Moving into a smaller home seems like a great option for a lot of homeowners especially those who are retired or thinking about retiring. Many homeowners over 50 believe that selling their larger homes will help to pad their retirement funds, which makes since considering 47% of homeowners are concerned with having enough money for retirement.
Moving to something smaller to reduce cost and using the money left over from the sale to add to your savings seems ideal on paper, however with the housing market still in a fragile state this is not the best option for everyone. Many homeowners who have made the decision to downsize have trouble adjusting to living in smaller quarters and parting with sentimental items. Additionally many are surprised to find themselves paying the same if not more expenses but living in a smaller place.
Will Downsizing Actually Save You Money
The potential problems don’t end once downsizers move into their snug new abodes. With fewer square feet to heat, mow and pay property taxes on, many downsizers assume they’ll slash their monthly expenses. But unless you’re willing to move to a part of the country with a lower cost of living, the savings may prove modest, cautions Beth Blecker, CEO of a financial-planning firm in Pearl River, N.Y.
Among older Americans who pull up stakes, a “large majority” settle within 20 miles of their previous homes, according to a 2009 Boston College study. While this lets them stay close to friends and family, it also leaves them paying similar prices for food, utilities and other essentials.
Find other great articles from The Wall Street Journal to help you make the most of your retirement.
