If you’re planning to retire within the next year or so, you’re probably eager to find opportunities for supplementing your soon-to-be-fixed income. Receiving that last regular paycheck is known to trigger the anxiety of even the most financially prepared retirees. Will you really be able to make the money you’ve saved last for the rest of your life? Should you have saved more or traveled less while you were still working? Will you be able to afford all of the travels you have planned? Or did your past adventures price you out of those dream destinations?
Obsessing over the choices you made in the past won’t help your bank account or your stress level. Instead, try to focus on things you can do now to improve your situation moving forward.
One common tactic for freeing up extra funds in retirement is by downsizing or relocating to a more affordable location. If you’re open to expanding your horizons and decreasing your residential footprint, this strategy could increase your monthly budget by hundreds or even thousands of dollars. Of course, making a major move isn’t easy. It can be especially tough if you’ve created decades worth of memories in the same home.
While traditional wisdom says that downsizing is a great idea for anyone in their golden years, that simply isn’t the case as often as it used to be.
Before you put your house on the market and start touring model homes across the U.S., take the time to consider whether the returns of your move would really be worth the investment of your time and energy. Even if the smaller home you are looking to move into is less expensive, the difference may not be enough to justify the intense effort that goes into a move.
This is especially true when you factor in other costs. For example, you may have to put down a deposit to start you new utilities accounts. If you plan to move to a harsher climate, you may also see your monthly expenditures on air conditioning, gas, and water increase significantly as well. If the new locale is far away from friends and loved ones, estimate how much you can expect to pay in airfare to visit them a few times throughout the year. Unless your move would decrease your housing costs by a minimum of 25%, you may be wiser to stay put.
If you take all of these factors into account and ultimately decide that a move is the right choice for you, use these tips to make the transition as seamless as possible.
Get the timing right
To make your move as profitable as possible, you’ll need to get the timing right. Housing values can be rather volatile. You’d be wise to get familiar with the real estate market, paying attention to its ebbs and flows. Look for patterns that can inform your best time to sell. You’ll also want to make sure that the timing is right in terms of your own personal and financial goals. If preserving your wealth is a priority, deferring your move to a later date might be the best course of action.
Location, location, location!
Finding the right location for your next home is incredibly important. You may be able to find a beautiful home at a relatively low price in Alaska. But would you be okay with wearing your warmest layers year round? And seeing a lot less of your family and friends in your golden years? As you search for suitable locales, consider the likelihood of accomplishing all of your retirement goals while living in this area. Think about how you hope to spend your days. Try to envision yourself doing these things in your potential new town.
If a commitment to fitness is a top priority, look for places with plenty of hiking trails, sports complexes, and fitness classes available. Similarly, learning new skills and pursuing new passions is more easily obtainable when you live within a few miles of a community college. Want to spend as much time as possible with your grandchildren? Consider staying within a distance that can be easily traveled by car. Remember: if your children are still working, and your grandkids are in school, you might have to make the trip more often than they do. You could be doing yourself a favor (and potentially saving yourself a lot of money in unnecessary airfare) by staying closer. If, on the other hand, you plan on traveling extensively in retirement, living closer to a major airport could make your life a lot easier.
Most good decisions are not made in a rush. When it comes to a choice that will acutely impact your daily life, it really pays to take your time. If you find a location you think you like, there’s no reason not to try it before you buy it. Especially if you’ve already retired from the hustle and bustle of the 9-to-5! You’d be remiss not to spend at least a week in your potential new city. If you have the ability, you’d be even wiser to dedicate three or four weeks to exploring the town. Get a taste of what your day to day might look like as a member of the community.
To get the most authentic experience, skip the four-star hotel. Rent a comparably-sized home to get a more accurate idea of what it would be like to live there. If you’re really dedicated to the cause, try out a few different neighborhoods in search of your perfect fit.
Calculate your cost of living & build your new budget
Once you get serious about making the move, start looking into what your actual costs of living might amount to. Will you have to pay a HOA fees in your new neighborhood? If you are moving to a new state, make sure to consider how your taxes might change. How might your monthly budget need to be adjusted to make room for new transportation costs? Will you be subject to increased insurance rates, or higher grocery costs? Taking the time to plan your new budget before making any commitments will help prevent common hiccups as you adjust to your new lifestyle.
Getting ready for the move
Congratulations! You’ve pulled the trigger and made an offer on your new, smaller home. Now, the actual work of downsizing will begin. If you’re a big fan of spring cleaning, this process of decluttering will probably be fairly easy–if not fun–for you. If you’re more of a sentimental soul, it may be more difficult to part ways with certain belongings. Especially family keepsakes or heirlooms that have been a staple of your home for so long. Begin by sorting your items into categories, like “to keep,” “to sell,” “to donate,” and “to trash”.
Some more sentimental items might give you more trouble than others. Try reading The Life-Changing Magic of Tidying Up by Marie Kondo to gain a new perspective on dealing with these trinkets, keepsakes, and heirlooms. If the item in question doesn’t serve a specific purpose or spark joy, feel free to let it go without guilt. Your loved ones would understand.