Like many people at my stage of life, I’m planning projects for not just one house but for two, as I prepare to move from an oversized house to a brand new smaller one, a beautiful new condo with many nice amenities.
I’m organizing what needs to be done with my current historic property, not to sell it as most people would do when they move on (I’m leasing it to my PR business and for a satellite office for my real estate company), and what things my wife and I will do to decorate our new digs.
The double-duty job has my wife and me down to our last nerve, as I used to hear people say in the south as a child, especially “the wife.”
Through the years, I have worked with many clients in the same boat: people of retirement age who are moving on with their living arrangements, even if they’re not fully retiring.
In some cases, it’s a joyous occasion, a time to prepare for enjoyment of the golden years but, depending on circumstances, it can be the most stressful. From personal experience and an article I read earlier this year in The Wall Street Journal, I learned more about how to advise clients to better prepare for retirement when it comes to housing options.
It’s odd, considering that for most people, their house is their biggest asset–and their biggest expense. But when it comes to retirement planning, their house most often falls to the bottom of the list involving changes in later life.
There are many reasons for not wanting to face the music about moving on. Our homes are filled with memories for all of us and emotionally it’s hard to let go of them. Also, let’s face it, moving is a hassle at any age, and downsizing to a smaller home isn’t always the cash cow it’s made out to be. That was the sad case for many who got caught up in the Great Recession.
But experience shows that while most wait until well into retirement before moving to a smaller house or condo, it’s much smarter to downsize sooner rather than later.
The financial benefits may not seem significant at first, but over time they can make a meaningful difference in extending the life of a nest egg. Also, there are lifestyle considerations, such as being in a community with others of similar age. Most importantly, making a move before one spouse dies can ensure that the surviving spouse or the couple’s children won’t have to deal with the stress of emptying and selling a big house.
Some financial planners say that the reluctance stems from the idea that trading a house with a paid-off mortgage for a rental or a condo with maintenance fees will involve higher monthly costs, but that’s a false impression. Actually, a home’s hidden expenses, such as maintenance for a roof, a boiler, heating and landscaping can far exceed condo fees or monthly rental costs.
Also, retirees might have a desire to hold on to a house where their children were raised so that they and their grandchildren can visit, when actually it’s far cheaper to put them up in a hotel room rather than clinging to a four-bedroom home.
Property taxes are also a growing burden, especially in our region. Who needs a good school district and the high taxes it demands when the children are long gone?
The aging process itself makes it harder to move. It is physically and mentally exhausting, even at a young age, and it’s much more daunting for older adults. And once a spouse dies, it’s even harder to move from a home that a wife and husband shared for decades. In such cases, the responsibility for helping take care of a house, and ultimately selling it, often falls to the children.
According to The Wall Street Journal article, downsizing can have a big impact on a retiree’s financial plan. Even with the mortgage paid off, housing often accounts for 30 percent of retirement expenses. For those trying to assess the financial benefit of downsizing, the Boston College Retirement Center has a new online tool. It’s available at squaredaway.bc.edu and can be found by clicking the “Housing” link at the bottom of the page.
It’s about more than just money. I was in New York City last week to attend the Cabaret Convention, and the couple sitting next to me with whom I struck up a conversation had sold a large home in the suburbs to buy a small apartment in the city, specifically to attend cultural and theatrical events in Manhattan.
This is how we wanted to spend our retirement, and we are loving it,” the woman said. “”We’re using our nest egg from the sale of our home, having a doorman and security, enjoying restaurants and a very active cultural life.”
Bill Primavera is a Realtor® associated with William Raveis Real Estate and Founder of Primavera Public Relations, Inc., the longest running public relations agency in Westchester (www.PrimaveraPR.com), specializing in lifestyles, real estate and development. His real estate site is: www.PrimaveraRealEstate.com and his blog is: www.TheHomeGuru.com. To engage the services of The Home Guru and his team to market your home for sale, call 914-522-2076.