Intelligent Downsizing for Savvy Boomers
When it's time to retire, there are a lot of choices to make. What kind of living arrangement suits your new lifestyle? Do you want to stay put or retire to a location you've always dreamed of exploring? Decisions about whether to rent or buy your next home and exactly how much space you'll need loom larger. And selling or giving away a houseful of memories is a daunting task for anyone.
The New Face of Retirement
With the current crop of retirees, senior housing isn't what it used to be. Not many of the Baby Boomers finishing up a career at home or work consider themselves to be typical senior citizens. Rather than relaxing on the front porch in a rocker, these retirees in their 60s and 70s are entering into the next phase of a full and rewarding life.
It used to be common for people to move to senior citizen communities when they sold their family homes. Warm locales like Florida and Arizona abound with retirement developments, from the simple to the luxurious. They range from assisted living facilities to independent apartments.
But for Boomers, who are more health-conscious and have a longer life expectancy than previous generations of seniors, the trend is to remain a part of the larger community. Downsizing is the buzzword for these young retirees, and they're more likely to trade in the expansive family home for a luxury apartment or small bungalow.
Rent or Buy?
Renting and owning both have advantages and drawbacks, and it depends on your preferences, lifestyle goals and finances. Certainly, if you're moving to a new area upon retirement, renting for the first year can be to your benefit. No matter how much research you do, you can't really get an idea of the flavor of various neighborhoods until you live in a city. If you rent first, you won't be locked into a mortgage and can move around.
If you enjoy walking to shops and restaurants and are comfortable with mass transit, renting an apartment downtown gives you a chance to find out about the activities and entertainment choices available in a new city. You'll have a base from which to explore and can take the time to get a feel for which part of the city appeals to you most.
Buying can be a good choice if you're staying in the same locale or are familiar with the area where you're relocating. And many people feel more comfortable having a hefty chunk of their financial assets invested in property. With a mortgage, you can count on the same monthly payment, whereas rental costs can always increase.
Also, when you downsize you have the choice of investing some of your home equity in stocks or putting a large down payment on your new home. The former may give you extra income, while the latter will give you the peace of mind that comes with a low monthly mortgage payment.
How Much Downsizing?
The first thing you should do when the downsizing bug hits is to write down a list of your goals for the next several years. If you plan to entertain often and would like to have family members visit several times a year, those things will need to be taken into account when it comes to square footage.
How much retirement income will you need? If you expect to travel a lot, you may not need as much room in your home, but you'll need a healthy disposable income. It might be better to focus on income-producing investments and scale back your space requirements.
How to Downsize
It's easier to read about downsizing than to do it, but you've got to get rid of unneeded possessions. Start by throwing out or donating obvious clutter like old sports equipment, unused clothing, and rarely-used kitchenware. Then take an inventory of the things left that have value.
You can sell excess belongings that are in good shape at a garage sale or online. Another option is to let your kids or other close family members go through and take what they want. You'll reap the benefit of completing the first step toward getting the best price for your home – clearing and decluttering.
The Fun Begins
Now that you've examined your goals, gotten your finances in order, and cleared out unused possessions, the best part is in front of you. You get to decide where and how to live for the next exciting chapter of your life!