Retirement Downsizing: A How-To Guide

As you enter your golden years, you may start to think about selling or even giving away all the material goods you’ve collected over time. Do you need three separate cars, tons of clothes, and many electronic devices you never use? Probably not.

Retirement downsizing is common, especially for folks who want to save money and move into a smaller, more affordable home. In this how-to guide, we’ll break down retirement downsizing in detail.

What Is Retirement Downsizing?

Retirement downsizing simply means opting for a smaller, simpler life in terms of possessions, financial obligations, and living space. It’s not necessarily about assisted living or retirement communities but more about finding a smaller space with less upkeep that can be healthier for your personal finances.

So, for example, if you have a large house with plenty of bedrooms perfect for your family, you might downsize by selling the home for a smaller abode with enough square footage for just you and your spouse. This will allow you to cash in on your home equity and secure better mortgage rates on a property better suited to your needs.

Retirement downsizing takes a lot of forms. For many retired or soon-to-be retired individuals, it means:

  • Selling extra cars they no longer use
  • Getting rid of excess possessions
  • Moving to a smaller house with a lower mortgage (to save money) with the help of a real estate agent
  • Moving to a quieter location or community

Many retirees, especially couples, opt to retire to warmer climates where they can relax and enjoy the fruits of their labor in comfort. Who doesn't want a retirement home near a beautiful Florida beach where they can get away from the hustle and bustle of the city?

Retirement downsizing is whatever makes you more comfortable in the years leading up to and after retirement.

When Is the Best Time To Downsize for Retirement?

Contrary to popular belief, the best time to downsize is a few years before you stop working, at least full-time. For instance, if you plan to retire in five years, but your kids have long since moved out of the house, you can downsize by selling your current home and moving to a smaller house with a much lower mortgage.

You’ll save hundreds or thousands of dollars annually by downsizing just two years before retirement, contributing even more funds to your retirement savings account or investment account. This way, you’ll have more money to enjoy after retirement.

If you’re already about to retire, that’s okay. You can still downsize right after retirement. The sooner, the better, especially if you plan to live off your retirement income for the rest of your life.

Why Should You Downsize?

Generally, people downsize to save money. Once more, the typical example of selling your big house for a smaller one applies.

Say that you have a pricey mortgage for a four-bedroom house of $2000 per month. But you and your spouse only need one bedroom, and perhaps one more when guests arrive. If you instead move to a house with $1000 per month in mortgage payments, you could save $1000 per month.

Plus, many people downsize for peace of mind. As you think about retirement, you may also start to wonder why you have so much stuff, such as extra cars or things cluttering up your garage.

Selling or giving these things away can free up a lot of space in your home, plus prevent you from having to worry about them (or worrying about what your family will do with all your possessions later on).

It also helps with your financial planning. If you’re planning to move, you’ll be a homebuyer again, perhaps for the first time in a long time. Average costs for realtors and capital gains taxes may come into play.

If you don’t have massive retirement savings or are planning to rely mostly on social security, selling unnecessary items may be able to help you cover ordinary home ownership expenses as you enter retirement.

Everyone has a different reason for retirement downsizing. Whatever your reasons are, it’s important to ask a few key questions, so you are prepared to downsize smartly and strategically.

Where Should You Downsize?

First, figure out where you will downsize or where you will move to your new home.

Most Americans prefer to relocate to retirement-oriented communities or smaller towns. These are usually in southern states with warmer climates; many retirees, called snowbirds, move away from their homes in colder climates.

Florida, Texas, Arizona, Georgia, and similar states are great places to downsize. As a bonus, many of these states have affordable houses, at least if you avoid the major metropolitan areas.

However, you may have a different retirement downsizing destination in mind. For example, maybe you have a favorite vacation spot that you and your spouse have frequented for years. You can always downsize by selling your house in your current place and purchasing a home in your favorite vacation location. The sky's the limit.

With the help of an auto transport service, you can even ship your car practically anywhere in the country, even across the entire contiguous US.

How Do You Downsize for Retirement?

Let's get into the details. Many soon-to-be retired couples aren't sure how to begin the downsizing process. Fortunately, it's much easier than you may think.

Find a Smaller Home

Firstly, downsize for retirement by locating an appropriate smaller home. As you near retirement age, odds are you don't need many extra bedrooms, an oversized garage, or even a big backyard for your kids to play in.

Instead, you can pick up a smaller home with one or two bedrooms, a manageable living space, and a small backyard that won’t require much maintenance. You can purchase a smaller separate house or opt for a more affordable duplex or a condominium.

Homeowners should consider property taxes, closing costs, and flat home prices. Your family home sale might make enough for you to afford particular renovations to a new property, but make sure those renovations don’t impact your cash flow or retirement planning for health care too much.

The right real estate market advisor can help you find a great property with the right sale price, reasonable mortgage interest rate, and little hassle with few downsides.

Bottom line: finding a smaller home will likely help your retirement income stretch farther than it would otherwise.

Consider Selling a Car

If you have multiple cars, you might also consider selling one or two of them. If you won’t drive them, there’s no point making car payments on them.

While you should still ship your primary vehicle across the country to your retirement destination, any other cars can be sold online or to people in your local community. If you’ve already paid off one of your different cars and want to give it away to a grandchild or other younger family member who might need it, you can do that, too. It’s all up to you.

Once again, selling a car not only nets you extra income you can use to enjoy your golden years. It’s also one less thing you have to worry about and one less bill you have to pay when you should focus on just relaxing and enjoying these years.

Toss Unused Entertainment Items

Similarly, take a hard look at all your unused entertainment items, like big TVs, unused computers, and speaker systems. Sell or eliminate unused electronics and other entertainment items cluttering your house or garage.

Sooner or later, you’ll have to go through all that junk. It’s better to get rid of it now, while you still have plenty of energy to do so, or in the middle of a move when you would have to pack it up and bring it with you if you didn’t get rid of it.

Declutter Your Space

In keeping with the above trend, it may be wise to declutter your space overall. Get rid of anything you don't use, like oversized or worn-down furniture, extra dishes, and anything else you can think of that you don’t actively use or even see.

You can hold a yard sale if you want to get rid of this stuff quickly and don't care too much about making extra cash. Or you can donate it to less fortunate people by taking it to places like the Salvation Army or Habitat for Humanity.

Be Realistic

Above all else, be realistic about your downsizing goals and capabilities. You may not be able to move to a beachfront property outside Miami, Florida. But you might be able to get a wonderful but, more importantly, affordable house 20 minutes away from Miami without completely decimating your retirement savings.

The Bottom Line

In the end, retirement downsizing isn’t something you have to avoid. It’s something to look forward to. Intelligent retirement downsizing can save you money, help your retirement nest egg stretch further, and allow you to enjoy what matters: spending time with your loved ones without a bunch of distractions.

When the time comes to downsize for retirement, you can rely on Carvaygo to help you move quickly and easily. As an experienced auto transport service, we can move your favorite vehicle down to your new home, plus keep it safe with enclosed car hauling services.

Contact us today to learn how Carvaygo can help you reach your retirement destination and provide peace of mind.

Downsizing Definition | Investopedia
When to Retire and Why Age Matters | Investopedia
Downsizing in Retirement: Expenses They Didn’t Expect | The New York Times

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