For many people working toward retirement, downsizing their homes is part of the plan. And it can be a wise move to free up money for retirement and meet future physical limitations. But there are several difficulties that make this process challenging emotionally and financially. If this is in your retirement plan, here are a few tips to help you make the best transition you can.
Get Realistic Estimates
Many homeowners don't have an accurate assessment of the value of their home or the cost of the new one -- and that number can be constantly shifting. But if the cost savings from buying a smaller home is a large part of your retirement plan, you need to ensure that you are relying on correct values. Start by researching the listing and sales prices of similar homes in your area and talking with two or three real estate agents or an appraiser to know what yours is likely to sell for. Then do the same research on your intended buying market.
Know the Costs
Neither buying nor selling is usually free when it comes to real estate, and this process can cost thousands more than you expect. As you talk with real estate agents and other professionals, find out what the costs of selling will actually be -- including commissions, closing costs and any repairs needed to sell your home. If you have specific remodeling needs for your new home, price those into your costs for buying. While you're at it, talk with moving companies about the cost of physically moving your belongings (especially if it's long distance) to avoid an unexpected hit to your bank account.
Visit the New Area
If you're not staying in the same location, take the time to visit your intended new town more than once. You will be leaving a lot behind if you've lived in your old home for many years, so get to know your new area to start building a sense of "home" there as well. Exploring the surroundings will help you find advantages and benefits to the new location. Talk with neighbors or join similar clubs as you have in your old area -- even before you move. Do some hiking, window shopping or explore the local farmers' market and spend time getting to know your new home so you have something to look forward to.
Find a Special Perk
If you're leaving a house you loved, it's important to find something specific to love about the new one you choose. This special asset can be anything that really speaks to you, such as a remodeled kitchen, a beautifully landscaped yard, or a nearby park. Look for a home that has something your old one doesn't. If you have extra money in the budget, consider adding that special perk yourself -- remodel the master bath into a spa or add an outdoor room or a custom-built sunroom. Giving yourself a new treat can help ease the pain of leaving other things behind.
By using these 4 tips before you actually make the move to a smaller home, you can help protect your retirement financially and make it a more pleasant experience emotionally.