Happily Ever After: Six Ways Downsizing Can Support Your Retirement Goals

When done thoughtfully, downsizing can support your retirement goals by creating financial flexibility and enhancing your quality of life.

The decision to downsize for retirement can be both exhilarating and a little scary. It’s a major financial event and a big lifestyle change. While some people opt for larger or more expensive retirement homes, downsizing is often the savvy strategy, especially if you haven’t saved quite enough for your golden years.

In this article, we will explore six ways downsizing can support your retirement goals along with some helpful guidelines for getting started.

Six benefits of downsizing for retirement. Downsizing your home in retirement may lead to robust benefits. We’ve outlined some key advantages below:

1. Your monthly cash flow may grow.
   Moving to a smaller space could bring savings on your mortgage payments or even eliminate it entirely. It can also cut costs for utilities, maintenance and repairs.  Homeowner’s insurance is another opportunity to save. Areas with lower crime rates and fewer weather-related incidents tend to have lower insurance premiums. Those savings can support your hobbies, fund traveling, or lessen the gap if you haven’t met your retirement goal.
   .
2. Get a quick income boost.
   Selling your home can provide a windfall, especially in today’s dynamic housing market. The potential profit depends on a number of factors, such as the value of your home and sales of comparable properties nearby. If you turn a profit from selling your home, you have several options. For instance, you might save it or invest the proceeds in diversified financial assets to potentially grow your wealth.
   .
3. Say goodbye to household responsibilities.
   Does your current house have a long staircase or a large yard that requires maintenance? You may not want to deal with those issues as you grow older. Downsizing to a one-level home or having a community that handles upkeep can simplify your life and add to your safety, too.
   .
4. Access plentiful amenities.
   Many smaller or senior-focused communities offer a range of amenities and services that can enhance your quality of life. These might include fitness centers, activities, transportation services, and health care options. Downsizing to a retirement community with these features can provide convenience, social engagement, and a higher level of support as you age.
   .
5. Enjoy tax advantages.
   Taxes present an often-overlooked opportunity to make your retirement income go further. Some states have significantly lower or non-existent taxes on retirement income, property taxes, and estate and inheritance taxes. Wyoming, for example, has no income, estate or inheritance taxes and offers low property taxes. The tax implications aren’t guaranteed, however, because they depend on several factors. Discuss your retirement downsizing goals with a financial advisor who can help you maximize your savings and avoid common missteps.
   .
6. Relocate to the place of your dreams.
   Now that you’re no longer tied to a certain work location or school district, you have the flexibility to live where you want. Are you seeking a warmer climate? To be closer to friends and family? A safe, walkable city? Moving to a new location can be a great opportunity to scale back and get ready for your next adventure.

Downsizing 101: Where to start? Follow these pointers to begin the process:

• Think about your retirement goals.
  Where do you want to live in retirement? How do you want to spend your time? Your answers should guide your decisions and identify concessions you’re willing to make while downsizing.
  .
• Create a monthly retirement budget.
  Look at your monthly retirement income and projected expenses to get a sense of your budget. This will uncover any gaps between the life you want to live and what you’re able to afford. Then you can determine how you will address any shortages, whether that’s through a less expensive locale, a second-act gig, or smaller abode.
  .
• Make a timeline.
  The downsizing process can seem daunting. Break it down into achievable key milestones so you can assess your progress and feel accomplished along the way.
  .
• Enlist the help of professionals.
  It’s never too soon to start conversations with professionals. A qualified real estate agent can help you understand the value of your current home and provide realistic costs associated with the market you’d like to move to. Tax professionals can keep you abreast of how your tax obligations may change while a financial advisor will help you create a financial strategy with your retirement goals in mind. With your team of professionals in place, you’ll get a clearer picture of your savings and expenses, now and in the future.

Downsizing can support your retirement goals in many ways, but primarily by streamlining your finances and simplifying your lifestyle. Start planning early and put a comprehensive strategy in place to help you stay on track to achieve the life you’ve been dreaming of.

If you are seeking to downsize, the experienced professionals at Certified Title are here to help. We can provide the valuable tools and information you need for all types of residential and commercial real estate transactions. To learn more, please contact our experienced team today.

About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for its industry-leading reliability and exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888)486-5511 or visit https://www.certifiedtitlecorp.com/.