Downsizing in Retirement | Pros and Cons
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- Опубліковано 20 бер 2024
- This video discusses the clear pros and cons of downsizing your home in retirement. It also discusses why, in some regions in the US, selling a large home to buy a small home won’t save money.
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.
Don’t worry about the market. It’s like trying to time the stock market.
Sell when your life dictates.
A house is just stix and bricks. Memories are in your heart and in your head.
Downsized to in-city condo in retirement and never looked back. Sold the vacation house. We made a commitment to live as stuff/crap/toy free as possible. We can age in place with elevator access, hospitals, shops, etc. all within walking distance. No maintenance lifestyle and living light has definitely benefitted our situation.
As you age, the need for reliability of the elevator increases.
Condos and apartments - warehouses.
We are downsizing and moving to a 55+ community near the beach. Moving 1700+ miles away
@@kevinh5349 not sure what you mean by warehouses why would you call condominiums and Apartments warehouses?
I have not owned a home in many years, and I’m fine with that. Over two years ago, I downsized from a two bedroom apartment into a one room studio. The process was physically and mentally exhausting, but well worth the effort. I am 69 years old and both of my parents are still alive, so I am currently committed to living near them. And I had my son late in life, so he is only 28 and married last year. I am portable to move wherever my son and daughter-in-law end up and they want me in close proximity. I am enjoying my minimalist lifestyle. Freedom!
Well, my house is 690 ft.². I've downsized enough :-) I never upsized. And I'm doing everything I can to make my yard work easier and easier. Eventually I'll higher it out but for now I can do it.
That’s what i need, a house less than $1000 sq ft so my mortgage payment can be even less than a rental payment. It’s just me now
The best reason to downsize is so that your kids DON'T try to move back into the basement.
Amen! 😄
I guess but also no room for them to visit
We were just going to say that 😅
😂😂
And your no longer expected to host everybody for holiday meals :) :) :)
With insurance and taxes going up most every year makes sense to sell and downsize when retirement kicks in
Our many friends who retired before us UPsized so they would have more room when the kids visit. Then they realized that the kids do visit but not nearly as often as they thought. After all, the kids have jobs, kids in school, and the spouses' family not to mention sometimes they want a vacation that does not include going to Mom and Dad's.
The only thing I cared about when I owned a home was the trees - especially the ones that I planted. A single family home for a single person can be stressful.
I go visit the 100 Redwoods that I planted 2 houses ago in 2003. Nice to see them but not have all the work. But then I'm planting an orchard now that I'll probably not see to maturity. I sense that there's lots of us that feel connected to the trees we plant.
The only thing, I will miss when eventually sell my house, is the orchard I have planted through the years, they are family...
In a bad storm, trees are your worst enemy.
@@Gary65437 And during a prolonged power outage firewood is your best friend.
After my retirement, I downsized. My elderly father downsized. I moved closer to him.
You hit the nail on the head, Geoff. There is a lot to consider.
Sure enjoy your cadence and the wisdom you impart to all of us.
A large home can create burdens from everyday chores as you get older that weren’t a big deal when you were younger. If you aren’t satisfied with hiring outside help, even if you can afford it, it may be less of a burden to downsize to a home you can still manage on your own. Smaller garden, fewer rooms to clean, etc.
Hi Geoff, I am trying to downsize and sell my home here in Texas… It has been very difficult because of the size… What’s killing us down here or is CAR INSURANCE home insurance and taxes… Thank you for your videos, and Hardwork. You truly are an outstanding individual and PROFESSIONAL.❤
Lots of good information. Thanks for creating this video. Downsizing is a tough decision. Our home taxes and such are largely fixed because of property tax laws here, and home maintenance fit well within into our retirement budget. We have family in 2 states so we would not want to choose to be close to one and further from the other. So, for now we are staying where we are. We know where every store is. We know and like almost all the neighbors for blocks. However, we will continue to travel places to see what is to see in the world. So maybe find a better option.
We are not only downsizing but we are downsizing and relocating! Time to sell and old house and buy a new one at the same costs… just in a different state.
In my city there is no advantage to downsizing. i can sell my home for 5x what I paid for it. In return I would get half the house for the full selling price and higher property taxes. A lot of work to save $100mo on utilities. Cheaper to keep her and bequeath it.
That's what I am doing. I have no mortgage, and the places I would want to move are much more expensive. Makes no financial sense to move, I'm glad I love my house.
Folks tell me about downsizing: *"but where will the kids and grandkids stay when they come to visit you?"*
My reply is *A hotel.....and I'll even offer to pay for them it'll STILL be cheaper than keeping my current house!"*
Thank you Holy Schmidt.
Single floor home is the way to go for 50 years old and up.
Having stairs sometimes away of keeping fit. My grandmother used her stairs until she was late 80s. She lived past 100.
A good home is one where you feel safe, comfortable, and that you can afford. A primary home (unless you’re very good at maintenance and upgrades) shouldn’t be thought of as an investment.
We have a large home and we are absolutely downsizing. We put it on the market next month. We’ve ran the numbers and we can slow travel a heck of a lot cheaper than we can sit in our home here in Florida. I retired this month and I refuse to keep working just to be able to pay property taxes and insurance.
Great info, thanks.
I currently have a typical 4 bedroom, three bath home. I could easily downsize to a much smaller home, but my wife is 100% opposed to the idea of moving. Also, when I have searched for a place to downsize to, the homes I have found were not as nice as my present home in terms of home quality or, especially, location. Finally staying in my present home is very economical (under $600/mo), so even after my wife dies (she is nearing 80 and is older than I am), I doubt I will relocate. If I do it won't be to save money.
A minimalist lifestyle saves time, energy and money. I did not wait for retirement. It served me well financially for decades and prepped me for a simple, frugal retirement. Now my retirement $ spent is all for fun experiences and I am not sacrificing material goods.
Younger people should follow this example!!!!!!!!!! Served me well
This is just another form of sequence of return risk, with a helping of emotional attachment on the side.
Money is one thing. Mos5 importan5 thing is how and if you can handle the place.
If you live in California and have owned it for 30 years it is worth 5x what you paid for it, you have a lot of equity but a low tax base. If you sell and buy a cheaper home you will have some cash but if you buy another house even for 50% of the the old home you will have double the tax base. In addition you have lost 6% to the realtor and another 2 or 4% in moving costs, you also may need to buy new furniture to fit into the smaller property.
Your capital gain is one time the increase in taxes is for life.
In the current market in East TN my house will sell fast for a lot of money. I would love to downsize but to do that it would be to a far less desireable neighborhood. Single female in her 70s here. Safety is paramount for me so I will stay put.
I’m in my 70s and concerned about neighborhood too. I’ll stay in my oversized house as long as I can afford to. Trailer parks and apartment buildings I don’t want to deal with.
@@monarene44We are practical aren't we! Cheers!
Is there a way you could sell your house and move to another state or city that is still safe but has less property tax?
One way to downsize without losing future upward gains is to isolate the basement, for example, and rent it out. That way you have extra income, home value gains, and less personal space upkeep. This also gives you the option to regain that space if required in the future.
This sounds like a good idea, but you need to really make sure your rental tenant is a good one because the bad rental tenant can give you lots of problems ! I know it happened to me
The scammers are out and about judging by some comments from fakesters.
If you can’t afford having things done downsize. I had to and glad I did. Four bedroom home with just me and my cat. It was time to sell.
When you sell a house to move to a small house or apartment to condominium or townhouse, it’s not always about how much money you make when you sell a house it’s also about downsizing, paying less property tax, maintaining less inside or outside the house.
Also, if you have a smaller house or apartment or condominium, etc., he usually pay less insurance and also cleaning less
Thanks.
I actually went up in my house size in memory of my wife who died on active duty in 2014.
I asked myself when I retired in 2021, what would both of us like to live in.
Then I bought where I grew up in Florida.
Lots of family and friends visiting.
You are also welcome.
Just let me know.
I live on Old Tampa Bay and I have a dock about 180 feet to the bay.
Just let me know.
You could follow the Mets with spring training at St. Lucie Florida but teams are known to shift around. Or buy an MLB subscription and watch every game.
When I retired, nI was single, no wife, no kids, no grandkids. There was a derelict house down the street which was zoned commercial, meaning that I could make it into a hobby restoring the woodwork and using it as a workshop and store to sell my woodworking. But things did not quite work that way and I found myself renting rooms in the new house while renting out the entire previous house.
So, today, I now own four houses in that town, but I live in my estate in a foreign country in a remote mountain valley ....and my income is higher than ever .... ."downsizing" ....
Thank you for having the wisdom to include knowing neighbors, grandparents and friends and turning corners and remembering this and that. Most people don’t realize that that’s why I’m here even when I say so.🥴
I would say it only makes sense if you can get a reduction in property taxes too. I considered downsizing in the US, but the homes I liked that were smaller had high price tags and even higher taxes. The math didn’t work. I wound up selling everything and leaving the US which turned out to be a great decision.
We did the same. We’re living a much higher quality of life by making this decision.
I’m thinking of doing the same
We thought about downsizing, but we would pay more now for a 2000 sq. ft home than we did for our 4000 sq. ft home by almost 100%, so no, we'll just be stayiing right where we are currently.
Ditto
static versus dynamic costs....
The cost of selling, moving out and moving into a new home, the stress and frustration aren’t really worth it to me. I’m not interested in leaving California for some place where it’s too cold, too humid and hot and where you’ve got to drive across many miles of strip malls and parking lots to go anywhere. Moving intrastate here is out of the question. I’d consider moving if I wanted to rent out my house and live on acreage among live oaks, rolling hills and wildlife, but I’m married, so that’s not gonna ever happen.
Spot on. There's never really a "top of the market". It's like the stock market. The general trend is always up with occasional drops. The "top" depends on your timeframe. The average house price has doubled about every 20 years over the past 100 with the occasional doubling coming somewhat faster. It's safe to say it will continue like this because we're simply not building enough new houses and haven't since before the 2007-2008 crisis. As you said supply and demand will cause prices to rise when there is limited supply and more demand. Limited supply is how you could describe the building industry for 20 years, even with 2007-2008 we had an oversupply of houses (mostly though an undersupply of mortgage money) but did not keep building at rates needed to make up for earlier slowdowns in construction and have not stepped it up enough since. Much of that is due to issues with building trades and how many people enter or exit the profession annually (hint: it's more exit and less enter and has been for years, heaven help us if we lockdown the borders).
I retired two weeks ago at 55 and we plan to downsize because our kids are out of the home. The Florida market is crazy. We are putting our house on the market next month. It’s a large home and expenses are just too high.
Home prices will be interesting to see in 20 years. At that point many boomers will have passed on and left to children who already have homes. That generation and younger are having less kids so I see home prices being very deflationary in 20 years. Supply will outpace demand.
I thought moving away from the Mets would be an easy decision to make.
If you buy another home that is the same price but is cheaper to maintain, then it doesn’t matter if you’re at the top or bottom of the market.
Please do one for the double income no children retirement😅
Hey Geoffrey, really nice and helpful video! I was wondering if I can help you edit your videos and also highly engaging shorts out of them.
Any updates on this
I both upsized and downsized - I bought a bigger place that was much less expensive. Monthly costs were about the same - about $1200 plus $250 for utilities.
Downsizing has been working GREAT for me. I up-sized to a 4,200 sq ft home when the wife started getting cranky w me and the kids.. that was a HUGE mistake. Dumping her was very costly, financially & emotionally , but now my life is 100,000 times better. I travel tons, tons. And pursue all the sports and activities I want, all from a very small real property holdings, keeping my liquidity very very high. Oh and staying frugal is a hella’ lot more fun!!! I meet much funner and interesting people flying coach than 1st class.. and slumming it is “funner” still. Retire young, and play like the child you used to be!!!
For me there was no question. SELL
Many older people are remodeling vans (and even Priuses )so they can afford to live on their meager SS. Perhaps you should report on this topic?
FNMA showed that the vast majority of Boomers decided not to downsize
If I sold my house on acerage I would have almost enough money to buy a house on acerage. Oh, wait. (The property gives me plenty to do in my retirement years, so I'm keeping it for now. No regrets, but yeah, carrying costs.)
Yes , some people are not able to give up a beautiful home they’ve worked decades to build! My mother lives alone now in a large 4 bedroom house with a nice sized lot full of trees and landscaping. Now that my Dad’s passed she can’t afford to pay to have things cared for. I help, but it’s way too much work. She absolutely doesn’t want to sell but needs a small condo or apartment she can manage. Or a small manufactured home in a 55+ community. She just too attached to her home.
My mom too. 100%. Meantime she tells me she NEVER wants to be in a nursing home.
I told her, sell your house. My husband and I will build an addition for you and take care of you. But, she refuses to sell.
Video Request: I’m 64 and will be retiring in Jan 2025 when I’m 65. I wont be working but don’t intend to start social security until 70 to maximize the benefit. I’m wondering how not working for 5 years will affect the future benefit that SS websites estimates since it clearly says that it is based on making the amount I am currently making. Your help would be greatly appreciated.
PapaDoug,
The determination of your PIA is based on your top 35 years of FICA contribution. The calculation stops at age 62. If you retire at 65 and delay until age 70, you will max out your benefit. I retired in January 2024. Good Luck & Happy Retirement.
@@rightwingprofessor1356thanks for your reply
I’m not sure you touched on my reason for downsizing. I need to liquidate my equity to invest for retirement. This will be easily possible by moving from Colorado and going to a lower cost of living market (Current ideas are FL or TN). The amount I would clear is just under the Capital Gains allowance. Curious to hear your thoughts on investing this $ vs keeping it in my home?
I don't have decades and have a lot of house. Also factoring in is that it has an attached "back-house" that generates $1800/mth in rent and I've no idea how to factor that into the selling price. That said, I love the house, I love the location but I hate the nanny-state that it is in and would love to get somewhere with fiscal sanity.
If it’s really making you unhappy, such as life there not the house then I would sell. But you’re the one that makes the decision.
If you’re unhappy with the location and the state that the house is located then that causes stress and that can be costly.
Yes, it really depends on each situation. Three years We moved from our 1,100 sqft co-op in Manhattan to Texas. We we bought a somewhat broken home in in a to prime neighborhood. Coming from NY we just got lucky. 2,100 sqft on 1/4 acre. We're ages 63 and 61. Plan to scrape and rebuilt 3,500 sqft with a pool and enjoy it for a while. Wrong direction with taxes and insurance, but it will be paid in cash and we will still have plenty of retirement money.
My question is what to do with my 401(k). I am retiring next month and need to draw from it. I don’t know whether I should roll it over to a IRA. I would like to still earn money on it and if I leave it in the 401(k), it will not be able to grow anymore since it’s a employment 401(k)
It will still grow, you never have to roll it over unless you want to. It depends upon the fees you are paying whether it's worth it to roll it over. good luck
You have to realize that if you downsize and don't have a mortgage, you have freed up a lot of capital to do other things with, such as investments. If you downsize and eliminate a mortgage, you have freed up your cash flow. Where it gets complicated, is when you are looking at moving and having a mortgage at your new place. Then, you have to look at your interest rates and mortgage payments, as well as property taxes, to see what makes sense.
Even if one doesn't have a mortgage they still have to pay Property Taxes.
@@sammysliver yes, and for some states, that's a complicated thing. I can give two examples. Oregon has a locked in maximum increase in property tax of 3%, but a newer home is going to higher taxes than an older home that sells for the same amount, because the tax basis for the older home started much lower and has only increased 3% per year since.
In California, my understanding is that the property tax on a home is reset when it sells, based on the purchase price, which can make home purchases partly to mostly unaffordable there.
Investing is and iffy subject in retirement. Generally the plan is to disinvest.
@@whatsup3270 investing can be government bonds, CD's, tax free bonds, commercial bonds, or you can do stocks, particularly stock classes that are less volatile. You can put money into an annuity to create cash flow. You can take your RMD's and invest the money you don't need that year in a taxable account. You do want to at least keep up with inflation, if not get ahead of it.
If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you...prevent inflation❤
People dont understand that the prices of things are never going back down. This inflation is deeper than we think. Those buying groceries are well aware that the real inflation is much over 10%. The increments dont match our income, yet certain investors still earn over $365,000 in stocks and assets. Wish I could accomplish that.
Very possible! especially at this moment. Profits can be made in many different ways, but such intricate transactions should only be handled by seasoned market professionals.
Some persons think inves'tin is all about buying stocks; I think going into the stock market without a good experience is a big risk, that's why I'm lucky to have seen someone like mr Brian.
Finding yourself a good broker is as same as finding a good wife, which you go less stress, you get just enough with so much little effort at things
Brian demonstrates an excellent understanding of market trends, making well informed decisions that leads to consistent profit
My mother’s upscale neighborhood is now 65 rentals to 200 homes. Crime is way up now. In Arizona.
I'm in the process of selling my home. My neighborhood has too many rental homes and is becoming very diversified. Time to downside and find a better place
Yep, get out as soon as you can it’s only going to get much worse!!
did not want to sell mom's [and my] boyhood home. wife convinced [shamed me] to. 5 years later she died in her sleep. and i am w/o that house and those memories. stick to your guns. you can never get back what you strive for w/o a fight.
No. You still have the memories. The house was just stix and bricks.
People are more important than things.
We are not downsizing. My family comes to my home for all family gatherings. I need a bigger house, not a smaller one.
A second home was on the table until Colorado real-estate went through the roof.
Now, you're just bragging Rhonda. How thoughtless. 😕
@BigMama2022 I am sorry you are living in a van down by the river. There are resources for you. Check with your local senior center. Meals on wheels is a good program but you will need a home address not a po box.
Don't care what the house is worth you couldn't pay me enough to figure out what to do with 50 years of married stuff , if you have traded up over a lifetime then sure your used to moving but if you built your house very young and have never moved it's another , it is complicated , for me a nice house an the kids are finally gone , we can enjoy it , retirement is much more than i ever dreamed it could be and i wouldn't wreck it by seeing green grass on the other side of the fence and finding out i'm stuck in pretty much a hotel room when we were living in the whole hotel
We did. Bought a condo. So we can golf freely.
You need to start clearing all the spam out of your comments. If you haven't got the time then pay someone else to do it. The comments sections of your videos are rotten with people touting "financial advisors"