Should You Downsize in Retirement?

Written by Brenda Spiering

Friday, March 23rd, 2018

With skyrocketing real estate prices, downsizing can be a great way to unlock some of the equity you have in your home to help fund your retirement. But there are some important factors you should consider before you put your home on the market.

For Linda Duringer and her husband Tim Hall, downsizing and moving from Toronto to Aurora, Ontario (a smaller town north of the city) was the best decision they ever made.

"We were able to buy a home in Aurora last year for a fraction of the cost of our Toronto home and invest the difference. We essentially bought ourselves a pension," says Duringer. "We also love the quieter pace of life in Aurora. And the fact our new home in the older part of town is just a close walk to local shops and restaurants."

But while moving to Aurora made sense for Linda and Tim, who have close friends and family in the area, downsizing isn't the right solution for everyone.

Betty Hargrove of Moncton, New Brunswick says she has no intention of ever selling her large family home. Instead of downsizing, when her husband became ill and needed to move into a nursing home, she converted their home's basement into a separate apartment. She then moved into the basement, and her daughter and son-in-law came to live in the upstairs part of the home.

"It's a great arrangement," says Hargrove. "We're independent from one another, and I have the comfort of staying in my home knowing I have family nearby."

"The decision of whether or not to move in retirement is a very personal one," says Toronto realtor, Linda Tickins. Before you put your home on the market, she suggests you consider the following:

1. Is It Worth It?

Downsizing to a smaller home or condo may make sense in terms of lifestyle considerations. But the price point may not be different enough for you to draw much money out. It takes some realistic number crunching – factoring in potential extra costs, such as decorating and condo fees – to make an accurate assessment.

2. Where Are You Going?

In order to draw enough money out of your home to help fund retirement, you may need to move out of your area. But think carefully before you move to a small town or head to cottage country. Do you love cottage life? Are you a city person? Before you move, you need to honestly evaluate your current lifestyle and the things that truly matter to you.

3. Mobility Considerations

It's important to think of the future. Downsizing to a townhouse, for example, may seem like a great idea in early retirement. But townhouses are usually built on multiple levels and climbing up and down all those stairs may someday prove to be a challenge. A one-story bungalow or condo may be a better option.

4. Proximity to Healthcare and Other Services

Moving to a remote cabin on a lake may seem like a dream, but it's important to consider how far away you'll be from community services. Will you have to drive for miles to the nearest shop? How far away is the nearest hospital? Access to healthcare in particular can become more important as you age.

5. Being Close to Family

It's tempting to think moving away from the city to a home in the country could mean your kids will enjoy coming to visit even more. But the reality is that when your kids are busy, and if they're parents themselves, these visits may become few and far between. If your idea of a perfect retirement is spending time with grandkids, you may want to move closer to your kids rather than further away.

Tickins' final advice: "Timing is everything. Downsizing can help fund your retirement. But it takes energy and planning, so don't wait too long. The best time to move is in early retirement when you can enjoy it as part of an exciting new adventure."

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