Is it Smart to Downsize for Retirement?

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711_4463949Retirement is upon you or coming up pretty fast and one of the things your accountant might have told you is that now is the time for you to downsize. While moving into a smaller house might seem to make sense now that the kids are all grown and gone, but like any financial decision you make, you should crunch the numbers first. Don’t just assume that downsizing is what you should do. 

When you are doing your calculations don’t forget to include the many fees you can incur when you buy and sell a house. Then there is the cost of moving, cost of changing utilities, address change costs, reprinting of checks, the cost of changing ID, and the list goes on. While some of these might seem like incidentals when you add them all up you might be surprised at what you discover. There’s also the costs of preparing a home for sale and then the remodeling you are likely to do to make your new home perfect for you. Even things like painting can translate into noticeable drops in your pocketbook. 

There are also other things to consider other than financing. Have you built relationships in your existing neighborhood? Are you close to amenities that you use? If you use bus services will the new location accommodate you? These things are especially worthy of consideration if you have lived in a neighborhood for a long time and you have ties to that neighborhood. 

If you are to consider strata type housing you need to consider the monthly costs of strata fees and how those will increase over time, which could land up having a negative effect on your pocketbook. 

As you can see there are many things that you need to consider when you are thinking about downsizing after retirement.