Finance “How much emotion is in these walls?” Economists view real estate in the abstract…as a commodity bought and sold by various people at various times in various parts of the country. But such a view doesn’t do justice to the reality of how we “experience” our homes. Anyone who’s ever owned one knows that, in addition to its value as a financial asset, a home is also a repository of family memories, stories and special events. It’s also a symbol of achievement and hard work – something we can look upon and in which we can take pride. What’s the “emotional value” of your home?That’s a very difficult question to answer. But for those who have lived in the same house for many years, the emotional value is likely to be substantial – the decision to downsize should involve an assessment of what you’re leaving behind emotionally, as well as what you’re gaining financially. On the other hand, for those who have lived inmultiple locations, or those who have a family cottage (which can often have much more emotional meaning than the home in the city), there may not be that much emotional value to worry about at all. “How do I want to live in retirement?” Sometimes, downsizing is a decision that’s less about the home and more about your lifestyle. So before you make the decision about one, it makes sense to consider how moving will affect the other. For example: do you see yourself doing a lot of travelling in the years to come? If so, downsizing can make a lot of sense. Downsize to a condo, for example, and you can lock your door and leave for several months without a whole lot of worry. You don’t have to think about who shovels the driveway while you’re away, or who cuts the lawn, or who deals with that frozen pipe, or any of the other routine maintenance which homeowners have to worry about while gone. Really, it’s just pack and go. On the other hand, if your vision of retirement is spending time in the garden, or relaxing by your backyard pool, or grilling on your BBQ, or just enjoying the neighbourhood in which you’ve spent years, then youmight want to think twice about uprooting yourself and starting a completely different life. “How will moving across town affect me?” In a similar vein, it’s important to realize that the simple act of moving to a different part of townmay bring profound changes to your daily routine. This is an important, but often overlooked, consequence of downsizing. Proximity to groceries and other shopping, as well as medical care and community amenities – all of these can be affected by your decision to move. So can your ability to visit friends or family who live in different parts of the city. Not that all of these changes have to be negative – it could very well be that moving actually brings you closer to things that you like to do or people whom you like to visit. But, at the very least, you’ll want to do an assessment of the possible impact upon your life before you make your final decision. “What are the TOTAL costs?” Downsizing may be a smart financial decision in the long run (see our note about retirement savings above). But when it comes to actually making it happen, it’s important to remember that the process isn’t free. We’ve already talked about some of the transaction costs that come with selling real estate, as well as the expense of moving your stuff across the city, province or country. But there are less-obvious costs as well. If you’ll need to buy smaller furniture, or put some of your possessions in storage, there will be additional costs for that as well. Another expense may be the cost of coming back to your old town or old neighbourhood to socialize with family and friends, or to seek medical care from a doctor with whom you have a long-standing relationship. After factoring in the time and money to travel back and forth, downsizing may be a lot less attractive than you originally thought. Are these costs high enough to make you reconsider your decision to downsize? Hard to say. But you’ll definitely want to take a tally and understand exactly how much the decision might cost you before you make it. Are you ready to downsize? So, how do you know whether downsizing makes sense for you? In addition to running through the pros and cons above, here are four quick questions that can help clarify your choice: 44 | www.snowbirds.org
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