Many people are at a stage in life where they have to decide where they want to live after retirement. If you’re a homeowner nearing this stage, you have several options. Jessica Lautz, assistant her chief economist and vice president of research at the National Association of Realtors (NAR), said:
“As we see the transition of the large Baby Boomer generation age into retirement, it will be interesting to see if they move in with their Millennial and Gen Z children or if they stay put in their own homes.”
Lautz lists two options
You can move into a multigenerational home with your loved ones or stay in your current home. Multigenerational living is becoming more and more popular, but it’s not an option for everyone. And the more you stay in place, the more you fail to meet your needs. However, there is a third option and it may be the best.
Selling a house to buy a smaller one is called downsizing. A smaller home may be more suitable for your changing needs, and your move may end up in the ideal location.
Besides the personal benefits, downsizing can also be cost-effective. The New York Times (NYT) announced:
“Many downsizers expect to improve their retirement income stream if their new home costs less than what their old house sells for. Lower utility costs, insurance and property taxes — as well as investment returns on the proceeds — can also improve the bottom line.”
Being in a strong financial position is one of the most important parts of retirement, and downsizing can make a big difference.
Record levels of homeownership are the main reason why downsizing is still cost-effective, even now that mortgage rates are higher than they were a year ago. Using stocks in downsizing can reduce or even eliminate mortgage payments on your next home.
So not only is it likely to be more affordable to keep a small home, but having home equity can make a world of difference. The best resource to help you understand if you have the property and what your options are for your next move.