Several things happened this week to cause me to think more about downsizing. Friends I hadn’t seen for many years dropped in on their way back to Ohio from the Florida Keys. They loved my new home and we talked about “downsizing”. It became clear that the husband was all in favor of it and living “lighter” and closer to doctors and cultural amenities. Their home is on a lake, beautiful, but very isolated. The wife, on the other hand, went on about how, the grandchildren loved visiting them and the “armada” of boats they had to entertain them with. This conversation was an example of the problems married couples can have in reconciling their individual preferences when it comes to downsizing and where to live.
For myself, I was feeling very grateful that I had moved when I did, leaving the big two-story home with all the stuff, as I ended up having an operation the first week of January with a recovery period of 6 to 8 weeks. So much easier doing that in a one story smaller place!
The next day I came across an article in the Wall Street Journal by Tom Lauricella titled “Downsize a Home Sooner, Not Later”. My motivations for downsizing were multiple: I wanted to make life easier for myself, I wanted to make it easier for my son to deal with things when I passed, I wanted to save money in living expenses, and I wanted to do it while I was strong and healthy enough since downsizing is hard work. The article, however, while acknowledging all the reasons why people might want to downsize, focused heavily on the economics of making the move.
“When it comes to downsizing in retirement, “if it makes sense, don’t wait,” says Steven Sass, an associate director at the Boston College Center for Retirement Research. Retirees may feel they are incurring additional expense by trading a home with a paid-off mortgage for a rental or condo with monthly maintenance fees, but Sass says just the savings in reduced property taxes alone could offset the new monthly fees. In addition, there are the savings from reduced maintenance costs such as roof or heating system replacement and landscaping costs. Investing the difference in sales costs by buying a less expensive home frees up funds that could be added to savings enabling the retiree to withdraw additional funds for living expenses. Those trying to assess the financial benefit of downsizing can go to http://squaredaway.bc.edu/  and click on the “housing” link to find a tool to analze the financial impact of making a move. The Boston College Retirement Center website has a lot of other useful information also.
While certainly not a strong motivation for downsizing for most people, there is a macro economic factor also. Downsizing to smaller homes, frees up larger, older homes, often in good school districts for young, growing families at prices that would be less than for new construction. Certainly my move from a 2400 sf. two story home with space I didn’t use, made it possible for a young family with two children move into a lovely neighborhood with green spaces and a good school district for probably $100,000 less than a similar newly-built home in a less central location would have cost. I got what I needed and saved at least $1000/month in living expenses plus the looming cost of a new roof, and the young family got what they needed. Everyone wins. Unless you are wealthy, for most people these days, maintaining an expensive property so that visiting children and grandchildren can enjoy it from time to time, is an expensive luxury. Do the math!