Don’t Put Off Retirement: Downsize Up!

In our heart of hearts we have always known that the old adage is true:  the best things really do come in small packages.  But this is America, where we have soaring hopes and dreams.  For quite awhile most of us bought into the notion that “bigger is better”, so we just had to have the super-sized Hummer parked in the three-car garage of our “McMansion”.

Not so long ago many of my baby boomer clients were anxiously anticipating an early and long retirement. Now these same clients find themselves wondering if, when and how they can ever afford to retire in today’s economy. College costs for their children have increased dramatically at the same time that stock portfolios, retirement account balances and pension fund values have plummeted or plateaued. This is particularly troubling for clients in their 50′s and 60′s who can expect to live well into their 80′s or beyond, but who have also seen their savings diminish, earnings flatten, and confidence in social safety net programs erode away. Many have trouble just paying monthly bills, and simply can’t afford to start or increase payments into investment or retirement accounts.
The good news for many people is that the answer may literally be right at their front doorstep! If you are contemplating retirement, but don’t see how to achieve your economic and lifestyle goals in today’s economy, ask yourself the following questions:

  1. Is your current home larger than necessary?
  2. Now that your children are grown, does maintaining your current home help or hinder your desired lifestyle?
  3. The difference between your home’s value and the amount needed to pay off any mortgage is known as “home equity”. If you could access your home equity and invest it, would this help achieve your retirement objectives?
  4. Does paying your real estate taxes, utilities, homeowner’s insurance, and mortgage, if any, significantly deplete your spending/saving power?
  5. Have you set money aside to pay for the inevitable future cost of roof replacement, driveway reconstruction, septic repair, HVAC systems replacement, home siding repair and the like?
  6. Would you benefit from living in a community where snow removal and home maintenance are taken care of for you?

Depending upon how you answered these questions, you may wish to consider the concept of ‘downsizing’, (i.e., selling a large, expensive and difficult to maintain home for one that is more modest, inexpensive and efficient).

While the “American Dream” of retiring early and in comfort has become much more difficult to attain in recent years, for many baby boomers downsizing to a smaller, more affordable home might be just what is needed for them to achieve their desired degree of security and peace of mind heading into their retirement years. I call this concept “Downsizing Up!” because it allows many people to exchange big, expensive and labor intensive homes for a more relaxed and care-free lifestyle, or at least to enhance the sense of security that comes from having lower bills and a larger “nest egg”.

To see whether downsizing is right for you, a logical first step would be to consult with a local realtor who can evaluate your home’s fair market value. He or she can also help you examine alternatives for your replacement home. You should also seek the advice of a qualified financial advisor who can help you find the most effective means of investing your net house sale proceeds and anticipated monthly cost savings.


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The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.