As retirement nears, many people reflect on whether leaving the workforce is also the right time for other lifestyle changes. While traveling, investing in passions, and spending more time with loved ones are common ways to enjoy the golden years, another trend is gaining popularity—retirement downsizing.
The deliberate choice to move to a smaller and more manageable living space offers a lot of benefits to retirees from greater financial freedom to a simplified lifestyle. However, choosing to downsize may not be for everyone and requires careful consideration before making any moves toward it.
3 Reasons Why Retirees Downsize
While downsizing for retirement can offer a lot of advantages, it’s important to make the decision purposefully. Weighing the options and considering if it’s the right choice for you and your retirement goals. Some common reasons retirees pursue downsizing include:
- Greater financial freedom: According to a Vlever survey, 40% of retirees worry they will outlive their retirement savings and 1 in 5 already have. Downsizing can help prolong your savings by selling your larger home, avoiding higher utility costs, and having a more manageable overhead that allows for greater resources to enjoy retirement.
- Convenience: Having a larger home means having more chores and repairs. Many retirees who choose to downsize want reduced maintenance and more efficient living with a house that's more manageable for them.
- Relocating: The house you have may have been perfect for raising a family. It could be close to schools, a larger yard, and a few bedrooms, but does it make sense to have it anymore? Many retirees take advantage of having an empty nest and choose to move somewhere that fits their new lifestyle, a better climate, and closer to activities they enjoy frequently.
Many times the reasons for retirees choosing to downsize can also include health reasons and having quality resources close by if driving is difficult. Other times it can be more personal and individual, but the three reasons listed above are the most common among people starting their golden years.
If any of the options above align with your current stage in life, the next step is to ask yourself some tough questions to determine if downsizing is the right choice for you.
Question #1:
How Would I Like to Spend My Retirement?
Likely the most important question and one you’ve thought over for years: how do you want to spend your retirement? While preparing for it, people tend to have less concrete answers like having more time for interests and hobbies and working to ensure a more comfortable retirement. As you grow closer, a more solid idea takes shape, but how would downsizing affect how you spend retirement?
What are your retirement lifestyle goals? Is it to be physically closer to family and friends? More affordable cost of living? Better weather or access to better healthcare and hospitals? How you answer these questions can tell you whether or not downsizing for retirement works for your goals or not.
Question #2:
How Much Space Do I Need?
A larger home makes sense when you have a family or are planning for one, but as the kids move out and begin families of their own it may not make much sense to hold onto all that space.
To get a sense of how much space you really need during retirement, begin by decluttering and getting rid of the items you’ve collected over the years. You can really get a sense of how much space you have after decluttering and selling things around the house you no longer need.
After that, ask yourself about your retirement lifestyle expectations and their space requirements. Do you really need more than one bedroom, a large family room, or a large dining area? What about a second story to the house or a larger garage? If the house you live in is far more than what you need for your retirement plans, perhaps a downsized home is a good option.
Question #3:
What New Home Do I Have in Mind?
If your current home doesn’t meet or exceed the needs of your retirement goals, the next question is what home would? Would a retirement community meet your needs or if looking for adventure, an RV or houseboat? Expert guidance could come in handy here, such as best places to retire lists or exploring downsized home options with professionals in that industry. Another option is to look at customizing floor plans and have a downsized home built for you that is designed to meet your retirement goals.
Question #4:
Where Would I Like to Retire?
Where to retire is a big decision. It can be tempting to jump to the warmest place or where a lot of retirees are, but what makes the most sense for your financial future, medical needs, and retirement goals? For example, taxes can quickly become a burden when living on a limited and fixed income. So, what states are the most tax-friendly for retirees? Washington, Idaho, and Oregon are consistently ranked as tax-friendly and can make for an ideal retirement location because of their healthcare systems and range of activities that satisfy an array of interests.
According to the 2023 Senior Report, published by the United Health Foundation, some of the Pacific Northwest benefits are that Washington, Idaho, and Oregon are all in the 20 healthiest states for retirees. It’s an unsung advantage to relocating to any of those states, the access to better healthcare, tax rates that are more retiree friendly, and a healthier lifestyle. Another advantage to note is that these states are also within HiLine Homes’ service area, meaning you could have a custom home built that fits your downsizing and retirement goals.
Question #5:
Would My Costs Lessen if I Downsized?
On its surface, yes. Your costs could lessen if you downsized, but that depends on how you make the step.
Firstly, how much can you afford based on your retirement income and what are your current expenses? Then, determine the costs for downsizing like selling your home and the downsized future home costs. You should also understand the potential cost reduction, and compare them to your current ones to see how much is saved. Listing out your current costs and future costs with a downsized home in respective categories (mortgage payments, utilities, monthly bills, etc) will give you a clearer picture of the cost reductions, and financial benefits of downsizing.
A Golden Opportunity
If answering these questions shows that downsizing is the right move for your retirement goals, you should explore having a custom home built to fit your needs rather than looking for another new house. HiLine Homes’ efficient home-building process ensures a streamlined construction approach that is convenient and affordable at every step. Having a custom home built for your retirement means a house that is designed to fit your retiree lifestyle and can accommodate your golden years throughout them.
To get a better sense of the cost reductions and savings downsizing in retirement can give you, we encourage you to read this guide that outlines the financial benefits of downsizing:
