Whether your are an empty-nester, a retiree, or recently single, downsizing may seem like an alluring and logical way to simplify your life and save on expenses. But for downsizing to really make sense over the long-term, you need to proceed with caution and avoid some pitfalls.
Do Not Rush
Be patient and take the time to do good research before you make a move. Make sure you have a full understanding of your finances and the potential impacts of a relocation. Moving is a major undertaking at any time of life, but downsizing in your later years can be an especially emotional process. Give yourself permission to take slow, small steps toward your goal.
Do Not Forget Fees and Other Expenses
To calculate the cost of moving, you must take more into account than just the value of your old and new homes. You also need to consider real estate fees, which will increase the cost of your transaction by as much as 10%; expenses associated with preparing your current home for sale; any upgrades you will need to make to your new home once you purchase it; and costs associated with moving and perhaps disposing of some of your possessions. While it is impossible to anticipate every expense, take the time to make as complete a calculation as you can.
Do Not Sign Anything You Have Not Read
This should go without saying, but is worth repeating. Condominiums, retirement communities, and assisted living complexes all require residents to sign contracts that are often complex and sometimes difficult to understand. Most charge annual fees and extra fees for certain services. Take the time to read all documents carefully and, if you have any questions, seek help from a professional to review contracts before you sign them. This will help you to fully understand your future cost of living, as well as any fees that may apply should you wish to move again in the future.
Do Not Buy Before Selling
If you have found a new place that you feel enthusiastic about, you may be tempted to take the plunge all at once and purchase a new place before your current home has sold. But to make the most of downsizing, it makes sense to operate conservatively. By selling your current home first, you will avoid the stress arranging financing to buy your new home or having to sell other valuable assets to make ends meet. Once your sale is made, you will have a concrete sense of how much money you will have to make your purchase, and you will be able to proceed with confidence.
Do Not Move Unless You Are Ready
It is possible that, through your research, downsizing will come to seem like a less attractive option or you will discover issues that need to be resolved before you can plan a move. There is no harm in staying put a little bit longer if doing so will provide you with peace of mind. Having all the information will prepare you for the next phase, whether it will take place in the old place or a new one.