When you think about a dream home you might consider building it from the ground up. Maybe add on to your current home or possibly gut and re-make your ultimate kitchen or master bath. But rarely does anyone consider changes to a home that can make you richer. Aka, the downsize.
The numbers look good
As you approach the latter part of your working years consider the necessity of a large home. Many have become empty-nesters and feel the house is a bit quiet. You may start to feel it is more than you need. It would be nice to have less cleaning to do and lower taxes and insurance is something everyone would enjoy.
For example, say you’re currently living in a big home that’s worth $650,000 and you have a 30-year mortgage. At an interest rate of 3.75%, you could be dishing out as much as $3,000 in monthly payments. Property taxes could range from $6,000 to $10,000 or more annually depending on where you live, and the cost of homeowners insurance would add another $2,000 to $3,000 to the bill.
Now consider a smaller home with similar amenities but fewer bedrooms and scaled back overall and you are now in the range of $400,000 or maybe $350,000. Your expenses will fall dramatically and your mortgage payment and property taxes could drop by as much as 50%. This can save you some substantial dollars, perhaps $18,000 to $20,000 in the above scenario. Not only will you be saving now but you will be in a great and less stressful position during your retirement transition and beyond.
Do the hard work early on
Like so many things in life, as we age our needs change as well. Continuing to live in a large home designed for raising a family does not often fit our current life style. Preparing to move from a larger home to a smaller will take a lot of work. You will be getting rid of years of accumulation and moving only the most important of items. It only gets more difficult with age. Some seniors wait too long and end up stuck. They have become weaker of sicker and lose the energy needed to sell and move.
Not long ago, medical problems that would keep you from taking care of your home would necessitate a move to a nursing home facility. For many it was the only way to receive regular medical care and treatment. Luckily things are changing.
Today it is much easier for seniors to remain in their homes for the entirety of their lives. There are many different levels of in-home care service available depending on needs. You may just require some light cleaning and grocery shopping or transportation for doctors appointments. Even in more severe cases 24 hour care can be had, all in your home. This will become quite expensive but might still be comparable to nursing home care and is a service many long term care insurance plans will cover.
In home health care is becoming such a big part of seniors lives it would be helpful to prepare for it. Overall home size is definitely something to consider, but the layout of your home is equally important. So much so that you will notice many seniors who are living in homes have chosen ranch style houses where all rooms are on a single floor. This and a smaller foot print lead to a much more manageable home life and will also keep many of your bills lower than what you were used to. Keep in mind the size of your landscape as well. This is a chore that requires physical stamina and is fairly expensive to out-source. Keeping it small might strike the right balance of exercise and enjoyment earlier in retirement versus the expense later on.