Finally, the moment has come. You’ve been working for the better part of your life, and now it’s time to reap the benefits in retirement. It can be a welcome relief to leave the workforce. There’s now an unlimited amount of time for travel, leisure activities, visiting with children or maybe grandchildren – the options are endless. It’s an exciting time, but as you enter retirement there are also a few things you should consider. There are ways to make your life easier and more feasible. Make your retirement fund last, and even add to it by downsizing.
Check out the 9 best ways to downsize and enjoy your retirement to the fullest.
1) Move
When retirement comes, many couples find they are living in a house that’s too big for them. If you made the decision to start a family, you probably bought a house that could accommodate your family and loved ones.
If you had children, it’s likely they flew the coup a while back. This leaves you with a half empty house. Downsizing to a smaller home can save money, especially if your mortgage is already paid off. The housing market has been a little shaky, so it may be wise to consult a realtor to get a realistic estimate on your current home’s value. Then it’s time to start looking for a smaller space. Once you make the sale, you’ll be able to pay for your new digs in cash (no mortgage!). Downsizing like this should also leave you with some extra money to add to your nest egg.
2) Rent Out Your Space
You may find it’s emotionally difficult to leave a home with so many memories. This is the house you spent many happy years with your family.
You may have also invested a lot of time and money in your home with improvements and modifications. You are probably well-integrated in the neighborhood and leaving the comfort of the community can be tough. It’s understandable that you may not want to give this all up. Here’s another option: consider renting out your empty room(s). Your location will dictate the success of this business venture. For example: if you live near a university, you have a good chance of finding students who are looking for quiet, safe housing. This will generate cash for essentially doing very little. If the mortgage is not paid off, this will help. If it is, this extra money can help to pay your property taxes and other expenses.
3) Scout New Location
There are many things to consider once you’ve made the decision to sell your home and downsize to something smaller. Of course, you will want to get a good deal on your new home, but this isn’t the only important thing.
It’s essential to scout the neighborhood and surrounding area of your potential new home before you buy. If you’re moving to a different state, make sure the property and income taxes are not higher than what you’re paying now. If you find you’re moving into a more up-scale neighborhood or a city center, consider the cost of living in a more affluent or expensive area. Things this like could result in breaking even or even paying more for your downsized home. Ask yourself, would the move actually be worth it in the long run?
4) Rent A New Space
This may be perceived as counter-intuitive or taking a step backwards, but in some cases, it makes sense. Once you close on your old home, you’ll have the funds to invest in something new.
Most people automatically think about buying another, smaller home. But why not consider renting? It may equate to the same, or less than, if you buy a whole new house. Remember, as a renter, you don’t have to worry about maintenance costs or general labor. This is especially attractive to retirees because due to their older age, these things aren’t as easy to accomplish. It also ensures your housing expenses every month will be predictable. There won’t be any surprise cost for broken appliances or roof repairs as this is your landlord’s responsibility. Try to negotiate a rent controlled deal. Otherwise, you risk a rent raise at the end of your lease.
5) Donate Old Things
Chances are you’ve accumulated a lot of “stuff” over the years. The garage may be packed with old sport equipment, bikes, tools, furniture, and more items that you may no longer use. Some items may be keepsakes and hard to part with.
Others, however, could be money-making opportunities. Depending on the condition of the items, donating them to a charity has several benefits. One, you are helping others in need. Two, you can get a tax write-off for the items you donate. This can result in cash at the end of the fiscal year. Tip: consider your professional work clothes from when you were a part of the work force. As a retiree, you don’t need those expensive suits, shoes, and accessories anymore. If they’re still in good condition, those are high value items and can net you a pretty penny when it comes to the write-off.
6) Adjust Insurance Plans
Often parents will sign up for life insurance policies. This protects their family, especially their young children, if the unthinkable should happen. Once the children are grown, though, do they really need that insurance if something should happen to you?
They are likely off on their own, working, and providing for themselves. Unless your children are still dependent on you, your life insurance policy may not be a necessity anymore. It may be difficult to scrap this type of insurance, and cash out what value it has. This decision may not be for everyone, but it’s a way to save a bundle every year by eliminating this monthly cost. You can also consider downsizing to a policy that protects only your spouse should something happen to you. Discuss it with your insurance agent to find a solution that works best for your situation.
7) Re-Evaluate TV & Phones
You may not realize how much you’re spending on entertainment and communication. We tend to take things like cable TV and telephones for granted. But, do you watch all those premium movie channels?
Research alternate cable packages for one that better suits your preferences. Still have a landline in your house? The entire world operates with cell phones. If you have a cell phone, a landline is a redundant expense you can do without. Speaking of the cell phone, how often do you use it? If the answer is “not much” then it’s time to re-evaluate your phone package and see where you can cut back. Prefer talking to texting? Downsize the text message allowance. If you rarely access the internet via your phone, cutback in this area too. Many phone companies have great pay-per-usage deals, or cheap monthly plans without the frills, and there are some that cater to seniors specifically.
8) Sell the Second Car
Many couples have their own car. Maybe it was once necessary for taking the kids to soccer practice and dance lessons, as well as getting to and from work. Perhaps you even sprung for the big SUV, or minivan.
These are perfect for larger, active families and make everything from daily commuting to family vacations a lot easier. Once the kids are grown, however, you don’t have these needs anymore. If you have a family-size car, consider trading it in for something smaller and more economic (i.e. something that doesn’t guzzle gas or cost a fortune to repair). If you and your spouse each have a vehicle, think about whether it’s necessary. Do you always ride together? Do you rarely travel anywhere alone? If the answer is yes, it’s time to downsize and sell the second car and save on having to insure and repair two vehicles.