These are the financial reasons I have identified so far that would favor a downsize strategy for baby boomers:
2. Extra money to invest. If you can downsize to a less expensive home (isn’t that really part of downsizing?), you have the opportunity to take the extra cash and invest it for retirement.
3. No more yard work or outside maintenance. If you downsize into a condominium or active-adult community that takes care of the outside of your home, then you don’t have pay any extra to maintain your yard, fix your roof, or paint your house. Even if you just buy a smaller home, the outside maintenance costs should be lower.
4. Lower property taxes and insurance. Hopefully smaller = lower taxes and reduced homeowner’s insurance premiums.
5. Smaller utility bills. If you truly downsize to a smaller structure (fewer square feet of heated space), the dollar amount of your electric and gas bills should be smaller. Your water and sewer bills may also go down because they are sometimes proportional to the number of bathrooms you have in your home.
6. Less furniture to buy. You can sell (or give away) some of what you have and concentrate on fewer, nicer pieces of furniture for your new downsized home.
7. Reduced transportation costs. Part of a downsizing strategy can include moving closer to your workplace (e.g., an in-town condo) or closer to your children if they don’t live in the same area as you. If done right, this can lower your travel expenses overall.
8. Reduced overall cost of living. Let’s face it – some cities and regions are just way more expensive than others to live in. California and the northeast are two places that come to mind immediately. If your downsizing includes relocating to a less expensive part of the country (and you should keep an open mind about that), then your overall cost of living (food, gas, housing, taxes, etc.) will go down. In fact, in some cases your “downsizing” may result in you finding and affording a home in a less expensive city or state that is as large or larger than what you have now. This is a “cost of living” downsize as opposed to a physical downsize.
What other financial considerations for downsizing can you think of?
Photo credit: Laura Leavell