Planning for Retirement: Sell, Downsize, or Stay?

By Andrew Te

|10 min read
buying retirement home

Making the decision to sell your home and downsize during retirement can be a difficult one. There are many factors to consider, from your current and future financial needs to your emotional attachments to your home. Ultimately, the best decision for you will depend on your personal circumstances.

In this article, we will cover some factors to keep in mind as you weigh your options, but keep in mind that you should always consult with a financial advisor to get tailored guidance for your unique retirement situation.

This guide should help you know which questions to ask, what to consider, and how to make the best decision for you and your family.

Important Factors to Keep In Mind as You Plan for Retirement

Your current financial situation is one of the most important factors to keep in mind as you plan for retirement. If you have a comfortable nest egg saved up, you may be able to downsize or relocate without any major financial concerns.

However, if you’re worried about having enough money to cover your costs in retirement, selling your home and downsizing may not be the best option.

In addition to your current financial situation, you’ll also want to think about your future needs. If you plan on traveling or relocating in retirement, selling your home and using the proceeds to fund these activities may make sense.

On the other hand, if you plan on staying put, it may make more sense to keep your current home and use it as a source of income in retirement.

Another factor to consider is your emotional attachment to your home. If you’ve lived in your home for many years and have strong sentimental ties to the home, downsizing or selling may not be the right choice for you.

On the other hand, if you’re ready for a change or don’t have strong emotional attachments to your home, selling may be the best option.

Step-By-Step Guide to Selling Your Home in Retirement

If you’ve decided that selling your home and downsizing in retirement is the right choice for you, there are a few steps you’ll need to take to ensure a smooth and successful sale.

1. Hire a real estate agent – The first step is to find a real estate agent who specializes in working with retirees. Many agents specialize in helping retirees find the right home and community for their needs.

However, there is a specialized certification offered by the National Association of Realtors (NAR) called the Seniors Real Estate Specialist® (SRES®) designation.

This designation is awarded to real estate agents who have completed coursework on working with retirees and have been proven to hold the following expertise:

“The Seniors Real Estate Specialist® (SRES®) designation is for REALTORS® who want to be able to meet the special needs of maturing Americans when selling, buying, relocating, or refinancing residential or investment properties. By earning the SRES® designation, REALTORS® are prepared to approach mature clients with the best options and information for them to make life-changing decisions.”

~ NAR

  

2. Determine the value of your home – The next step is to determine how much your home is worth. Your real estate agent can help you with this by doing a Comparative Market Analysis (CMA).

A CMA is an estimate of your home’s value based on recent sales of similar properties in your area. In addition to a CMA, your real estate agent may also use other methods to determine your home’s value, such as an appraiser.

3. Preparing your home for sale – Once you have a good idea of your home’s value, it’s time to start preparing it for sale. This may involve making some repairs or cosmetic updates to the property.

Your real estate agent can give you guidance on what updates are likely to have the biggest impact on potential buyers. It’s also a good idea to declutter and stage your home to make it more appealing to buyers.

4. Marketing your home – Once your home is ready, your real estate agent will help you market it to potential buyers. This may involve listing your home on the Multiple Listing Service (MLS), holding open houses, or placing ads in local publications.

5. Negotiating with buyers – Once you receive an offer on your home, it’s time to start negotiating with the buyer. Your real estate agent will help you through this process and ensure that you get the best possible price for your home.

6. Closing the sale – Once you’ve reached an agreement with the buyer, it’s time to close the sale. This process can take several weeks and will involve signing a lot of paperwork.

Your real estate agent will be there to help you through the closing process and ensure that everything goes smoothly.

Why Are Retirees Selling Their Homes?

There are a number of reasons why retirees sell their homes and downsize in retirement. Some of the most common reasons include:

1. To free up cash – Selling your home can provide you with a large chunk of cash that can be used to supplement your retirement income. This money can be used to pay off debt, travel, or simply to have a nest egg in case of emergencies.

2. To simplify your life – Many retirees find that they no longer need or want the hassle of owning a large home. Downsizing to a smaller home, like a condo or townhouse, can simplify your life and make it easier to take care of your home. It can also free up time that you can use to enjoy your retirement.

3. To move to a warmer climate – A lot of retirees choose to sell their homes and move to a warmer climate in retirement. This can be a great way to enjoy your retirement and escape the cold winters.

4. To be closer to family – Another common reason for selling in retirement is to be closer to family. This can be especially important if you have grandchildren that you want to spend time with.

5. To downsize after a divorce – Unfortunately, divorce is common in retirement. If you find yourself in this situation, selling your home after a divorce may be the best option. This will allow you to split the proceeds from the sale and start fresh in a new home.

6. To move into a retirement community – Many retirees choose to sell their homes and move into a retirement community. This can provide you with the chance to meet new people and enjoy amenities that you may not have access to in your current home.

7. To pay for long-term care – One of the main reasons that retirees sell their homes is to pay for long-term care. This can be a very expensive proposition, but selling your home can provide you with the money you need to cover the costs.

8. To settle an estate – If you have inherited a property that you don’t want to keep, selling it can be a good way to settle the estate. This can help to cover any debts that the deceased may have left behind and can provide you with extra money in retirement.

9. To avoid foreclosure – If you are at risk of foreclosure, selling your home may be the best option. This will allow you to pay off your mortgage and avoid damaging your credit. 10. To move into assisted living – If you need to move into assisted living, selling your home can provide you with the money you need to pay for this type of care. This can be a very expensive proposition, but it may be the best option if you need extra help.

10. Renting is easier – Owning a home is a lot of maintenance and upkeep. Renting can be cheaper and allow retirees to save money and continue building wealth.

How Do You Know It’s Time to Downsize?

There are a few signs that it may be time to downsize in retirement. If you find yourself in any of the following situations, it may be time to sell your home:

1. You can’t afford the upkeep – If you can’t afford to maintain your home, it may be time to sell. This is especially true if your home is starting to fall into disrepair.

2. You’re living alone – If you’re living alone, downsizing can simplify your life and make it easier to take care of your home.

3. You don’t need the space – If you no longer need the space that your home provides, downsizing can be a great way to save money and reduce the amount of stuff you have to take care of.

4. You want to travel – If you want to travel in retirement, selling your home can provide you with the extra cash you need to make this a reality.

5. You’re moving to a warmer climate – As we mentioned before, many retirees choose to sell their homes and move to a warmer climate.

6. You’re moving closer to family – If you want to be closer to your family in retirement, selling your home can help you make this happen.

7. You’re getting divorced – Unfortunately, divorce is common in retirement. If you find yourself in this situation, selling your home can be the best way to move on with your life.

8. You’re moving into a retirement community – If you want to move into a retirement community, selling your home can provide you with the money you need to make this happen.

9. You need to pay for long-term care – One of the main reasons that retirees sell their homes is to pay for long-term care. If you find yourself in this situation, selling your home can provide you with the funds you need.

10. You’re at risk of foreclosure – If you’re at risk of foreclosure, selling your home may be the best option. This will allow you to pay off your mortgage and avoid damaging your credit.

These are just a few of the signs that it may be time to downsize in retirement. If you find yourself in any of these situations, it may be time to sell your home.

Keeping Your Home in Retirement: The Pros and Cons

There are a few things you should consider before deciding whether or not to keep your home in retirement. Here are some of the pros and cons to consider:

Pros:

1. You’ll have a place to live – Obviously, one of the main benefits of keeping your home in retirement is that you’ll have a place to live. If you’re not ready to downsize or move into a retirement community, this can be a big plus.

2. You can use it as collateral – If you need to take out a loan in retirement, your home can be used as collateral. This can give you access to funding that you may not otherwise have.

3. It can be a source of income – If you rent out part of your home, it can be a source of income in retirement. This can help you supplement your other sources of income and make ends meet.

4. You may be able to pass it down to your heirs – If you keep your home in retirement, you may be able to pass it down to your heirs when you die. This can be a great way to leave them a financial legacy.

Cons:

1. It’s a lot of work – Keeping up with a home can be a lot of work, especially if you’re doing it by yourself. If you’re not ready for the responsibility, it may not be worth it.

2. It’s expensive – Homes are expensive, and the costs can add up quickly. From mortgage payments to property taxes to repairs and maintenance, there are a lot of costs associated with owning a home.

3. It can be a hassle – If you have to move in retirement, selling your home can be a big hassle. This is especially true if you have a mortgage or other loans that you need to pay off.

4. It’s not always easy to downsize – If you decide that you want to downsize in retirement, it’s not always easy to find a smaller home that meets your needs.

5. You may not need the space – If you’re living alone in retirement, chances are you don’t need as much space as you did when you had a family.

These are just a few things to consider before deciding whether or not to keep your home in retirement. Ultimately, the decision is up to you and depends on your specific situation.

If you’re not sure what’s best for you, it’s always a good idea to talk to a financial advisor. They can help you figure out if keeping your home in retirement is right for you.

How Do I Prepare My House for Retirement?

If you decide to keep your home, you should do some renovations to make the home comfortable for retirement living. Here are a few things you should consider:

1. Make your home more accessible – As you age, you may have difficulty navigating stairs or other obstacles in your home. Making your home more accessible can help you live comfortably in retirement.

2. Update the kitchen and bathrooms – If your kitchen and bathrooms are outdated, it’s time for a renovation. Updating these rooms can add value to your home and make it more comfortable to live in.

3. Add some extra storage – As you downsize in retirement, you may need some extra storage space. Adding some extra storage to your home can help you keep your belongings organized and tidy.

4. Get rid of unused rooms – If you have any unused rooms in your home, consider turning them into something else. For example, you could turn an unused bedroom into a home office or den.

5. Make energy-efficient upgrades – Making energy-efficient upgrades to your home can help you save money on your utility bills. This is especially important in retirement when you’re on a fixed income.

Talk to a Local Agent to Discuss Your Options

While there’s no rush to make a decision now, consider talking to an experienced real estate agent to learn more about your options. They can help you figure out what’s best for you and your situation.

If you’re not sure where to start, check out FastExpert. We can match you with a list of top agents in your area who will compete for your business. This means you get the best possible service at the best possible price.

With FastExpert, you can compare bios, qualifications, designations, recent sales, and more stats on Realtors near you! All in one convenient, absolutely FREE, place.

  

Andrew Te

Andrew has 7+ years of experience in Real Estate and working with Real Estate Agents. He is passionate about the housing market and solving problems.  

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