Decided to Downsize, Now What?

Decided to Downsize, Now What?

After years of working, you finally receive some hard-earned time off to live your life as you see fit, as long as you can afford it. To combat the growing costs of living on a fixed income, seniors are downsizing once they retire. The smaller living space usually means a smaller mortgage, but there are other benefits to downsizing as well.

Once you find the right-sized home, you might be left wondering what in the world to do with the home you lived in for years. There are three directions to go: selling the home, renting it out, or keeping it within the family for future generations to use. Find the option that’s best for you and your retirement.

Sell Your Home – Profit Now, Save Later

By far, the easiest choice is to sell your home when you downsize. Cashing in on the equity of possibly your greatest investment makes sense once you start to look at the cost of living and your budget. Your property, meaning the home and primarily the land it sits on, is an investment that appreciates over time, building value year after year, according to Investopedia.

You could fund your move or your next big purchase with the profit made from selling the home. Reach out to a local real estate agent to receive a market analysis and get a better idea of the potential payout you could receive. If you’re leaning toward selling, you’ll also save yourself from the future expenses of homeownership.

For example, you’ll no longer have to pay for insurance, upkeep, or taxes once you sell. Plus, you could sell it fully furnished, avoiding extra moving or dumping costs when you finally head out to your new home. Every dollar you save or make is important at this stage, too, which is why people also rent out their homes.

Rent Your Home – Extra Work for Extra Money

Choosing to hold onto your home can lead to financial challenges now and later. That is unless you’re receiving monthly income from tenants to offset expenses and line your wallet. Becoming a landlord in retirement is a lot of hard work, though, so don’t make this move without careful consideration.

Owning a successful rental property requires you to be prepared and ready to make repairs happen as soon as possible, and you need to have a savings account dedicated to these emergencies.

Minor setbacks should never impact your overall retirement. Choosing not to sell while downsizing means you’ll take on the cost of homeownership for two properties. Be cognizant of these costs when you’re shopping for a smaller home, and keep your income pre-rental in mind. You’ll need enough cash for a down payment on a new home on top of your monthly expenses.

A lot of factors come into play at this point, so it’s vital that you set a budget and find an affordable home before committing to any other expenses. Weigh the risks and possible profits against your savings and time. Besides, if being a landlord isn’t your cup of tea, you can always give your home to your loved ones.

Keep Your Home – Hold Family Close

Holding onto your home when downsizing gives you the opportunity to not only retain a valuable asset but also to keep a part of your family’s history. Gifting family with property is common, according to LawDepot, but there are many ways you can go about doing it.

If you choose to name an heir or heirs after death, you can still use the home as you see fit. So, you can summer there, rent it out, or host family holidays in the larger home. There are also a number of ways one can go about giving the home to the family before passing.

You have to make a lot of tough decisions through life, but choosing what to do with your home doesn’t have to be one of them. Whether you sell, rent, or keep it in the family, do what will lead to a happier, healthier retirement.

Image courtesy of Pixabay.