How To Avoid Mistakes When Downsizing at Retirement

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    Even if you have a large family there will come a point in your life when the home you live in is probably not manageable. When you get older it gets much more difficult to care for your home and do repairs and if you have to rely on contractors it can end up costing you your savings.

    Fixed budgets are not the best time to deal with a lot of bills and you should really start your plan for downsizing when you get to be about 45 to 55.

    One of the biggest mistakes people make is waiting too long to make the move. If you are at the point where you feel forced to move into a smaller home, condo or apartment because of expenses or ability to care for your home then you have waited too long.

    If you begin your plan early enough you will have time to find the right time to sell your home.

    Right now things have been difficult for the past 6 years and we can probably expect home prices to stay lower than we want to sell at for quite some time.

    However this is a good time to purchase your retirement home. Many people want to retire in resort areas or places in warmer climates and this is a good idea because dealing with half a year of cold and the snow that comes with it is just a waste for the latter part of your life.

    Some people purchase a second home to use for retirement and then use it for their vacation home for 10 to 15 years. This gives you a foothold in the community you intend to move to and lets you understand all the problems and opportunities in the area.

    Depending on your employer you might even be able to move to an office near your second home and live there permanently. This is especially true for retail companies and those that serve people nationwide. Transfers or at least good recommendations from your current employer may mean moving doesn’t mean starting over and could even mean a promotion.

    This is why you need to start early in your retirement and downsizing plans. You might actually benefit from the move rather than break even.

    When downsizing from a larger home up North and moving to Florida, Texas or another Southern state don’t make the mistake and choose a home with the exact same value. You want to find a home that is less expensive that way you can pay off your mortgage and buy the new home and bank some money for retirement.

    When selecting a home you must include all the improvements you might need to make.  Remember your income will be lower and whatever you can save will mean maybe a few years of utility bills and taxes.

    Taxes are another issue. Find a location with lower real estate and general taxes. Some states have no income tax and rely on other forms of taxes to get their revenue. If you are retired then you won’t benefit from not paying income taxes and higher sales or investment taxes could eat into your savings pretty quick. On the other hand some states don’t have sales taxes so you will pay less on retail merchandise but remember even states that have sales taxes often have exceptions for primary needs so you won’t pay taxes on clothing, food or basics.

    Once you  have decided on the area you want to move to you need to select a home that is easy to care for. Many homeowner association communities will offer care for your lawn as part of the package and they may offer other services that are nice for older adults. However the cost of these communities can be very expensive when you consider you will still need to pay local, state, federal and other taxes that people outside these communities pay. Factor these costs in and expect increases of about 5% per year even if fees do not go up every year they normally work out to about 5% per year when they eventually do.

    If you decide that you want to live outside of a retirement or managed property situation then make sure the home is built with materials that do not require frequent maintenance.

    You want to look for things like:

    Vinyl siding or stone which does not require painting.
    New Roofing which should last 25 years or more.
    Concrete walkways that will provide more stability when your older.
    Decking that is Composite and New so it will last a long time without the need for staining and care.

    Although you may love plants I would suggest that you look for a home with fewer bushes and more flowers. You also don’t want to deal with plants with thorns especially when you are older because your eyes might not be able to use tweezers that well.

    Electrical and Utilities should be up to date and they should be quality products that are easily serviceable. If you have a water heater in a crawl space It won’t be optimal to drain it and care for when you’re older.

    Other Services

    You should buy into a community that has easy access to medical services and high quality doctors. This is a difficult thing to evaluate but if you need a specialist you should not need to travel very far.

    Easy access to food is also something you must plan for. If you are older you may have a time where you can’t drive. If there is a supermarket close enough to walk you might do better for some time.

    Eventually you will probably need to sell this home but that is not always the case. Many seniors live full lives independently and more often than not they are living on their own when they are older. This is not to say you can do it all on your own and you might need services such as food delivery, house cleaning and other day to day services that you might never have thought of.

    It is good to have a senior community center near you even if you don’t attend many of the events you can still avail yourself of some of their services. You should reach out to them prior to the need and see what others are doing.

    Final Note

    So retiring means a lot of changes. If you plan well you should be able to take care of most of your needs on your own. If you need help you should find the groups that offer it prior to your need and consult them about any eventuality you might need.

    If you have family that can help that is always a good thing. Children or siblings or friends are good to have for support of all types.

    Basically you just need to do your best to prepare and that means taking some time and thinking about your future.

    I strongly suggest that you look for a single story home or a condo that does not require you to climb stairs. Remember to look for things that could be a problem for you later such as carpet which can be hard to walk on, Bathrooms that are hard to negotiate and storage that is out of reach.

    If you can bring an older relative with you and ask them how they feel about it. Then again they might beat you to it and move in before you.

     

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