Senior real estate: Downsize sooner rather than later

As a Realtor who specializes in senior real estate, I try to stay on top of news and trends that could affect my clients. Recently, an article by The Wall Street Journal headlined “When Should Retirees Downsize Homes?” caught my eye.

The article suggests it pays -- financially and emotionally -- to downsize sooner rather than later. By downsizing you can reduce your monthly expenses, even if you are moving from a home you own to one that requires monthly payment. Downsizing sooner in your life can also be a good idea because moving is a physically taxing and mentally exhausting undertaking -- and will only be more of a strain the older you get.

The financial benefits of downsizing in senior real estate

As The Wall Street Journal points out, people sometimes believe they will save money by staying in their home longer because the mortgage is paid and an apartment or condo with association fees would lead to higher monthly costs. But owning a home comes with hidden expenses.

WIth a monthly bill, you can plan your finances. Maintaining your landscaping or paying for repairs on your furnace or your roof, however, are are expenses that you may fail to adequately represent in your budget.

Your home’s sale could supplement your retirement funds. If you do sell your family home, you can take the proceeds from that sale -- minus your expenses for moving -- and add it to your retirement savings. That money can continue to grow, and result in larger allocations for living expenses over time. Depending on the figures, it could mean thousands more per year available to meet your needs.

You can eliminate/reduce your property tax liability. By living in a rental, you could eliminate your homeowners’ insurance and taxation expenses. If you buy a smaller home or condo, you could target an area with much lower tax rates.

If you’d like to better evaluate the financial benefit of downsizing, the Boston College Retirement Center has a tool that can help at squaredaway.bc.edu. Visit the site and click on the “Housing” link at the bottom of the page.

If you’re downsizing, you might be weighing whether to move in with family (Read my article on buying a multigenerational home) or to a 50+ community, among other choices.  This will likely be a difficult decision -- senior real estate transitions are never easy -- but if you take the time to think through your decisions and seek out the guidance of an expert, you’ll do just fine.