To Downsize Or Not?
That Is The Question
Should we downsize our house? If so, when? Maybe never? I think that downsizing too early or without planning can be one of the most costly retirement mistakes. I have seen couples that have downsized, found that they have not liked it, and then purchased a house similar to what they originally owned. The cost to do so was thousands of dollars.
Should we downsize is a very common question that I get asked at most initial meetings by people planning to retire. Sometimes it seems as though people think that they are required to downsize as part of their retirement. One main reason for considering this is the high cost of housing in the Vancouver area; the majority of people’s equity is in their home. This can create a problem where you are asset rich but cash poor, hence the downsizing to free up cash. One of the other reasons we see people planning to downsize is to reduce the ongoing cost and labour involved in owning a home.
Prior to pulling the plug and downsizing I would recommend considering the following:
1. Strata Living – Most situations involving downsizing can involve properties with a strata. There are a lot of people that are used to living in a house and not dealing with committees when it comes to decisions about pets, parking and other items. You should consider if this is going to be a problem for you.
2. Lifestyle – Do you like hosting family and friends for meals or parties? If this is important to you, will you be able to do this in your new home? Items like limited parking or smaller rooms may be a frustrating issue.
3. Children – Often adult children can come back to live with their parents after life situations such as death of a spouse or divorce.
4. Aging Parents – Will you need space to care for aging parents?
These are the main areas to consider when thinking about downsizing. As with any financial strategy we would recommend ensuring that you have your personal situation reviewed by a professional to make sure that is done in the best way possible. If you have any questions or would like your plan reviewed, feel free to contact us.