Pros and Cons of Downsizing
Downsizing is a great way to shrink your cost of living, which can help you get by in retirement or free up funds for saving and investing. Think it through carefully, though, before taking any action. You might start by considering how much of your home you really use and need, how easy or hard your home is to maintain, and how high taxes are in your town and state.
There are many benefits to downsizing. For starters, if you move to a less costly home in your area — or further, to a less costly region entirely — you can end up spending much less in mortgage payments, property taxes, home insurance, utilities, maintenance, repairs and so on. All that money saved — and it could be many thousands of dollars per year — might be invested in retirement accounts, strengthening your future financial security. Or it could get you out of debt, if you’ve been carrying a lot of credit-card or student-loan debt.
A new location might offer other benefits, such as better health care, or easier access to ski resorts, fishing streams or golf courses. College towns attract many downsizers with sporting events, arts performances, lectures to attend and courses to take. Moving into a city might let you dispense with a car and access necessities and entertainment on foot or by public transportation.
On the other hand, you might not want to downsize if you need room for friends and family members to visit regularly — or if they need a place to live for a while. You also might not want to move far from your social circle and support network.
A final consideration is the current real estate market. If you do want to sell, waiting for a seller’s market would maximize your gain. Alternatively, you might stay put and rent out some space in your home in order to generate income.
Learn much more about moving, real estate and real estate investing at our sister site, Millionacres.com.