Retirement Planning: Downsizing Your House

Getting ready for retirement is a big deal. Depending on your retirement goals, you may have some ideas of what you would like to do as far as retirement is concerned. Some people plan to travel more. Others plan to get a hobby. Still others just want more time to spend with family members. No matter your goals, however, downsizing can really help you meet your retirement goals. This is because you can enjoy more flexibility and freedom, not to mention you can have more cash on hand, when you downsize your house as part of your retirement plan.

Saving money on property tax payments because of your smaller house is just one of the reasons to downsize. Another reason is lower utilities. A smaller, cozier house costs less to heat and power. And many people find that it is just too difficult to keep up with all of the things a larger house needs. A smaller house is easier to care for. Many retirees find that when they sell their larger house, it brings a great deal more than they originally financed (and many of them already have the mortgages paid off by the time retirement rolls around). Luckily, with the capital gains laws, you can enjoy an exemption for up to $250,000 if you happen to be single or $500,000 if you are married. That means that most of the money you make from the sale of your old home goes right into your pocket.

Another advantage is the fact that downsizing your home forces you to go through your amassed possessions and figure out what to keep. The most cherished heirlooms can be kept or passed on to children and grandchildren. Everything else can go to charity (for a nice tax deduction) or to EBay (to make a little extra cash). Not only will your new home be cleaner, but you will have fewer things to worry about moving. If you plan to travel, having fewer belongings affords you that much more freedom.

If a great deal of travel is in your retirement plan, you might be able to sell your home altogether – and avoid a new one. My grandparents took this tack. They pay for two trailer spaces, one in Arizona and one in Idaho, and have small, tidy, mobile homes (the manufactured variety that look like showroom houses) on each. This works well for them. They haul a camp trailer behind their truck, and they can sleep wherever they want between their two “homes,” or go where they feel like. They got rid of nearly all of their belongings so as to more fully enjoy the true feeling of freedom in retirement.

When it comes to retirement, sometimes less really is more