Downsizing is a common tactic taken by retirees to improve their financial situation.
- Retirees will have to make a choice about whether to downsize their homes, which has both advantages and disadvantages.
- Personal finance expert Suze Orman says homeowners may want to sell before retiring if doing so will save them money in the long run.
Retirement comes with many important lifestyle changes. When you’re getting ready to leave the workforce, you’ll have to decide whether you want a change in your housing situation to be one of them.
For those who own their home, selling it upon retiring can make a lot of sense — but not in every situation. Since it can be difficult to decide if moving is the best option, homeowners may wish to consider Suze Orman’s opinion when making the choice.
Suze Orman has some advice about downsizing in retirement
On her blog, finance expert Suze Orman acknowledged that aging in place, or remaining in a current home, is a popular goal among people who are retired or who are planning on leaving the workforce soon. She understands many people have memories associated with their homes and so they may not want to leave.
And, in some cases, she believes there’s nothing wrong with staying put. Specifically, Orman said she’s all for remaining at home during retirement if:
- Your mortgage will be repaid prior to retirement.
- You’re 100% sure you can cover property taxes, maintenance, and insurance both now and in the future.
- You can cover these costs from guaranteed sources of income, such as Social Security, retirement benefits, a defined benefit pension plan from an employer, or an immediate annuity.
In other situations, Orman suggests selling a house and downsizing before formally retiring.
The reason: Making a move can often free up cash that can be used for retirement savings. If homeowners can sell the larger, more expensive property they were living in before retiring, they can use the profits from that home to buy a smaller place they hopefully can live in mortgage-free.
Homeowners who are still working but decide to downsize before retirement may also be able to save more if they sell early. By doing so, it’s possible to free up money that can be invested to build up a retirement nest …….