The decision to retire is a significant one. You have a number of important decisions to make before leaving the daily commute behind and moving on to the next phase of your life.
From how to best tap your retirement funds and make your nest egg last to how you will occupy all the free time, you have plenty of things to think about before you leave the world of work behind.
One of the most important decisions involves the home you will live in. Will you continue to live in the same home where you built your career and raised your family? Will you move to a retirement community where you can bond with other active seniors? Or will you sell your home and use the proceeds to hit the road, perhaps living in an RV and driving across the country?
These are all important questions, and the time to ask them is now, before you accept that gold watch and move into retirement. Downsizing your home and moving into a smaller and less expensive property has a number of advantages, but there are also some potential drawbacks to think about.
The most obvious benefit is a financial one: If your home is worth a lot of money, selling it will free up a lot of cash. Even if you choose to buy a new property, chances are it will be far less expensive than the one you previously owned. If you choose to go the RV route, you could save even more and have plenty of funds to explore the country.
Selling your home can also improve your quality of life and give you more time to pursue hobbies and other interests. You may have needed that large home when you were raising your children, but now that the kids are grown and out on their own, all those extra bedrooms just mean more cleaning and maintenance.
Selling your home in retirement also gives you a chance to relocate, if that is what you want to do. Many retirees dream of moving to a warmer climate, one where there is no snow to shovel or ice to slip on. If you have always dreamed of retiring to a warmer area, selling your current home can give you the cash you need.
There are a number of potential downsides to selling your home in retirement. Timing is one of the potential pitfalls; if you retire during a down housing market, you may not get as much for your home as you had hoped. That in turn could limit the options you have going forward, thus forcing you into a smaller home than you need or reducing the amount of money you have to pursue your other interests.
In some cases emotional ties can make selling the family home difficult. That home is, after all, where you raised your family. You may find that you regret selling a home with such a strong emotional pull.
There is also a chance you will regret the move you had been looking forward to. You could find that the retirement community is not all is cracked up to be, or that the warm weather is not worth the traffic and influx of tourists. If you do find yourself regretting the decision, reversing it could be hard.
Retirement is a major change in terms of finances, but the change in lifestyle is just as significant. If selling the family home and downsizing in retirement is part of your plan, you will need to plan carefully and make sure you do not make a mistake.