It’s just the two of you now and your empty nest is feeling really big these days. Those four bedrooms you have to heat in the winter, the three bathrooms you need to keep clean, the hallways that echo when you speak — all of these things make you intensely aware of just how much house you own, and how much of it is currently going unused.
As you approach retirement, you may be looking at the possibility of downsizing. It’s not always an easy decision and the timing matters. Weigh these pros and cons before you decide to move.
Pros to Downsizing
You’ll Save Some Money.
It’s no easy feat to sell the home your kids grew up in, but consider all the money you can save.
Home insurance costs an average of $95 per square foot per year; maintenance costs roughly one percent of a home’s price tag — so a $300,000 house might cost $3,000 per year to maintain. According to the U.S. Energy Information Administration, the average heated square footage in Wisconsin is nearly 2,100 square feet. Why heat 2,100 square feet if you’re only using 900 these days?
While we could break it down with cost per square foot and average square footage per home, it’s pretty simple: The bigger the house, the most it costs… in mortgage, taxes, insurance, maintenance and utilities.
If your current home is paid off, you have equity, which can add a lot to your retirement assets. It may also mean you don’t have to take on a mortgage if you downsize.
You’ll Clean Less.
The pink mildew rings that show up in your toilet bowl show up whether everyone is using the hallway bathroom or nobody is using it. This means you can’t get away cleaning all the bathrooms and then letting them sit while you just keep up with the one in your master.
Unfortunately this concept isn’t just true of the bathrooms. Dust collects on every bookshelf. Pet dander clings to all carpets. Cobwebs happen in rooms that are used regularly as well as rooms that aren’t. Less space equals less cleaning.
You’ll Have Fewer Loose Ends.
If you have very little upkeep, it’s pretty easy to book an AirBnB for the weekend or buy a flash sale flight deal and head out on a whim. This is one of the thrills of early retirement.
If you’re coordinating with a housekeeper, a gardener and a dog sitter however, it’s a little harder to just lock up the house and jetset. A smaller place to maintain (and fewer bills to pay) translates to fewer loose ends.
You’ll Find More Amenities Elsewhere.
There is nothing more satisfying in summer heat than someone else’s pool. You get to swim in it but you don’t have to check the chemicals every day or clean out the bees with the mesh net or deal with frustrating phone calls when the filter has problems.
You may find, in your search for a smaller place, that there are many communities that offer a long list of amenities: pools, health and fitness centers, dog parks, etc. If you’re 55+, options abound. Many of them have planned activities and tons of perks. You’ll pay association dues but can wash your hands of all the maintenace.
You Can Look at the Market Differently.
When you bought your first house, you might have been thinking of the family you’d have — the candles you’d blow out around the kitchen table and the shoebox-sized bedroom you’d turn into a nursery. Now, you’re thinking about the moving process a little differently.
You no longer have to consider factors like the school district or making sure they’re plenty of room for your growing family. You can move to where you kids or grandkids are or move to where property taxes are null. You don’t have to decide on a location based on a commute to work and you can stick with single-level homes only if you want.
Cons to Downsizing
If You Don’t Have Equity or the Timing Isn’t Right.
If you purchased your home at the height of the market and it hasn’t come back yet, now may not be the time to sell. Talk to an agent in your area who will give you a good idea of what your local market looks like and help you forecast what it might be like in the coming months.
If you sell at the wrong time, you could lose a lot of money — something you can’t really afford to risk if you’re now living on your retirement. If moving means you’ll need to take on a mortgage, you’ll also want to carefully consider the financial impact.
You’ll Have to Set Things Up When the Kids Come to Town.
Trading the kids’ bedrooms to fund your trip to Europe isn’t quite as crass as it may sound. Whether they’re away at college or have their own lives now, they can do without their childhood bedroom set up just as it was in high school.
- If you chose to downsize, you have many options but all involve a bit of set up.
- Put together one permanent guest bedroom
- Buy an air mattress
- Install a murphy bed in your living room
- Spring for a comfy couch or a Hide-a-Bed and a set of soft sheets
You can still create a home that’s welcoming to your kids and other guests without having to keep all those extra rooms clean all the time.
You’ll Have Less Room for Projects.
If you currently have a three-car garage and you’re thinking of condensing to one, you’ll have to evaluate your priorities. Do you want a shop or large garage for the hobbies you’ve taken up in retirement?
- If you’ve recently learned how to weld or construct wooden furniture and need more than the tiny garage available at a condo, you do have options.
- Buy a smaller house on a large lot and add on a garage or shop area
- Build something that fits your needs
- Rent warehouse space nearby
- Prioritize or take up different hobbies
You’ll Need to Get Rid of Stuff.
It’s impossible to condense four bedrooms into two without A. Getting rid of some stuff or B. Renting a large off-site storage unit.
The problem is, it’s hard to get rid of things that have memories attached. No one is going to make you get rid of your high school yearbooks or your kids’ first pairs of shoes, but you can certainly donate old clothes, condense your kitchen equipment and sell some of the extra furniture. At this point, who needs that old homework desk in bedroom number three?
Your Entertaining Space is Limited.
You used to host the entire lacrosse team for Saturday night movies, but a smaller place won’t lend itself to quite the same crowd. Though you don’t really need enough room for the whole team anymore, not having the space to entertain will take some getting used to.
- Find a small house that has a large yard. Plan around the weather. If Saturday night movies are still in the cards, set up a sheet and a projector!
- Plan cocktail parties with appetizers where most people are standing and mingling instead of sitting around a dining room table.
- Accommodate small groups of close friends. You’ll love the conversation and you won’t miss the crowd.
Whether you decide to downsize or not, it’s ultra-important you talk to someone who knows what they’re doing. Whatever you’re looking for, working with an agent is the best and fastest way to find it.