Ideally, in retirement, you reduce your monthly expenses. No more commute, less need for work-related clothes and dry cleaning, and the ability to eat lunch at home every day. But is it enough savings to balance the lack of income from work?
If you’re like many retirees, near-retirees or even those just starting to plan for retirement income, you may have an uneasy feeling about just how much money you’ll need and how long you’ll need it to last. If you’re just not feeling confident about it, there is one thing you can do to help: Downsize.
Downsizing to a less expensive condo, townhouse, apartment or smaller home offers numerous savings advantages, from reducing your monthly mortgage or rental costs, to lower maintenance, property tax and utility bills.
If you’re thinking of moving out of state, perhaps to a locale where you’ve vacationed and dreamed of living for years, consider the pros and cons of what living there year-round may mean. Is it a dreary place in winter, or too hot in the summer? Does it feature a year-round community where you can make friends with locals, or is it pretty much abandoned when tourists or snow-birds are gone — and could you bear that? Oftentimes those lovely vacation spots can be quite isolated during the off-season.
It may come down to your basic personality and disposition: do you prefer the opportunity to make good friends and always have people around with whom to spend time, or would you be OK with getting away from it all and minimizing outside relationships, at least for part of the year? Consider, too, how your spouse’s answers may differ to those same questions.
Then, too, you should examine the practical side of relocating. For example, will the cost of living be higher or lower than where you currently live, and what can you expect in terms of health care and other expenses and amenities? After all, your large family home may not be as expensive as a tiny condo on the beach, complete with high monthly expenses and high property taxes.
If you plan to move to another state, you will need to investigate tax and estate laws to see if you’ll need to update your wills and trusts. If you have a network of trusted financial professionals and attorneys, you may want to check if they are licensed to continue working with you in the state where you want to relocate.
Then again, you could just move to a smaller place in your current neighborhood or community. You may opt to live closer to relatives, which can offer the potential for significant savings when it comes to home care in your later years. If so, consider features in a new home that will be more convenient as you venture gracefully into old age, such as a single-story home with a low-maintenance yard and accessibility features. Also think about your locale of choice — such as whether you’d like to move to a more urban scene in a trendy downtown location near art galleries, museums, fine restaurants and concert halls. Perhaps a condo with a skyline view, concierge and doorman would fit the bill. After all, if you spent the majority of your adult life raising a family in suburbia, retirement may be the time to enjoy other types of entertainment.
A third option is to move to a senior living community. According to a survey by the Demand Institute Housing & Community, one in five baby boomers is considering relocating to a senior-related housing or active-adult community. While many of these campuses have come a long way in featuring more cultural and upscale amenities, many still suffer from a reputation of the proverbial “old folk’s home.”
The key to downsizing — or what some prefer to call “right-sizing” — is to make the right decision for your lifestyle and finances. Some retirement-oriented communities may offer work and entrepreneurial opportunities so you can get out and about, make new friends and contribute to your retirement income. Do not under-estimate the value of a strong social network comprised of people of all ages. After all, if you’re going to live a long and healthy life, why not live it among friends?
- Media Post. May 15, 2015. “Redefining Senior Living for Boomers through the Name Storm Project.”
http://www.mediapost.com/publications/article/248470/redefining-senior-living-for-boomers-through-the-n.html. Accessed Aug. 5, 2015.