Should you downsize your home?

It might seem like yesterday you were moving into your spacious new home with an infant in tow. But as the years tick by, empty nesters often find themselves adrift in a quiet house. And with the state of retirement being what it is, the idea of downsizing your home to save money can definitely become more attractive over time.

From apartment living to the tiny house movement and more, options for downsizing abound. But how do you know if it’s the right decision for you? Before you pull the trigger, you (and your spouse or partner) should ask yourselves these three questions:

• Where will you go? Contrary to popular belief, most people choose not to relocate once they retire. Rather, they appreciate the familiarity of their current community and would prefer staying close to family and friends. However, downsizing your home could give you the opportunity to move to an area with cheaper taxes and a lower cost of living. For example, that may include an urban area with increased public transportation and things to do.
• What about your stuff? Downsizing means you’ll have less space to keep your things. But if saving money is the goal, it won’t make sense to pay for a storage unit, will it? Have a candid conversation with your loved one about your joint ability to de-clutter and get rid of items you no longer need – even if you want to hold onto them.
• Can you afford it? It isn’t always as simple as selling your home and paying cash for a new place. The cost of moving itself can be more than $12,000, according to the Worldwide Relocation Association. And from working with a professional real estate agent to possible homeowners association fees in your new abode, “hidden” expenses could put the kibosh on your plans to cut your square footage. Consider whether you can afford these upfront expenditures – and whether downsizing makes the most financial sense over the long term.

Downsizing can be a great way to lower your expenses in retirement, but that doesn’t mean it’s right for everybody. Make sure you crunch the numbers and have the necessary discussions with loved ones before deciding if it’s in your best interests.