As retirement nears, you may be looking for ways to simplify your life and your finances. Downsizing your home can be a great way to streamline as you look ahead to retirement.
On average, people in the U.S. live for 20 years after retiring, according to USA.gov. That means you could spend decades living on a fixed income, so it's important to be realistic about what you need in a home as well as what you can afford.
By downsizing for retirement, you can free up money and ultimately make the most of your retirement income. Depending on your financial situation, downsizing might even free you of a mortgage payment — an ideal scenario for retired life.
What to Consider When Downsizing Your Home for Retirement
1. Be Realistic About Needs vs. Wants
If you're used to living in a large home with plenty of room for a busy family, consider whether you'll still need all that space in the future.
After retirement, who will be living in your home? Just you? You and a partner? Will you be supporting any other family members? Maybe you no longer need a dedicated office space or a big backyard, but you'll want a second bathroom for visitors. Think about your must-haves and your nice-to-haves so you can prioritize the assets that matter most in your home search.
2. Location, Location, Location
Downsizing could be the perfect opportunity to relocate to your preferred climate or move closer to friends and family. Downsizing for retirement can also come with savings if you move to a less expensive area or a town with lower property taxes or cost of living.
Spend time thinking about where you would like to spend your retirement years and identify the regions and communities that will fit with both your preferences and your budget.
3. Think Long-Term
Downsizing your home isn't just about the things you want right now or in the next few years. Eventually, it's possible that you'll need additional care or assistance during your retirement.
To plan ahead for your future self, consider downsizing to a single-level home that will make it easier to age in place. By opting for a single-story home, you won't need to worry about steep staircases or accessibility issues in the years to come.
Downsizing for Retirement Offers Peace of Mind
Whether you stay in your hometown or head to a new part of the country, downsizing provides an opportunity to identify your priorities and values as you transition into the next stage of life. By simplifying with a smaller home, you can rest easy knowing one of the largest pieces of your financial puzzle is in place.