The Benefits of Downsizing When You Retire

By
March 07, 2024

If you’re taking a look at your expenses as you retire, one popular way to save money is by downsizing.

Downsizing Your Home When You Retire

As you approach retirement and review your expenses, finding ways to save money becomes increasingly appealing. One enduring and popular method is to downsize to a smaller residence.

When contemplating cost-cutting measures, one often thinks of routine purchases such as groceries. However, downsizing your home can significantly reduce associated expenses like mortgage payments, energy bills, and maintenance costs. Realtor.com points out that opting for a smaller home generally means lower bills and reduced upkeep. Moreover, there's the potential financial gain from selling your larger property and purchasing a smaller one.

This windfall primarily stems from your home equity, which tends to accumulate over time. Daniel Hunt, CFA at Morgan Stanley, underscores the significance of home equity as a substantial asset for retirees, often constituting a significant portion of their net worth. Despite the complexities of retirement planning, home equity should not be disregarded.

When you decide to leverage this equity for your next housing move, your real estate agent will be instrumental in guiding you through the process, from setting the right selling price for your current home to finding a property that aligns with your evolving needs and financial capabilities in today's mortgage landscape.

What Does This Mean for You?

If you're contemplating downsizing, consider the following questions:

  • Do the reasons I initially purchased my current home still hold, or have my needs evolved?
  • Do I genuinely require and desire the current amount of space, or could a smaller residence better suit my lifestyle?
  • What are my current housing expenses, and how much do I aim to save through downsizing?

Subsequently, consult with a real estate agent to explore your options in the current market. They can assess your home equity and advise you on how downsizing can benefit you financially.

In Summary

If you aim to save money during retirement, downsizing is a viable option worth considering. When you're ready, engage with a local real estate agent to discuss your housing objectives for the year ahead.

For more information, give Alaskan Properties a call at (907) 694-3434.