4 Reasons to Move to a Smaller Home in Your 60s (Most Forget #2!)
Owning a home is an essential part of the American Dream. This is especially true for our generation, which grew up at a time when traditional family living, centered around the cozy home with a well-maintained lawn and a white picket fence, was idealized in magazines and on TV.
In fact, our big homes have become so much a part of our lives that we can’t imagine life without them… even when they no longer meet our needs.
Well, today, I want to argue that our definition of the American Dream might need some adjusting as we approach our retirement years. Instead of assuming that “bigger is better,” perhaps, when it comes to our homes, we need to consider the possibility that “less is more.”
Here are 4 reasons to consider moving to a smaller home in your 50s or 60s.
Free Up Your Capital to Invest in Your Financial Future
Let’s be honest, despite being called “the richest generation of all time,” most of us baby boomers haven’t done a great job of saving for retirement. But, if there is one saving grace to our situation it is that many of us own our homes free and clear.
The obvious challenge is that the money in our homes is “locked up.”
One option, of course, would be to take a reverse mortgage. But, as you probably know, the fees and terms associated with this type of agreement can be torturous. I’m not saying that reverse mortgages are always wrong, but, if you are in your 50s or even 60s, you probably have better options.
Another option would be to rent your home (or even just a room) on Airbnb. This can actually be surprisingly lucrative, but, it requires you to deal with strangers, taxes and other management issues.
So, at the end of the day, perhaps the easiest way to free up your home is also the most obvious – to sell it and move to a smaller place.
How much could selling your home in your 50s impact your retirement? Let’s look at the numbers. To simplify, I’m going to ignore closing costs and other fees.
If you sold your home, at age 50, for $400,000 and moved into a small, $250,000 condo, you could free up $150,000 to invest. If you achieved a 9.8% return (the 90-year historical average for the S&P 500) and left your money for 20 years, you would have an additional $886,000 for retirement!
I’m not giving any financial advice here. But, I hope that this gives you something to discuss with your financial advisor. He or she can help you to crunch all of the numbers and decide whether selling your home makes sense in your personal situation.
Reduce the Stress, Time and Money Needed to Maintain Your Home
For several years after my kids left the house, I continued to live in a 5-bedroom home on the outskirts of Seattle. Even with no-one around to do laundry for, I probably spent an hour or two every day, cleaning, gardening, dusting, wiping, vacuuming, scrubbing and sorting.
Now, I live in a one-room studio apartment and I can honestly say that I have never been happier. Everything in my home has a story to tell. Every cup is precious and every postcard is a time machine.
How much time do I spend cleaning now? Probably 15 minutes a day… tops!
I’m not saying that you need to move to a studio or tiny home to get the most from your 50s and 60s. I’m simply inviting you to challenge your assumptions about how much space you really need.
What would you do if you had an extra hour every day? Would you finally go to the gym? Would you stop using that gentle yoga DVD as a coaster and start using it to build your balance and flexibility? Would you start a business? Learn a new skill? Something else?
At our age, time is our greatest asset. It’s simply too valuable to spend with “Mr Muscle.”
Kick Start Your Downsizing (Rightsizing!) Adventure
“Downsizing” has become a trendy word in recent years. As a matter of fact, I’m actually not a big fan of downsizing… I much prefer the concept of “rightsizing,” which involves giving up the things that don’t make you happy to make room for the things that delight and inspire you.
But, here’s the thing. When you are in a big house, it’s easy to ignore all the stuff around you. My 3-car garage was filled with boxes from floor to ceiling before I started my first rightsizing wave. I say “first,” because rightsizing has been a stop and go process for me for the last decade.
One of the most challenging (and ultimately life-changing) experiences that you go through when you move into a smaller home is that you are forced to confront the pile of “stuff” that you have acquired over the last 50+ years.
Yes, some of these items can be sold to fuel your retirement. But, the primary benefit of rightsizing in your 50s is that it frees up mental space to focus on the things that make you happy.
So, don’t wait until you are 70 to start organizing your life. Use your big move to kickstart your rightsizing adventure now!
Save Money on Utilities, Taxes and Other Costs
When you are working and raising a family, “small” house costs like utilities, taxes and maintenance don’t seem to matter that much in the great scheme of things.
But, I can promise you one thing… once you reach retirement, every single penny will matter. This is true whether you have $1,000,000 in the bank or $1,000.
Not only could moving to a smaller home give you more money to invest for your future, but, it could also be one element of your “practice retirement.” In other words, getting into the habit of eliminating small recurring costs today will set you up for financial success in the future.
Could you see yourself moving to a smaller house in the years leading up to retirement? Why or why not?