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Downsizing your home in retirement

Find out what to consider when downsizing and how a new home may affect your financial situation.

As your life evolves, your needs change. That's especially true of your housing situation when you transition into retirement.

Maybe your single-family home requires more maintenance than you’d like. Perhaps you'd like to move to a warmer climate. Or maybe living closer to grandchildren is a priority.

Whatever your reason, your Ameriprise financial advisor will help you think through your options and provide guidance on how such a change may affect your overall financial situation.

In this article

  1. Think about your lifestyle needs
  2. Understand your different housing options in retirement
  3. Account for the broader financial considerations when downsizing your home
  4. Questions to ask your Ameriprise financial advisor

Think about your lifestyle needs

Lifestyle is one of the most important considerations to account for when considering a change to your housing situation in retirement. Consider the following lifestyle questions before a move:

  • Upkeep: Do you want to continue with home maintenance chores and expenses? Can you afford to hire help? Will you have to rely on friends and family?
  • Proximity: How close do you want to live to family and friends? To public transportation? To shopping and social life?
  • Practicality: Will you be able to renovate your home as your physical needs change?
  • Personality: Do you adjust to change and make friends easily?
  • Family preferences: How does your spouse feel about moving or staying at home? Your family?

Understand your different housing options in retirement

Here are the most common moves that retirees consider as they enter the next chapter of their lives:

  • Stay in the family home. If you're physically independent and willing to do (or outsource) the upkeep, you'll probably be happy with this option. You might also consider remodeling your home to reflect your changing lifestyle and needs.
  • Purchase a smaller home, condo, or townhouse. Downsizing your home and moving into a smaller space in retirement may be less expensive and more manageable. With a condo or townhome, most of the outdoor maintenance is done for you.
  • Move closer to or move in with your children. This option requires an important discussion with your kids. Ask yourself:
    • How will other family members feel about such a move?
    • Will you miss having your own space?
    • Beyond family members, do you have other social connections in the area that can offer support?
  • Explore other retirement housing possibilities. Continuing care retirement communities (CCRC) are an increasingly popular option. CCRCs and/or assisted-living facilities rent rooms or apartments and offer as many or as few "extras" as you care to choose — housekeeping services, meals, social activities, transportation. Some also offer degrees of physical assistance if you require it.

Advice spotlight

Downsizing is a good opportunity to think through your ideal retirement location.

You’ll not only want to think through what amenities you’d like to have access to at your new home, but how a different cost of living and tax implications may affect your quality of life.

Account for the broader financial considerations when downsizing your home

Changing your housing situation can have multiple implications for your financial situation:

  • Real estate implications: How will a sale/purchase of a home impact your retirement income or financial goals? You’ll want to evaluate both the positives and negatives. For example, if you’re selling a home, you may end up earning a profit on the sale of your house, but certain costs like realtor fees, closing costs and repair expenses may erode some of those gains.
  • New monthly housing costs: Depending on your choices, you may end up with a higher or lower monthly payment. And even if you purchase your home outright, you could find yourself paying more for homeowners’ insurance and HOA fees, but less in property taxes. Regardless, consider how living expense changes affect your budget and income withdrawal strategy.
  • Moving expenses: Moving expenses can add up. Hiring a moving company, and furnishing a new home, can require a substantial amount of money. As such, consider how you may fund these one-time expenses by budgeting in advance of the move.
  • Tax and estate planning considerations: If you are moving across state lines, account for any changes in state income taxes, as well as potential estate tax implications.

Plan for the retirement lifestyle you want

As you contemplate a potential retirement downsizing strategy, talk to your Ameriprise financial advisor. They will help you understand how changing your housing might affect your financial situation and your retirement, now and in the future. 

How will a change in my housing situation, such as downsizing, affect my financial situation in retirement? How might the sale of my home impact my financial goals? What unique financial and lifestyle considerations should I take into account as I consider a move in retirement?

When you’re ready to reach out to an Ameriprise financial advisor for a complimentary consultation, consider bringing these questions to your meeting.

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