In the many decisions facing federal employees, few loom larger than where to live in retirement. Some retirees seem to walk straight from their last day on the job onto an airplane. The desire to at last see the world after years of laboring hits them with full force. Others are content to simply enjoy a few quiet days at home before retirement life really gets going. 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 IS
When you think of your home, what do you think of first? The sound of little feet racing from room to room? Sharing your favorite casserole made from your grandmother’s recipe 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 recollections 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 for retirement can have huge benefits, both financially and mentally. A smaller living space might save you thousands of dollars a year in taxes, utility bills, and insurance costs, not to mention conserving 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 previous advantages 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 for retirement 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 house. 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 shouldn’t be a barrier to lowering your expenses. You might just need to do a little research before settling on a retirement friendly residence.
Even if you’ve been a homeowner for a while, there are a couple “downsizing for retirement” 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 monthly payments on a 15-year mortgage make you a little uncomfortable, you may want to lower the price range you’re looking in.1
To find the best mortgage structure for you, consider income sources and 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.
HOW MUCH IS YOUR ENERGY WORTH?
Rightsizing your life also comes with psychological benefits, as less domestic upkeep can be quite mentally freeing.2 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.
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.