The Upside of Downsizing
The Upside of Downsizing
Four questions to consider when moving to a smaller home, which can free up money to help you meet other financial goals.
As people grow older, they often discover that less is more when it comes to housing. Either they find that they no longer need as much space—or doubt whether it’s worth maintaining a larger home. Some might want to live in a retirement community or be attracted to city life. Additionally, there can also be significant financial advantages to downsizing.
In addition to the profit you could receive from selling your home, your mortgage will likely be lower. Your property tax and energy bills are also likely be lower in your new, smaller home.
The savings from downsizing can be redirected into other areas of your life, such as helping to pay for your grandchildren’s education or bolstering your retirement income. However, you need to consider the financial aspects of the move.
How will the move affect my budget? You will need to consider more than just the purchase price or rental cost of your new home. You should compare the cost of living between your new and old locations. Also, factor in the cost of moving all of your belongings. A financial advisor can help you determine what factors to figure into your budget, and how the numbers could affect your progress toward other financial goals.
Will my income be affected? When moving into a new place, you may also think about making other changes as well, such as working less or not at all. Be aware of how the changes might affect your income needs and long-term plans. A financial advisor can help you establish a strategy to draw down income from your investments as you begin your next chapter in your new home.
What if I sell my home before I purchase a new one? If the closing date on your old house and the move-in date for your new place do not line up, you may need to find temporary housing. This situation could create a need for short-term financing, but there are a number of credit solutions that can potentially help you cover this cost.
Where can I invest the money I save by downsizing? First, think about where the money is most needed and how it could help you pursue your other goals. Are there any immediate needs you should finance? Could you take a portion of the proceeds from the sale and treat yourself to a vacation? Perhaps you’re considering upping your charitable giving or starting a small business. You may have a smaller home now, but your opportunities have expanded. DEBRA GREENBERG, a director in the Personal Retirement Strategy & Solutions Group at Merrill Lynch Wealth Management
For more information, contact The Menashe Morley Group in the Rancho Santa Fe office at 858-381-8114. The Menashe Morley Group, serving the community for over 30 years: David Menashe is a Senior Vice President and Wealth Management Advisor, and Bruce Morley is a First Vice President and Wealth Management Advisor and John Naviaux is a Financial Advisor for Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered broker-dealer, Member SIPC, and a wholly owned subsidiary of Bank of America Corporation. Investment products are not FDIC insured, are not bank guaranteed, may lose value. The Menashe Morley Group can be reached at 858-381-8113.
Photo by Andy Templeton
One Comment
Sebastian
That is a great argument for downsizing! Quick question, what do you think about putting things in storage while you change homes? I’ve been looking around and Closetbox (https://closetbox.me/locations/san-diego/) looks pretty convenient and easy to use, especially since they pick up and drop off your stuff for you and let you keep track of what you have in storage, online! Any thoughts?