As people approach retirement age, they often start thinking about where they want to live during their golden years. If you're a homeowner who's contemplating your options, you may want to consider downsizing.
Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of Realtors (NAR), suggests two options: move in with your loved ones or stay in your current home. However, downsizing may be the best option for you.
““As we see the transition of the large Baby Boomer generation age into retirement, it will be interesting to see if they move in with their Millennial and Gen Z children or if they stay put in their own homes.””
When you downsize, you sell your current house and purchase a smaller one that suits your changing needs. In addition to the personal benefits of downsizing, it can also be a more cost-effective option.
The New York Times (NYT) reports that many downsizers expect to improve their retirement income stream if their new home costs less than what their old house sells for. Lower utility costs, insurance and property taxes, as well as investment returns on the proceeds, can also improve the bottom line.
““Many downsizers expect to improve their retirement income stream if their new home costs less than what their old house sells for. Lower utility costs, insurance and property taxes — as well as investment returns on the proceeds — can also improve the bottom line.””
One of the most important parts of retirement is being in a strong financial position, and downsizing can make a big difference. The current record-high level of equity homeowners have is another reason why downsizing can still be cost-effective today, even with higher mortgage rates than a year ago. By leveraging your equity when you downsize, you can lower or possibly even eliminate the mortgage payment on your next home.
A smaller home not only has lower upkeep costs, but leveraging your home equity could make a big difference in your financial situation. Your local real estate advisor can help you understand how much equity you may have in your current home and what options it can provide for your next move.
In conclusion, if you're a homeowner preparing for retirement, deciding where to live during your golden years is an important part of the transition. Consider downsizing as an option and reach out to a real estate professional to learn more about your opportunities. With the right guidance, downsizing could be your best option for a happy and comfortable retirement.
