Last Updated on May 1, 2023 by Luke Feldbrugge
“Should I downsize my home?” is a question retired Baby Boomers are asking with increasing frequency. It’s not, however, just for retirees. Downsizing your home can work for you for a lot of reasons. If you are simplifying your life, looking to enhance your income, or just taking a break from your current trajectory, a small home and downsized lifestyle might be for you.
Going smaller, rather than going bigger, requires that you be a bit of contrarian. You aren’t afraid to buck the system that says we need to supersize our houses, our belongings, our food…everything. It takes a bit of courage, and you will need to look at your life differently, but the benefits of downsizing can be life changing. Who knows, once you start scaling back, you may want to continue? Going smaller is an evolution, and maybe it’s time to evolve.
Downsizing Triggers: Life Events That Can Begin the Process
Big decisions never occur in a vacuum. Life events push us from our comfortable place, and prompt us to make changes. Here are some of the things that may help you answer your question “should I downsize my home. Even though downsizing is for everyone, a lot of these are probably more appropriate for people who are retiring.
You can make a pretty good case for downsizing your large home when you look at the money you will save. With a smaller house and property, you can save a lot of money through:
- Smaller monthly mortgage payments
- Lower homeowners insurance payments
- Reduced utility bills
- Lower property taxes
There are other ways to save money when you downsize, but these are the big four. Downsizing allows you to shift your money and align them with your new priorities. Maybe you want to use the extra money for travel. Perhaps the money and time savings allow you to pursue hobbies that you’ve been putting off. You could even use the extra money to contribute to your retirement nest egg.
You could argue that reducing the maintenance you need to do for a smaller property is a money saver, but really it’s a time saver. Fewer chores, less upkeep, less yard work and fewer DIY projects will give you more time to pursue the things you want to do. Added time, like more money, is a valuable resource that can really make your downsized lifestyle amazing. Imagining having both the time and money to travel or pursue one of your other dreams that have been on the back burner.
Less maintenance also means less stress, less anxiety. Face it, when you’ve got maintenance on your to do list, it’s a distraction from everything else. You worry about getting it done. You worry about how you are going to get it done. If you are hiring someone else to do maintenance, you’re wondering how you are going to pay for it. It’s an ongoing list of anxieties and it never seems to let up.
Over time, maintenance can eat up your time and your peace of mind.
Aging in Place
If you haven’t seen the phrase “aging in place” yet, it’s a reference to houses that are laid out so people can continue to live there easily as they get older (think fewer stairs, wider doorways, etc.). There’s a useful checklist to look at: the Aging in Place checklist. This will help you evaluate a house based on your ability to live there comfortably as you get older. There are some surprises here. Did you know that the way the walls are painted can help retirees navigate the house by enhancing depth perception?
Even if you don’t use the checklist, finding a smaller home that is easier to navigate can be a big help as you get older. There are even home inspectors who specialize in analyzing a house for buyers with mobility issues.
Having your kids move out is another reason to think about downsizing to a smaller house. Once the last kid leaves, you may look around, see a bunch of unused space–bedrooms and such–and conclude that the smaller place you always wanted is now within reach. And if you had a lot of kids, that means there’s probably a lot of extra space in your larger home.
The drawback is, of course, the possibility that some of the kids might move back in. There are two ways to begin that conversation:
- “If we downsize, what happens if Ben decides to move back in?” This opening could curtail your downsizing plans.
- “If we downsize to a smaller house, Ben will realize that there is no place for him at the new house and find some other arrangement.” This strategy could further, and even accelerate, plans to move to a smaller place.
As we mentioned, retirement is the big one. The Baby Boomers have been retiring for about a decade, and they began leaving the workforce in droves during the pandemic. It’s a huge change to leave the workplace after decades, and it causes many to re-evaluate their priorities.
If retirement is making you consider less square footage and thinking about making an adjustment, you’re not alone. Almost half of all Baby Boomers (46%) selling their homes in 2017 were downsizing to smaller houses.
So how does downsizing shape their golden years, as a strategy and as a lifestyle? In the best of all possible worlds, it opens up opportunities to be the best that you can be (there, we said it).
- Travel – The opportunity to travel is probably one of the most common reasons for retiring. Of course, if you will be spending a lot less time at home, you probably don’t need as much space. The extra money you get from downsizing will find plenty of ways to get spent if you start traveling around the U.S or to even more exotic locations.
- Warm Winters – The opportunity to live somewhere warmer exerts a strong pull on retirees who live north of a certain line. Even the most diehard winter sports enthusiast can get a bit tired of the white stuff about March 1, and the prospect of living in a warm climate for a month or more is enticing. A lot of snow birds downsize one house into two smaller ones: one for their home and one for their warm sanctuary during the winter months.
- Grandchildren – The opportunity to live near your grandchildren is difficult to pass up. If they live far away, a visit twice a year isn’t going to be enough. Spreading more time with them and your family members is priceless. The years of pursuing your career may have taken you some distance from your kids and grandkids, so retirement is a great time to consolidate the family and reunite them if possible. Downsizing gives you that possibility.
- Back to the City – The opportunity to be hip again is irresistible. Ok, maybe you won’t regain your hipness, but living in the city in a loft can open up an entirely new lifestyle of museums, restaurants, plays, concerts and art. You moved to the suburbs once upon a time; now it’s time to go back to the city where you belong. One warning: if you are downsizing to save money, moving to a loft condo downtown may not solve the particular problem.
Downsizing your life can be an important step when your life gets difficult. In the case of a divorce, the large house may not be a good fit for either party and so both of you decide to downsize. Perhaps you’ve become widowed, and the old house is full of memories and it’s time to move on.
In the case of a financial downturn, downsizing may be the only way to protect your equity in your home. You know you can’t keep your current house, but you don’t want to lose the money you’ve invested to the bank by defaulting, so you downsize. Likewise, in the case of bankruptcy, downsizing your home and your life may be an important part of your plan to get back on your feet.
In this way, downsizing your house answers a lot of different needs in your life. It can help out, even when it hurts. Whether it’s broadening your horizons or helping you fix things when life takes a bad turn, downsizing is useful.
As you examine your downsizing options, it’s important to get a good sense of what your equity is in your current bigger home. It might be more than you think. In one of our recent market updates, we reported on the state of equity in the housing market. During the pandemic, home values shot upward, thus accelerating a lot of equity in recent years. Right now homeowners are sitting on more equity than ever, with the average household equity hitting its highest level of $320,000. That’s the 2020 number. Recent research shows that it’s gone up by an additional $60,000 since then.
If you are retiring and have lived in your home a long time, it’s a good idea to get a re-evaluation your property values. That might help you decide to sell your home and downsize.
If You Choose to Sell, Homes for Heroes can Save You Money
If you have enough reasons to downsize your family home, it’s time to get some help. If you are in one of our hero groups – teachers, healthcare professionals, firefighters, EMS workers, law enforcement members, or military service personnel – we want to help you. Our real estate teams consist of real estate agents, mortgage lenders, inspectors and title companies. Sign up today to learn more about how we can help you sell your current home and buy your new place, and if you do both with our local specialists, the average savings received by our heroes is $6,000. Our services and savings also extend to retired heroes in all of our hero groups.
When you buy or sell using our dedicated teams, they contribute to a Hero Reward check that you receive after closing. It’s our way to say thank you for your work building and protecting our communities. It’s a great option for starting your downsizing journey.