Upsize your retirement
Selling your home could boost your nest egg — but is it worth it?
A 2023 report from investment firm Vanguard estimates that about a quarter of Americans age 60 and over could move to a cheaper housing market and use the equity in their homes to upsize their retirement savings — making retirement more secure and enjoyable.
Those with home prices near the national median could have cleared about $99,000 in equity, on average, in 2019 (the year the data was gathered). Homeowners in top-priced markets could have cleared an impressive $346,000, on average.
Here's the steps to take you're considering selling.
1 Assess the market Selling (and potentially downsizing) your home and pocketing the equity is a good strategy in a market where you can make it work. This is easier in pricier housing areas, when you may be able to trade your high-value home for a smaller place in a more affordable market.
Selling property also isn’t a slam-dunk task. “Just because you want $800,000 for your home, the market may not care,” says Andrew Herzog, a certified financial planner in Plano, Texas.
Additionally, you have to make sure you can afford to buy a replacement home that you like. Check home prices in your desired location before putting the “For Sale” sign out.
2 Research the cost Make sure you understand property taxes and the basic costs of living in your desired locale, as well as the costs for selling your home. If you’re picking up a mortgage on the new home, there will be closing costs, and rates are probably higher than when you last purchased property. All these numbers could chip away at your net sale profit.
In an area with a very low cost of living, do some digging to make sure you understand what to expect from the municipality. Are the streets and sidewalks maintained? How is garbage collected?
3 Test-drive the location If you’re buying in a new city, visit in every season to ensure you like the area year-round, even in the snow or blazing sun.
Vacation there if you can.
“Every area has its negatives,” Ralph Bender, a CFP in Temecula, California, says. “You have to find out what they are before you move there and be prepared to deal with them.”