Image by PixabayMention the term “downsizing” and most people think of seniors selling their home or a business falling on hard times. One image that almost never comes to mind is that of people in their 40s and 50s upgrading their lifestyle by moving into a smaller house. That’s a shame, because, as we’ll see, midlife is a perfect time to discover the sizable pleasures of living in a smaller space. Getting the Monkey Off Your Back About ⅓ of couples in their 50s spend more than 30% of their income on housing, according to the Huffington Post. Bearing this burden is like carrying around a ticking time bomb, one that could explode in your face when you’re ready to retire. That’s because saving for your golden years becomes ever more crucial as you age. Every dollar you pour into your mortgage is a dollar you could use instead for your retirement account, as pointed out by the financial advisors at CNN. “But What About My Equity?” Many homeowners have a standard response to this concern: “I’ll just use the equity in my home to pay for my retirement.” But, while this may sound like a solid plan on the surface, the idea is fraught with pitfalls. Here’s why:
- Housing values fluctuate over time, according to Investopedia. To see what we mean, you need look no further back than 2008, when the world economy almost imploded due to overvalued real estate. You may find your equity plummeting just when you need it most.
- Other investments entail risk, of course. But it’s possible to manage those uncertainties by shifting your investment strategy as you near retirement. But your home’s value is captive to forces outside your control.
- Many folks plan to use reverse mortgages to pay their living expenses when they get older. But these types of loans are problematic. For example, many of them come with restrictions on how many pets you may own or how you may modify your house. Why lock yourself into an obligation that could cause you endless frustration?
- In most cases, the kids are grown and either in college or building their careers by this point. So there’s no need for all those empty rooms and the dust they accumulate.
- Taking care of a large residence is challenging even for young couples. It becomes ever more difficult as time goes on. What once seemed like a breeze becomes an arduous chore that saps you of energy and offers nothing in return.
- Whatever you own also owns you. Property taxes, utility bills, and homeowner’s association fees are like rocket ships: they go up but rarely come down. Why keep your income hostage to a host of budget-killing fees?
- Appearance is almost as important as location when it comes to selling your home. Uprooting your house and moving it to another neighborhood is impractical for most people. So focus on your homes looks by keeping it as close to spotless as you can, tending to landscaping tasks, and adding a fresh coat of (bargain) paint if needed.
- Downsize your belongings. Buyers want to imagine your home with their stuff in it, not yours. So minimize furnishings and decor to give room for the other party’s imagination to run wild.
- Price your home for what the market says it’s worth, not what your heart says. Sentimentality can sabotage your efforts if you’re less than careful.