Downsizing After Retirement, What You Need to Know

Written by Banks Editorial Team
2 min. read
Written by Banks Editorial Team
2 min. read

As retirement sings its sweet song to you, you may already be wading through your finances and looking for ways to keep your comfortable lifestyle where you want it. And downsizing may be on that list. After years of working like a dog, you can almost smell the roses of your retirement life – and damned if you’ll let any thorns get in the way of plucking what’s rightfully yours.

For many of us, the first thing we’ll be thinking about is downsizing – but hold your horses, because it might not be such a great idea after all. Yes, you can make a huge dent in your mortgage or even eliminate it – but there’s more to this equation than typically discussed.

Get a Home Loan or Refinance Your Mortgage

Downsizing as a Natural Part of Life

For years, the received wisdom has been to sell your home and downsize to a more modest property. The kids have flown the nest, so you don’t need all this space. A smaller home means reduced bills and taxes – not to mention fewer chores eating into your leisure time.

Oh – and it frees up all that equity that’s locked into the property’s bricks and mortar, giving you more money to add to your retirement investment portfolio. It’s one thing to live in a gorgeous $750,000 home and has little in the way of savings – quite another to live in a nice $250,000 home with $500,000 in savings that you can then invest.

The argument is pretty compelling, and for years, you’d be hard put to find someone to tell you otherwise with any sound reasoning behind it. However, things are changing, and you may just have to rethink your plans.

The Illogical Side of Downsizing

According to Smart About Money, anyone considering downsizing should only do so if they reduce all the combined expenses of owning a property by at least a quarter. The electricity and maintenance bills move with you, and your prospective new property may turn out to be a surprise money pit – only unlike Tom Hanks, you’re way too old for a challenging renovation project.

It’s also worth considering the actual expense involved in moving home. If the stress doesn’t take years off you, paying the various commissions and fees to the army of professionals involved in the process just might.

It may feel like a good idea – a new lease of life, a new home, a new dream – but you need to do the calculations and figure out whether you can really afford to downsize. Some 75% of folks overestimate their home’s value while committing the opposite sin when buying!

If you’re not saving at least 25%, there are other options – and the good news is that you won’t have to move anywhere.

Get a Home Loan or Refinance Your Mortgage

The Wisdom of Staying In The Family Nest

Throw out conventional wisdom for a minute; as a baby boomer, you’ve lived life on your own terms throughout and experienced all the highs (and regrettable lows) that life has to offer.

Why change now that you’re approaching retirement? Home is where the heart is – but more importantly, there are more options than ever for assuring a happy and secure retirement, especially if you have been careful with your finances throughout most of your adult life.

The best thing you can do is to talk to a financial advisor who can help you to run through the numbers. From annuities and bonds, to the stock market and even life insurance, there are plenty of options to help you make the right decision for your long-term financial needs.

By staying put, you’re saving yourself a ton of time and stress while also giving yourself more time to ask yourself the real questions: what are your personal needs in retirement? How aggressively do you want to pursue them?

Your retirement situation is unique, and downsizing may not be the right choice for you. By speaking with a financial adviser, you will be able to get a much better idea of what you need to do to secure a healthy, wealthy retirement – whether that’s downsizing to a low-to-no mortgage lifestyle, or staying where you are.

You may also like

Before you apply with a mortgage lender, understand how refinancing works and how long you need to wait before you can refinance your house.
Read more

Advertisement Disclosure

Product name, logo, brands, and other trademarks featured or referred to within are the property of their respective trademark holders. This site may be compensated through third party advertisers. The offers that may appear on’s website are from companies from which may receive compensation. This compensation may influence the selection, appearance, and order of appearance of the offers listed on the website. However, this compensation also facilitates the provision by of certain services to you at no charge. The website does not include all financial services companies or all of their available product and service offerings.