5 Benefits to Downsizing Your House for Retirement
If you’re a baby boomer—the generation born between 1946-1964—chances are you probably own a home. It’s the place where you’ve raised your family and made countless memories with your friends and neighbors. But now your children have grown up and started families of their own, and you’re left with a big, empty house. What are you going to do with it? It might be time to consider downsizing your house for retirement.
If you’re not interested in “aging in place”—that is, upgrading or adjusting your house to meet your current needs—then downsizing might be the answer. If you have a significant financial burden, selling your home can be a quick way to gain control of it. Some people are simply seeking a lifestyle change. Others can no longer maintain large homes or may be experiencing mobility issues. Regardless of your reason, here are some benefits to saying goodbye to your large home and “upgrading” to a smaller, more efficient space.
You Can Tap Into Equity
A 2016 Survey of Consumer Finances by the Urban Institute found that homeowners over the age of 65 have a median home equity value of $143,500. In areas where housing prices have doubled in the last 10 years—like Seattle—that number could be significantly higher.
Tapping into your home equity could allow you to ease your financial situation by paying off your existing mortgage. If your equity is enough to buy a downsized home outright, that’s even better. For tax purposes, remember that the first $250,000 of profit from a home sale is excluded from taxes for individuals, and up to $500,000 for married couples.
You Can Boost Your Retirement Savings
If your retirement savings is lagging, selling a house you’ve owned for a long time can give you the boost you’ve been looking for. You can put the profit from your home into an IRA, or you can invest the money to provide another income stream.
Alternatively, if buying another house isn’t a possibility, many retirees switch back to renting. Even though renting isn’t the ideal solution, it can be more lucrative in markets where competition is strong for starter homes between boomers and younger generations. Then, you can invest the entire windfall from selling your home.
It’s Less Maintenance
The prospect of mowing, weeding and taking care of huge yards doesn’t appeal to many people anymore. Kiplinger reports that a patio and outdoor spaces are desired by home buyers, but yards shouldn’t require excessive maintenance. New construction homes often have smaller yards or no yards at all—and that reflects a buyer preference for less yard maintenance.
Older homes typically need a lot more maintenance and repairs—and there could be deferred maintenance. The most common problems in older homes are outdated electrical and plumbing systems, uninsulated walls, inefficient appliances, drafty windows and toxic materials such as lead paint and asbestos. These problems can be expensive to fix or replace. All these issues can add up, especially if you have not invested in regular maintenance over the years. Downsizing to a smaller home or condominium can mitigate some of the overwhelming maintenance issues.
You Need to Clear the Clutter
If you’ve lived in your current home for 20+ years, you’ve likely collected a lot of items—furniture, power tools, family heirlooms, forgotten projects. For some people, downsizing their personal belongings can be the hardest part of moving on. Sifting through all your stuff and deciding what to pare down is an emotional journey that can be terribly stressful. And there’s one thing we know for sure; your children don’t want it.
Downsizing can be a positive thing for those who need to get it done though. It will force you to take a hard look at your current clutter and might help you take the plunge in getting rid of some of it. We recommend the Marie Kondo method. See our blog article about that topic below.
You Can Live A More Active Lifestyle
The CDC says that lack of physical activity in older adults is a problem akin to smoking. Over one fourth of people 50 or older reported not participating in physical activity outside of work. Lack of physical activity can lead to chronic illnesses such as heart disease and diabetes, and a shorter life span in general.
In the car-driven, suburb communities that many boomers live in, achieving an active lifestyle can be hard. If one of your goals in retirement is to be more active, downsizing can help you reach that goal. You may be able to move to a neighborhood that is more walkable with better opportunities for exercise and transportation. A condominium is a good choice too if you desire building amenities such as a gym or pool.
You Can Upgrade to Luxury Amenities
Speaking of amenities, downsizing doesn’t have to mean cramped living in a tiny house. In fact, downsizing can often mean upgrading to the amenities and luxuries you’ve always wanted. New Home Source reports that is often the case, saying, “Many [boomers] will downsize square footage, but upsize everything else. They are looking for the highest finishes and they know what those are.” So, if it’s time to upgrade your floorplan, appliances or wish-list items, downsizing is your opportunity to do just that.
Thinking about downsizing in the Greater Seattle area? Contact us. We’re always here to help with your real estate needs.
Beachworks LLC local, family-owned company in north Seattle committed to improving the value of our community. For those who need to sell their homes quickly and privately, we we provide an all cash offer and close on your timeline.