As you approach retirement age, life is full of transitions. Your adult children grow up and move out on their own. You are preparing to say goodbye to full-time work for good. And if you’re like many baby boomers, you may also be thinking about downsizing your home.
According to a report by Zillow Group, 24% of recent home buyers were 60 or older—up 47% from 10 years earlier. For nearly half of these older adults who returned to the housing market, downsizing was a primary motivation.
What is downsizing?
When it comes to real estate, the term downsizing is pretty self-explanatory. This means moving to a home that is smaller than your current residence.
But for those starting their downsizing journey, finding a house, apartment or condo with less square footage is just the beginning. That̵7;s because a big consequence of moving to a smaller home is having less space to store all the stuff you’ve accumulated over the past few decades.
When is the right time to downsize?
Choosing to downsize your home is a deeply personal choice—one that comes with major lifestyle implications. But there are several signs that it might be a good time to make a move.
- Unused space. As your family grew, all those bedrooms and bathrooms were an absolute necessity. But as an empty nester, you may find that your home is bigger than you need. If you have a lot of space that isn’t used daily, downsizing can be a great choice.
- Reduced mobility. As you age, homes with stairs, narrow hallways and small bathrooms can become difficult to navigate. Downsizing offers an opportunity to move into a one-story home with universal design features – meaning you have a safe, accessible space to spend years to come.
- Change in income. When you decide to retire, you have to adjust to a new financial picture. Moving into a smaller home often means smaller bills, which can be helpful if your savings and retirement benefits aren’t quite replacing your full-time income.
- desire to move. Want to spend more time with your grandchildren who live in another state? Or exchange the cold winters in the north for the Florida sun? Retiring in a new city can serve as an opportunity to downsize in the process.
What are the benefits of downsizing?
Here are some reasons why you might want to downsize your home.
- Access to equity capital. Property prices are at record highs in many cities across the country. If you’ve owned your current home for any length of time, you can withdraw all of the equity when you sell. Since you’re buying a smaller home, you may end up with no mortgage at all (and money left over).
- Lower bills. Smaller homes use less energy. That means lower gas, electric and water bills – something you’ll appreciate in retirement.
- Less maintenance. With a smaller home, there is less space to clean, dust and vacuum. A smaller yard saves you hours of mowing and landscaping in the summer. And if you move into an apartment or condo, you have no exterior maintenance at all.
- More accessibility. When you downsize, you have the option of choosing a home that is handicap accessible. While you may not need it now, it’s a feature you’ll probably appreciate in the years to come.
What are the disadvantages of downsizing?
While downsizing can be a great option for older adults, there are still some downsides to consider.
- Home availability. In a seller’s market, the same factors that make it a good time to list your home can make it difficult to find a new one. With tight home inventories, you may have fewer options to choose from when looking for a new home—and the ones you do find may sell quickly.
- Adaptation to small spaces. When you’re used to a large home, it can be difficult to adjust to life with less space. For that reason, the mere thought of reducing the number makes many hesitate to move.
- Leaving memories behind. Your current home is filled with memories. It could be where you raised a family and watched your children grow up. And leaving it all behind can take an emotional toll. The same can be true for clearing out many of the possessions you’ve accumulated over the years.
- Moving costs. While downsizing will likely result in long-term savings, the moving process results in lots of upfront expenses. You need to have enough money saved for things like closing costs, home repairs and hiring movers – just to name a few.
How to prepare for downsizing
Are you ready to downsize your home? Take these steps to prepare before moving into your new living space.
- Fix your home. If you’ve lived in your current home for any length of time, it probably needs some TLC before you list it for sale. So fix that leaky faucet, add a new coat of paint, and look for other improvements you can make to increase your home’s resale value.
- Declutter. With less space in your new home, you’ll want to start going through your belongings as soon as possible. Keep the items you need and use often, donate, sell or give away the rest. Organization experts recommend getting rid of duplicate items, as well as anything you haven’t used in the last year or two. If you have a few collections, consider keeping a few of your favorite items and setting yourself apart from the rest.
- Limit inheritance. You’ve saved boxes of memorabilia, memories and family heirlooms to pass on to the next generation. But how many of them will your kids actually want (or keep when you’re gone)? To avoid saving too much, talk to your family members about the gifts you’d like to leave behind one day. Digitize your photo albums. And if your daughter wants great-grandmother’s cuckoo clock or fine china, consider giving these old gifts early. When you do, your family can start enjoying your precious items right away, and you have one less thing to pack for your move.
- Measure your furniture. You know how furniture always looks smaller before you get it home from the store? The same principle will apply to your downsizing journey. In large rooms, you can underestimate the size of large items such as sofas, tables and chests of drawers. Take measurements ahead of time to make sure they fit in your new home. If something gets too big, try selling or donating it before you move and replace it with a smaller item.
- Call your insurance agent. Before you pull the trigger on your new location, it’s always smart to call your Erie Insurance agent. Your local agent can give you an idea of how your move may change the level of home insurance you need and how much you will pay in premiums. And remember that unlike other utilities, moving to a smaller home doesn’t always result in a smaller homeowner’s insurance bill. That’s because there are tons of factors that go into determining how much home insurance costs, including the age, location and condition of your home and other personal information.
Find the right balance
Downsizing is a big decision and like all big decisions it’s important to find the right balance. When it comes to homeowners insurance coverage, you can trust our local, independent agents to help you make good decisions about your insurance coverage. Our agents are knowledgeable, caring people you can trust. They will make sure you have the protection you want and need – all at the right price.
ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home office: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York). The companies within the Erie Insurance Group are not licensed to do business in all states. See the company’s licensing and business information.
The insurance products and rates, if applicable, described in this blog are effective as of July 2022 and are subject to change at any time.
Insurance products are subject to conditions and exclusions not described in this blog. The policy contains the specific details of coverage, terms, conditions and exclusions.
The insurance products and services described in this blog are not offered in all states. ERIE life insurance and annuity products are not available in New York. ERIE Medicare supplement products are not available in the District of Columbia or New York. ERIE long-term care products are not available in the District of Columbia and New York.
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Your ERIE agent can offer you practical guidance and answer any questions you may have before you buy.