Finance Reasons for downsizing Downsizing has a lot of things going for it. Here’s a list of some of the most common reasons for people wanting to downsize. Easier to maintain and repair your home Some homeowners enjoy “puttering” about the home, making small repairs, keeping up with the yardwork and so on. Others would rather leave all of that behind. Sell and move into a smaller home, and all of that time spent on maintenance and repairs is likely to decrease. Sell and move into a condo, and you’ll likely never have to mow the grass again. Sell and rent, and all of those problems now belong to your landlord. Less time spent cleaning It’s pretty simple: less square footage means less time spent vacuuming, dusting, scrubbing toilets and so on. That means more time for hobbies, entertaining friends and family, travel, or the million and one other things which you’d rather do than clean up a big house. Less expensive Most of the time, a smaller home means less of your money going into the walls. Specifically, a lower property tax bill, lower utility bills, less money spent on fewer appliances, and so on. And, should something need a repair, the repair may well be less costly because the “systems” and mechanisms of the home (the roof, the heating system, the plumbing, etc.) are more compact as well. Less debt (and less risk) Debt can be a very dangerous thing during retirement – with limited income coming in, how do you intend to pay it off? Using the proceeds of a home sale to reduce or even eliminate that debt can provide a quick solution to this problem. Obviously, getting out fromunder a big mortgage can wipe out a significant financial risk, should mortgage rates rise. But putting the proceeds of a home sale toward clearing that line of credit or credit card debt which you’ve been carrying around for years can be an equally smart move. Forced de-cluttering Over the years, many of us accumulate a lot of “stuff” that takes up a lot of space within our homes. Without a doubt, some of those items may have significant sentimental value. But the fact remains that keeping the stuff clean, well-maintained and properly stored creates a significant burden on the homeowner. Downsizing basically forces you to come to terms with this issue; if you don’t have space for everything, you’ll have to determine what’s really important to you (more on that below). Helps you stay in your home longer It’s an unfortunate fact of life: as we age, it gets harder to climb long flights of stairs or push lawnmowers around. Changing the type of home that you own – downsizing from a two- or three-storey to a condo or “ranch”-style home with a smaller yard, for example, can make a lot of sense. For those currently dealing with mobility issues or those who expect that they may have to deal with them in the future (perhaps there’s bad arthritis in your family, or maybe an old hockey injury that’s been flaring up these past couple of years), this can be a big plus. A lot of snowbirds look forward to the simple life – or at least, a life that’s a lot more simple than it was when they were working every day. And why not? Now that the kids are grown up, the mortgage is under control (if not paid off) and retirement is here, it makes sense to simplify, pare down, get focused and spend time on what’s really important. A big part of those plans is downsizing – selling the large family home andmoving into something smaller andmore convenient. And if that sale results in a few more dollars that you can put into your retirement account, so much the better... But hang on: is that really a good idea – financially, for starters, but also from a lifestyle perspective? What exactly are the pros and cons of such a move? Most important, how should you do it? Here’s a rundown of some of the most important reasons both for downsizing and for not downsizing. Hopefully, this will lead you to understand your own goals better before making this significant decision. DOWNSIZING 101 Does moving to a smaller home make sense for you? If so, how should you do it? By James Dolan 42 | www.snowbirds.org
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