When Is It Time to Downsize Your Home?
Baby Boomer Population
There are approximately 76 million people born between 1946 and 1964, so another baby boomer turns 50 every seven seconds. As such a large group of people near retirement age, many are making plans as to how to stretch their income and live comfortably. This has caused many people to consider downsizing their homes and perhaps also moving to a different location.
For most people, their home is their most valuable financial asset. The statistics for the homeowners age 50 and up show that 80 percent are homeowners, and the bulk of them have home equity.
Many people have their homes paid off. However, only 17 percent of Americans over the age of 55 believe they will have an adequate amount of income to live on in their retirement years. Some people work extra years or seek part-time employment for the extra income.
G.I. Generation vs. Baby Boomers
The G.I. generation avoided debt and saved money, so combining money (usually a tradition pension) with social security provided adequate income for their retirement years.
Baby boomers, on the other hand, have often faced vanishing 401(k) money and other funds they have invested unwisely. In addition, there is the possibility that Congress will reduce Social Security benefits. As a baby boomer, I find that very annoying, as I have worked since 15 years of age contributing to that fund.
Many baby boomers are willing to shoulder too much debt, which keeps them working longer or having less retirement income. However, many other boomers plan to move to a smaller home and seek a less complicated, less expensive lifestyle.
Financial Reasons to Downsize
People typically decide to sell their homes for financial reasons or practical reasons. With proper planning many people upgrade their home through the years, so they can receive an optimal price when they decide to sell.
More than 80 percent of people between the ages of 50 to 64 have an adequate amount of home equity. The goal is certainly to reduce your mortgage payment, but it is ideal to eliminate a mortgage altogether. Purchasing a smaller house with a smaller mortgage is financially beneficial, which increases your financial security.
Some people find this difficult for sentimental reasons if they have lived in the same home for many years, especially if they move a long distance away. While downsizing makes financial sense, it can be difficult for some to move, make new friends and learn their way around a new community.
Empty Nest Syndrome
When children grow older and move out of the home, many couples find that they simply have more square footage than they really need. Often they have bedrooms that are not being used anymore, or they may have a large yard that requires a great deal of work.
Home maintenance is much easier in a smaller home. Moving to a smaller home or condo easily reduces these problems. Additionally, in the senior years many people lose their mates. A senior citizen who lives alone often moves to a more functional setting.
Moving in Retirement
Some people enjoy moving into a retirement community with people of their own age. Many of the retirement communities are near beaches and golf courses. There are many benefits to living in these communities, such as new friends and senior community activities. There is no yard-work and many seniors enjoy this carefree life. Health problems are another reason that people are drawn to retirement communities. For example, the stairs in a two-story home may become a big challenge. It is important to choose a community that is designed for people as they age. Some independent living facilities also offer cleaning and dining services.
As criminals often prey on the elderly, retirement communities also often have locked gates and a guard at the entrance. This provides security at night or when you are on vacation.
Many baby boomers have been attracted to college towns, particularly in the South. Some people like to start a second career, which takes further education. This choice also offers entertainment through clubs and other activities, such as golf.
Other people want to live in a warmer climate when they retire. They are tired of shoveling snow, and many choose a sunnier climate where they can play golf or just take walks on pleasant days. The cost of living is also lower in many of the southern states. As an example, certainly a lower heating bill is a plus. Florida and Arizona are common choices.
The Benefits of Downsizing in Retirement
The reality is that if you are getting close to 50 and have not made a retirement plan, then it is time to make plans as well as, perhaps, lifestyle changes. It is difficult to work extra jobs as you age, so the earlier you plan the better your chances are to have adequate income for those retirement years. You may think twice about buying that new TV or boat. Making wise financial choices now will help you tremendously in the future.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2014 Pamela Oglesby