually need or other properties or belongings that cost more to maintain than they add value to your life are better off sold off.
Besides, it’s not like you can cram everything from your old home into your new, smaller home.
- Keep an eye on your spending
Changing homes can be quite costly. To avoid costs sneaking up on you and throwing your budget out of whack, be sure to plan your move carefully and ensure every aspect of the move is progressing according to budget, not beyond it. You can evaluate your spending by comparing your projected budget to what you are actually spending as your move progresses.
- What are your other choices?
You don’t necessarily have to downsize in order to afford a comfortable retirement. There are other options such as renting out your home or parts of your home instead of outright selling it. You could also pursue the option of a reverse mortgage or a Home Reversion Plan.
With these tips, you are in a better position to ensure that your efforts at downsizing your property yield the type of results you actually want. If you know of any other tips, please don’t hesitate to share with us in the comments.