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How to Manage Retirement Finances through Downsizing and Decluttering

By Lyle Solomon March 14, 2023 Managing Money

Before you decide on your retirement living options, there are several factors to consider, whether you’re contemplating downsizing to a smaller home or moving to a retirement community. It’s essential to calculate what you can afford, take inventory of your retirement goals, and consider how housing factors into your transition to retirement. To determine if downsizing is the right choice for you, refer to our guide below.

Why Are Downsizing and Decluttering More Vital for Retired People Than Young People?

Downsizing and decluttering can be important for both the retired and the young, but there are a few reasons why it may be more significant for you if you are retired:

Reduced Income

Retired people generally have a fixed income, which means that you may have less money to work with than you did when you were working. Downsizing and decluttering can help you reduce your expenses and make your money last longer.

Health and Mobility Issues

As you age, you may experience health or mobility issues that make it more challenging to maintain a larger home or manage a lot of possessions. Downsizing and decluttering can help you create a more manageable living space and reduce the risk of accidents or injuries.

Estate Planning

If you are thinking about estate planning and passing on your assets to your heirs, downsizing and decluttering can help you simplify your estate and make it easier for your heirs to manage the assets after you’re gone.

Enjoyment of Retirement

Finally, downsizing and decluttering can help you enjoy your retirement more fully. By reducing your expenses and streamlining your possessions, you can focus on the things that matter most to you, such as traveling, spending time with family/friends, or pursuing hobbies and interests.

How Can Downsizing and Decluttering Help You Manage Your Retirement Finances?

Downsizing and decluttering can help you manage your retirement finances in several ways:

Reduce Your Expenses

When you downsize your home, you’ll likely have lower housing expenses, such as mortgage payments, property taxes, and utility bills. Similarly, decluttering can help you simplify your lifestyle and reduce spending on unnecessary items.

Generate Extra Cash

If you sell some of your belongings during the decluttering process, you may be able to earn some extra cash to put towards your retirement savings or to cover other expenses.

Simplify Your Finances

Downsizing and decluttering can help simplify your financial life by reducing the monthly bills you must pay and the number of accounts you need to manage. This can make it easier to keep track of your retirement income and expenses. You’ll have more cash in your hand than before. If that’s not enough, try to settle credit card debt or payday loans to lower your high-interest debt burden and save more.

Enhance Your Retirement Lifestyle

Downsizing and decluttering can help you free up more time and resources to focus on the things that matter most to you in retirement, such as traveling, pursuing hobbies, or spending time with loved ones.

Overall, downsizing and decluttering can help you streamline your retirement finances, reduce expenses, and enhance your retirement lifestyle. By making these changes, you can live more comfortably and confidently during retirement.

Pros of Downsizing and Decluttering for Retirees

More Manageable Living Space

By downsizing and decluttering, you can create a more manageable living space that requires less cleaning and maintenance, making it easier to maintain an active and independent lifestyle.

Financial Savings

Downsizing to a smaller home or apartment during retirement can save you money on utilities, property taxes, and maintenance costs, allowing you to redirect those funds toward your retirement savings or other interests.

Less Stress

A cluttered and disorganized living space can create stress and anxiety, and downsizing and decluttering can help you create a more peaceful and serene environment.

More Mobility

By moving to a smaller, more manageable living space, you may be able to free up more time and energy for travel, socializing, and pursuing hobbies and interests.

Legacy Planning

Downsizing and decluttering allows you to pass on cherished possessions to loved ones while streamlining your own possessions and making it easier for family members to manage their estate in the future.

Cons of Downsizing and Decluttering for Retirees

Emotional Attachment

Downsizing and decluttering can be emotionally challenging, as it may require letting go of sentimental possessions or memories associated with a particular home or space.

Loss of Community

Moving to a new location or downsizing to a smaller home or apartment may mean leaving behind a beloved community or social network, which can be difficult for retirees who value those connections.

Adjustment Period

Moving to a new location or downsizing to a smaller living space can require adjustment. It can be stressful for those used to their familiar routines and surroundings.

Limited Space

Downsizing to a smaller living space may require you to prioritize and make difficult decisions about what possessions to keep and what to let go of, which can be challenging for those who have accumulated a lot of belongings over a lifetime.

Moving Costs

Moving to a new location or downsizing to a smaller living space can be expensive, and retirees should consider the cost of hiring movers, transportation, and other expenses associated with relocating.

What Are Some Unique Strategies to Downsize and Declutter?

Host a “Clothing Swap” Party

This is a fun and social way to declutter and refresh your closet. Invite friends over and have everyone bring clothes that they no longer wear or want. Then, swap clothes with each other to get new outfits without spending any money.

Sell Items Online

You can use online marketplaces like eBay, Craigslist, or Facebook Marketplace to sell items you no longer need or want. This might be a fantastic way to earn extra money while decluttering your home.

Digitize Photos and Documents

You probably have a lot of old photos and documents that take up physical space in your home. Digitizing these items can help you preserve your memories while reducing clutter. You can use a scanner or a smartphone app to digitize these items.

Gift Items to Family and Friends

As a retired woman you can give items you no longer need or want to your family and friends as gifts. This can be a great way to share memories and pass on special items while decluttering your home.

Rent Out Extra Space

If you have extra space in your home, you can consider renting it out to earn some extra income. You can use platforms like Airbnb or HomeAway to list your spare rooms or spaces for short-term rentals.

Purchase a Smaller House

Buying a smaller house is a typical method of downsizing. Fewer rooms to heat and cool, lower utility costs, less house maintenance, and lower property taxes are all advantages of smaller square footage. Look for a ranch or a little house to settle down for retirement if you want easy access.

Rent an Apartment

Apartment living is a fantastic retirement alternative! Typically, renting is less expensive than getting a mortgage and requires less upkeep. Apartment living also offers a wealth of perks, like laundry facilities, clubhouses, swimming pools, and gyms.

Look into a Townhome or Condo

An intelligent retirement downsizing option is to move into a townhome or condominium. Some benefits include less maintenance, a convenient location, a sense of community, and excellent amenities. There may be less privacy from your neighbors, though, depending on how the walls are located in your townhome.

Relocate with a Child

In search of a means to remain near your family? If your adult child’s housing status permits it, move in with them! This gives you a practical retirement living alternative because you can seek their health help and fortify your bonds with your family. A senior resident can have their bedroom, bathroom, and kitchen in a separate living space that can be added to the house as an in-law suite.

Think About a 55+ Community

Benefit from retirement community life by choosing one! This retirement living option gives you a sense of community with your peers, and it comes with amenities like swimming pools, exercise centers, and golf courses. Due to the absence of surrounding schools, taxes usually are minimal in the area. In some 55+ communities, you should be ready to pay HOA dues.

Choose Assisted Living

A fantastic option for you may be assisted living if you’re downsizing. This choice is quite flexible; if your health deteriorates, you can select more support or independent living in an apartment. While making arrangements for your golden years, this is also a great choice.

Adventure on a Boat or in an RV

Wish to spend your golden years living by the water? Contemplate living on a boat! You would pay for mooring or docking at a marina instead of a mortgage or rent on a home or apartment. You gain the advantages of being surrounded by people, simplicity of transportation, and a carefree boat life. Also, living on a boat is environmentally sound because it uses less energy than a conventional home.

Consider buying an RV to live in as you travel the nation if you enjoy the adventure on the road! There are several different RV types, including campers, travel trailers, and motorhomes. Don’t know the advantages that come with living in an RV? No mortgage, electricity costs, or homeowner’s insurance make road vacations convenient.

Bottom Line

A good contribution and an easier transition into a retirement lifestyle can be made by downsizing your home by organizing, decluttering, or otherwise reducing your living circumstances. But the procedure isn’t always a straightforward approach or an easy one.

While some might choose to purge their possessions, others might not. Like home moves, not all homeowners need to downsize, even if some do. Whatever you decide, adhere to the advice above to achieve financial independence.

Let’s Have a Conversation:

What financial benefits have you gained from downsizing and decluttering? How much does it help you save money in the long run? What are some strategies that you have used to downsize and declutter effectively? How did you decide what to keep and what to get rid of? Are there any creative ways you have used your excess belongings to make money? What are some common mistakes you make when downsizing and decluttering? How did you overcome these pitfalls and make the process go smoothly?

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Lauren Teton

Renting out rooms in my home through AIRBNB has proven to be a good income solution to help me stay in my home. I don’t take short term rentals, most stay a month, and often years. This turns out to be co-housing, the biggest trend in housing, and a win-win-win situation for me, the guest, and our society at large! If you are fit and have the personality for it, it is a fun practical solution!
Lauren Teton
Airbnb Mentor and Twifties Founder


I just retired from teaching 25 years, and downsized to live near my adult kids in another state! I always planned to move back where my kids are when I retired, but did not expect housing and apartments to triple in cost recently! The least expensive apartments located in a safe area in the NW. here are twice the price of my old home mortgage in the Midwest! I was not expecting this and makes finances extremely tight! I would love to live in a retirement community but those are even more expensive! I have only been retired for 9 months and living off the sale of my home, so looks like I will have to get a part time job to make it next year, or depend on the help of my son who is helping me with some finances!
a bit disappointing since I am just turning 65, and still very healthy and active.


Now you know what the younger generations are dealing with.

The Author

Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998, and currently works for the Oak View Law Group in California as a Principal Attorney.

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