Downsizing your home in retirement

As your life evolves, your needs change. That's especially true of your housing situation when you transition into retirement. 

Maybe your single-family home requires more maintenance than you’d like. Perhaps you'd like to move to a warmer climate. Or maybe living closer to grandchildren is a priority. 

Whatever your reason, if you’re considering downsizing or moving in retirement, we can help you think through your options and provide guidance on how such a change may affect your overall financial situation. 

Think about your lifestyle needs 

Lifestyle is one of the most important factors to take into account when thinking about a change to your housing situation in retirement. Consider the following questions: 

• Upkeep: If you stay, how do you plan to maintain your home? Can you hire help if needed? Will you be able to rely on friends and family? Might you need to renovate your home as your physical needs change? 
• Proximity: How close do you want to live to family and friends? To public transportation? To shopping and social life? 
• Personality: Do you adjust to change and make friends easily? 
• Family preferences: How does your spouse feel about moving or staying in your home? How does your family feel? 

Understand your different housing options in retirement 

Here are the most common moves that retirees consider as they enter the next chapter of their lives: 

• Stay in the family home: If you're physically independent and willing to do (or outsource) the upkeep, you'll probably be happy with this option. You might also consider remodeling your home to reflect your changing lifestyle and needs. 
• Downsize to a smaller home, condo or townhouse: Downsizing your home and moving into a smaller space in retirement may be less expensive and more manageable. With a condo or townhome, most of the outdoor maintenance is done for you. 
• Upsize into a larger home: While downsizing in retirement is a popular financial strategy, it’s also a common aspiration for retirees to move into a larger home to enjoy the benefits of a bigger space. This could mean more room to host extended family members or dedicated square footage to pursue hobbies. 
• Move closer to or move in with your children: This option requires an important discussion with your kids. Ask yourself: 

• How will other family members feel about such a move?
• Will you miss having your own space?
• Beyond family members, do you have other social connections in the area that can offer support?

• Explore other retirement housing possibilities: Continuing care retirement communities (CCRC) and assisted-living facilities are increasingly popular options. These types of communities often offer an array of amenities such as housekeeping services, meals, social activities, transportation and varying levels of physical assistance, if needed. 
• Maintain two homes: If you see yourself splitting your time between two locations — whether it be for family, climate or recreational reasons — it may make sense to maintain a second home in your retirement years. “Snowbirds,” for example, spend their summers in colder climates and then flee to warmer-weather destinations for the winter. 

Account for broader financial considerations when downsizing your home 

Changing your housing situation can have multiple implications for your financial situation: 

• Real estate implications: How will a sale or purchase of a home impact your retirement income or financial goals? You’ll want to evaluate both the positives and negatives. For example, if you’re selling a home, you may end up earning a profit on the sale of your house, but certain costs like real estate agent fees, closing costs and repair expenses may erode some of those gains. 
• New monthly housing costs: Depending on your choices, you may end up with a higher or lower monthly payment. And even if you purchase your home outright, you could find yourself paying more for homeowners insurance and homeowners association (HOA) fees, but less in property taxes. Regardless, consider how living expense changes affect your budget and income withdrawal strategy. 
• Moving expenses: Moving expenses can add up. Hiring a moving company and furnishing a new home can require a substantial amount of money. As such, consider how you may fund these one-time expenses by budgeting in advance of the move. 
• Tax and estate planning considerations: If you are moving across state lines, account for any changes in state income taxes, as well as potential estate tax implications. Further, if you’ll be maintaining two homes, you’ll want to consider the impact on your taxes and if you need to update your estate plan. 

Plan for the retirement lifestyle you want 

As you contemplate a potential retirement downsizing strategy, talk to us. We can help you understand how changing your housing might affect your financial situation and your retirement, now and in the future.