Retirement is one of life’s biggest transitions. Every aspect of your life, from your daily routines to your personal goals to your financial situation, will undergo massive change. Your monthly income — whether from a pension or Social Security, investments, or some continuing employment — will mostly likely be reduced, and among other priorities you may need to find ways to cut expenses, or generate cash.
Many retirees downsize their homes, for any number of reasons. Of course, moving to a different part of the country or even overseas will probably involve a home sale and the purchase of something more practical in your new location. But even if you don’t plan to relocate, keeping the house you’ve lived in throughout your working life may no longer make any sense, especially if your house is large, with lots of bedrooms for children who have since moved on to their own homes. You don’t need all that space anymore, and as you get older, you’ll need it even less.
Most significantly, downsizing will save you money. If you’re staying in the same area, you don’t need to rush a sale; tell your real estate broker that you can wait for the right buyer, at the right price. You don’t need to jump at the first offer if it’s significantly below what you want to get. Your broker can simultaneously be looking for a more suitable house or condominium for you to purchase. If you need to generate cash from your swap, let your broker know how much cash you need, and he or she will know how aggressively to price your home, and what your price range for a new home will be.
Downsizing will save money on utility bills. A big house costs more to heat in the winter and keep cool in the summer; bigger homes have more electrical fixtures, and more televisions with cable hook-ups. Bigger homes have bigger gardens that cost more to keep tidy. And, if your home is old, it may need several expensive upgrades or repairs down the road. What’s the condition of your roof? How old are those vinyl kitchen counters, peeling up at the corners? You’ll need to disclose any problems with the house when you put it on the market — a potential buyer will hire a home inspector who will discover these problems in any event — and you may need to make at least a few repairs yourself, to make the house more saleable. Ask your realtor for the most cost-effective solutions to these kinds of problems.
If you’re swapping a house for a condo, remember that condo fees will be a new monthly expense that you’ll have to calculate for. And many new homes in planned communities, whether townhouses or single-family homes, also require payment of monthly association fees. Even if your utilities bills are significantly less, your overall monthly expenses might not change that drastically if condo fees are $250 a month or more.
The biggest logistical headache in downsizing, even if you’re just moving around the block, is dealing with your possessions. If you’ve been in your current home for decades, it’s probably crammed with a lifetime’s worth of furniture, appliances, books, clothes, geegaws, and plain junk. Start by figuring what you’ll need in your new place, at least as far as furniture and major appliances are concerned. Even if you don’t know exactly where you’re moving to yet, you should at least have some idea of how many rooms you’ll have, and how much of your furniture will fit there.
Then, start sorting, room by room, closet by closet, shelf by shelf. Will your children want, or need, any of the excess? Are there valuable pieces that you can sell online at Craigslist or eBay? Old appliances and clothing are worthless; at best, you can donate them to Goodwill and take a tax write-off. If you have a lot of question marks — or if your children want to come later to help you sort, and take pieces they want back home with them — then you can rent out a self-storage unit in the meantime.
If you just want to get rid of a lot of stuff, then have a yard sale. Or a series of yard sales. Advertise in the local papers, put up signs, and hold the sale for two full days (Saturday and Sunday). If done correctly, yard sales can be a lot of fun, and lucrative too. If you have a houseful of valuables that call for a sale event that’s more highbrow than a yard sale, then hire a specialist. Small firms are starting up across the United States and elsewhere that specialize in putting on such sales — not just for downsizing retirees, but also for younger couples who find themselves overextended financially. These firms, of course, will take a significant percentage of sales receipts, and they may price items more aggressively than you anticipated. But if you want to move a lot of items quickly, a professional firm is the way to go.
Once you’ve sloughed off a lifetime’s worth of accumulated baggage and have moved into your smaller home, you’ll be ready to start enjoy your retirement in style.