While downsizing after your children graduate and move out seems liberating, it can be scary. Here are a few things to consider as you contemplate this next chapter in your life.
The day has finally come! Your children have graduated college and started their first jobs. But more importantly, they are no longer living with you nor are they depending financially on you.
One of the first things that has come to your mind is the possibility of downsizing your current home to cut down on house maintenance and property taxes. However, while part of it seems quite liberating, it can also be a bit scary leaving the house you’ve lived in for the last few decades.
Here are a few things to consider as you contemplate this next chapter of your life:
• As you look to simplify your housing by finding a smaller space, you should consider that there is a possibility that at some point, your children may move back in with you for a period of time. Or, could a parent come live with you? There is a reason you are known as the sandwich generation!
• How small is the right size? What possessions are you willing to part with? Logistically, downsizing is often easier said than done. It may be hard to part with items of sentimental value. Consider how much space you need not just for the inhabitants but for items that you plan to keep.
• Consider trying out what it’s like to live in smaller quarters. If you are reluctant to sell your house at this point, perhaps you can rent it out and try living in a smaller house or condo to see what it’s like.
• Since being close to the right schools is no longer of importance, perhaps consider making a move to a more urban location. Proximity to restaurants, stores and less home maintenance have drawn many empty nesters from the suburbs back into the cities.
• There is the possibility that downsizing may not actually end up being cheaper. You would need to think about your home value, moving costs and closing costs. For example, moving from a house in the suburbs to a condo/coop in the city may seem like it may be cheaper but it might not be once you take into account higher cost of living, maintenance cost and higher car insurance premiums.
• Downsizing can be tough logistically if you are looking to sell and buy at the same time. Sell the old place first! The last thing you want is to be paying a double mortgage. But remember, that may mean storing furniture and belongings if it is difficult to coordinate the timing.
• The savings from downsizing can be substantial in some circumstances but it should not be the sole expected source of your retirement nest egg. Keep in mind your house is not a liquid asset.