Downsizing Before Retirement

For those whom retirement is a long way off, it can represent a never-ending vacation, a time free of work and full of play. For others who are closer to retiring, their next chapter may represent an exciting season filled with new and meaningful contributions. Whatever your retirement plans may be, shrinking your domestic footprint may be an important aspect to consider, and you may be surprised why it matters. In this article, we’ll explore some reasons to downsize, and some smart strategies to consider that can help make sure your retired life is everything you’re hoping for.

HOME IS WHERE THE HEART ISWhen you think of your home, what do you think of first? The sound of little feet racing from room to room? The comfort of a home-cooked meal shared around the family dinner table? In every phase of life, the emotional memories we attach to our most meaningful spaces and places can be powerful. Sometimes those memories are even strong enough to keep us in a place longer than we might stay otherwise. Many retirees continue to live in too-large homes, despite no longer needing the space, simply because it’s hard to let go.

Downsizing to a more modest home before retirement has huge benefits, both financially and mentally. A smaller living space might save you thousands of dollars a year in taxes, utility costs, and insurance costs, not to mention the savings in your personal energy. The upkeep required on a larger home can also take a mental toll over time.

DOWNSIZING? MORE LIKE “RIGHTSIZING”While you’re working or raising a family, owning a home that’s large enough to accommodate your needs comes with innumerable benefits. However, many of those benefits become burdens after retirement. Still, it’s hard for some to think about shrinking their domestic footprint.

It can be helpful to think of downsizing as “rightsizing,” instead. The end result is typically the same, but conceptually, this can help transform what may feel like a limitation into a positive, lifestyle-affirming strategy. Moving to a home that’s the right size for your retired lifestyle can result in a lower mortgage payment, lower utilities, lower property insurance, and lower overall stress.

After you’ve put in the effort to prepare for an enjoyable retirement, rightsizing your home for your needs can help you truly maximize the positive impact of all your hard work.

SMALLER DOESN’T ALWAYS MEAN CHEAPER Depending on what stage of life you find yourself, it may have been a while since you were in the market for a smaller home. Interestingly, the national median price for condominiums—which are typically smaller in square footage than standalone homes—is now higher than the median price for single-family houses.1 However, this needn’t be a barrier to lowering your expenses. You might just need to do a little research before settling on a retirement-friendly home.

Even if you’ve been a homeowner for a while, there are a couple downsizing guidelines to keep in mind. One simple trick to gauge what’s affordable for you is to check out what the payments would be on a 15-year mortgage. If the scheduled montlhy payments on a 15-year mortgage makes you a little uncomfortable, you may want to lower the price range you’re looking in.2

To find the best mortgage structure for you, consider your income sources and your time horizon. Structure your payment schedule in a way that is designed to work best for you, and don’t hesitate to reassess your home regularly to ensure it continues to meet your needs.

NEEDS VS. WANTS: THAT OLD CHESTNUT In a world where we’d like to think we can have it all, it’s never fun separating “wants” from “needs.” But when it comes to creating your retirement strategy, it helps to remember that the line between necessity and luxury has shifted over time. These days, people tend to categorize as necessities many things that their parents either never heard of or lived without.

Your idea of necessities and luxuries is highly personal and will most likely be different from those of your friends or neighbors. What one person considers a necessity may be a luxury for another. Even still, as you make these distinctions for yourself, it’s wise to remember that each item or activity one pursues has two costs: the actual cost in dollars and the opportunity cost, or what the money may have earned elsewhere, given the opportunity. By no means should you forgo all luxuries in retirement: simply strive for balance as you carefully weigh your approach.

HOW MUCH IS YOUR ENERGY WORTH? Rightsizing your life also comes with psychological benefits, as less domestic upkeep can be quite mentally freeing.3 Cleaning a larger house, keeping up with repairs, and overseeing yard work all require hours of valuable mental and physical energy each week. With less “stuff” to worry about, you’ll have more room to pursue what really matters to you.

It may be helpful to think of your energy like an asset. Assuming you have a finite amount of energy, where would you like to invest that energy to see the greatest return on your investment? Will you dedicate it to social activities, family visits, or finally writing that novel? For many, retirement is the first chance they have had in decades to dedicate themselves seriously to cultivating a favorite hobby or skill.

Retirement is also a perfect time to reconnect with old friends or further strengthen existing relationships with loved ones. With the daily grind out of the way, you may find yourself reaching out to former classmates or acquaintances you haven’t spoken to in years.

MAKE IT EASY ON YOURSELF Your retirement should center around enjoying a hard-earned lifestyle you love, not maintaining a living situation that no longer suits your needs and drains your finances as well as your energy. By preparing now, you can begin working toward a rightsized retirement that’s everything you want it to be–and then some.

SOURCES 1 Relocating.moneymag/index5.htm 2 Relocating.moneymag/index5.htm 3

IMPORTANT INFORMATION: Craig Price, CFP, CTFA, is an Investment Advisor Representative associated with Naples Wealth Planning, LLC (NWP), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). The content is the opinion of Craig Price, and may not necessarily agree with the investment adviser Naples Wealth Planning.

This material is provided for informational purposes only. Information is not intended to be and should not be construed as an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice and no investor should rely upon or make any investment decisions based solely upon contents of this material. Current or prospective clients should under no circumstances rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. Please keep in mind investing involves varying degrees of risk, and there can be no assurance that future performance of any specific investment or investment strategy will be profitable and you may gain or lose money. Past performance is not indicative of future results.

Capital Rock Financial, LLC d/b/a Naples Wealth Planning (“NWP”) only transacts business in states where it is properly registered or in compliance with applicable state regulations. NWP is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). NWP’s services should be considered in connection with its written disclosure brochure (i.e., Form ADV Part 2A), a copy of which is available for free by calling (239) 260-9386 or Email

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