When to Downsize: 7 Signs It’s Time to Put That Big Old House on the Market

Let’s face it.  As children move away and we want to spend time doing things other than cleaning and working in the yard, a house that once worked well just might not work any more. Nevertheless, many retirees find it difficult to pull the trigger.

The trouble is, the choice to delay downsizing by even a few years could translate to tens of thousands of dollars lost. If any of these 7 signs resonate with you, don’t hesitate in the land of indecision and sentimentality—get moving!

1. Your monthly housing expenses have risen above 30%

When it comes to how much should be spent on housing expenses, 30% is the magic number. While you’re still working, housing costs may fit comfortably in your budget, but living on a fixed income can unexpectedly push some retirees into the “burdened” bracket. If you want to avoid getting a part-time job just to make ends meet, you’ll need to calculate how much house you can afford in retirement.

Living in a smaller space can reduce mortgage costs, utilities, property taxes and maintenance. Keep in mind, though, that there are costs to moving – repairs on the home before selling, moving expenses, and closing costs are unavoidable, so you may want to move while you’re still working.

2. Your monthly budget leaves little left for fun

Whether you long to become a globetrotting retiree or plan to head back to school to pursue a passion like painting or writing, chances are it’ll cost money. And if you’re already spending too much on housing expenses to afford your dreams while you’re working, you’ll have even less cash to spare when you retire. However, if you downsize 5 or 10 years before you’re set to retire, you’ll save several thousand dollars each year, which adds up over time.  Just imagine the interest you’ll make on the money saved, especially when it’s compounded over time.

3. You’re falling behind on your home maintenance

Precious memories of life’s golden moments often lead retirees to linger longer in their family home than is wise. If sentiment tempts you to hang on to your home too long, it’ll wind up doing more damage to your finances than you’d expect.

If you make the move too late, your home just starts deteriorating. Then you’re going to have to spend equity to repair your house before it goes on the market. Not only will you wind up spending more money to get your home ready to sell, you’ll have wasted years of cash on more expensive homeowners’ insurance, property taxes and more.

4. Your home has features that no longer fit your lifestyle

If you’re only using a handful of rooms in your house (the master bath, bedroom, kitchen and the smaller, cozier den), it hardly makes sense to pay for heating, cooling and lighting rooms that you don’t even use.

Size is only one part of the no-longer-livable features that your home might have. Features that can take a physical toll as you grow older include stairs, high-maintenance landscaping, or a steep driveway. Weather (mowing the lawn, shoveling snow) plays a part too.

As of 2011, only 3.5% of housing in the U.S. had single-floor living, no-step entry, and wheelchair accessible extra-wide hallways and doors, so if accessibility tops your list of must-haves, you need to start house hunting long before you’re ready to retire

5. You’re the oldest resident in your neighborhood

Downsizing to a smaller home in a retirement community means living among your peers. In fact, you can actually raise your happiness by meeting more people from your generation. A lot of adult communities have amenities like tennis courts, billiards rooms, woodworking shops, classes and clubs all paid for by the community. That can end up saving you money in the long run.

6. You want to convert your home equity into income

For most homeowners, their home’s equity is their most valuable asset. It stands to reason then, if you’re accessing that asset to pay your everyday expenses like housing costs, it’ll eventually become depleted—unless you’ve invested that equity in a low-risk retirement account that pays out monthly dividends. When you sell, it’s all about converting the home equity into a stream of income that will last the remainder of your life (not going and blowing it on a whim).

7. Your career no longer ties you to your location

The Merrill Lynch survey found that age 61 was the sweet spot for retirees to take their pick of where to live. Without a workplace to worry about, you’re free to shop around for the locations with the lowest property taxes and cost of living. You may even find that you don’t need to sacrifice square footage if you choose to move to a less expensive area.

Choosing to downsize is a difficult decision. Choosing the best time to downsize is even trickier. But if you play your cards right, your move into a less-expensive home has the potential to save you money, and make you money, too.

Brought to you by Erik Bashford and your friends at Pantano Real Estate. If it’s time to consider downsizing, it’s time to call 302-540-8048.