The kids have all left home, you spend a lot of the year travelling and visiting friends, and the maintenance on your property is quickly getting out of hand. Saying goodbye to the family home will never be easy, but with the possible boost to your savings, a more manageable property and access to financial liquidity on the cards we ask the question- should you downsize in retirement?
Why Would I Want to Downsize in Retirement?
It seems obvious, but retirement usually results in a rather large reduction of income for most households. Of course, we all hope to be comfortable enough to maintain our current standards of living, but downsizing can often make our lives more comfortable and manageable as we age.
In saying that, the decision to downsize will depend on your own circumstances, and there are a lot of reasons that people choose to downsize their properties in retirement. They begin with the physical components, such as:
Access to medical care
More appropriate living arrangements as you age (mobility)
Downsizing your property may also reduce or eliminate mortgage stress if you are still paying off your loan when you enter retirement. This capital boost, and the possible capital appreciation on your property, can enable a much more comfortable standard of living, and often creates more time and opportunity to spend on hobbies and with family.
Is Downsizing the Only Option?
Selling your home to move into a smaller one is a great retirement strategy, but it isn’t the only option available to you. Instead, you may choose to:
Sell your property and rent another
Take on tenants yourself (depending your property set up)
Downsize and take on tenants
Downsizing may also put you in a position to purchase an additional property or condo, which can generate an ongoing rental income to supplement your retirement.
Conversely, with the costs of selling and moving taken into account, altering your existing property to account for mobility and care as you age may become a more viable solution.
Are There Any Disadvantages to Downsizing My Property?
There are always pros and con’s when it comes to major financial decisions. When it comes to downsizing in retirement, some of the major considerations include:
The cost of moving
The cost of selling
The potential loss of relationships with friends and family (if you choose to move further away)
You may need to renovate/update your current property in order to sell
If your property is not listed as the primary residence you may need to account for capital gains
It can be difficult to establish yourself in a new community
There can be other costs involved if you choose to move further away from your amenities, such as travel costs and limited access.
It’s also imperative that you downsize to the right property. Not making a big enough leap could lead to more costly adjustments in the future, i.e. you may need to sell and move again. Going too far, however, may compromise your retirement-lifestyle by more than you needed.
Thinking About Downsizing in Vancouver?
Downsizing in retirement has a specific set of challenges that can make it a difficult process. The timing of this decision can also greatly affect it’s viability, whether that is dependant upon the current state of the market, or your personal needs moving forward.
At the West Haven Group, we can help you to downsize your property, and ensure you are making the right decisions to provide for a comfortable retirement.
To find out if now’s a good time to downsize, or for any other information, please reach out and connect with our dedicated team.
For many of us, the dream of a big family home is enough motivation to get out of bed every morning. But after the family leaves the nest, it’s not uncommon to find yourself with too much space and an ever-increasing list of costs and maintenance. Downsizing in Vancouver can be the perfect solution, giving you back the time and money to enjoy your new home, and it’s location.
Why Downsizing in Vancouver Can Be the Right Move
There are a lot of reasons that people choose to downsize their properties in Vancouver. Being able to reduce your living and maintenance costs and unlocking capital in your property to name a few. But more typically, we see people looking to downsize when their children have left home, or in a move to a different neighbourhood to be closer to amenities and other lifestyle benefits.
Downsizing could also be the right choice for you if you travel a lot for work, or are looking to travel more permanently. Rather than paying expensive utility bills and property taxes for rooms that aren’t being used, moving into a smaller property or condo may free up some much-needed capital, as well.
As the boomer generation continues to exit the workforce, we most often see retirees looking to downsize in Vancouver. Considerations like comfort, the difficulty of living in multi-storey housing as you age, and being closer to family and friends are all reasons to consider downsizing. But other unforeseen events such as relationship breakdowns, employment circumstances, or global pandemics can also become aggravating factors.
Make Downsizing Easy With These 5 Steps
1. Define Your Goals
Before you can downsize, you need to determine the necessities, and which things you are happy to compromise on. Room is a given, but you need to consider things like:
how much room do you actually need to live comfortably?
Do you need a guest room or can you sacrifice it to minimise costs?
Which neighbourhoods would you be happy to live in?
How long do you plan to live there? Will stairs become an issue?
Are you trying to avoid maintenance?
All of these questions and more will help you to make decisions on the type and size of property that suits your needs.
2. Buy or Sell
When it comes to property, the decision to buy or sell first comes down to personal circumstances. There are a number of factors that come into play, such as:
the current state of the market
The specific properties involved. Are they unique? Will they be an ‘easy’ sell?
The risks involved with either option
Flexibility with your time, finances or options
For more information, see our detailed write-up. Using an experienced realtor can help to streamline this process for you, and give you advice specific to your circumstances.
Then it’s time to make some tough decisions.
3. Pack and Sort
Downsizing in Vancouver can mean a much smaller space than you’re used to. You’ll need to decide which pieces of furniture you might donate, which items you consider essential and which ones you do not. In short, what are you taking, and what are you saying goodbye to?
It can be an emotional process, and we suggest starting as early as possible. Some people prefer to start in unemotional rooms, like the laundry or garage, before moving into the main parts of the home.
When you begin to pack, it’s important to consider whether the items you’re keeping serve your plan for the new property and its uses. Does it help you meet your goals? Have they actually been used recently? In many cases, a lot of possessions can be passed down to family or friends, who can enjoy them as much as you did.
4. Call in the Favours
Moving day means all hands on deck. Depending on your circumstances you may be able to rely on friends and family, or paying for a moving company may suit you better. Either way, it can be an emotional and stressful experience, so remember to breathe, and take your time.
Spend time in your new property, arrange and re-arrange. But don’t forget to enjoy all the great things about moving to a new place! Get outdoors and explore, get to know the street names and how to find your way, meet the neighbours. Often it lets you appreciate a neighbourhood while you get to know it, and it’s a great way to find it’s quirks and rhythm.
Thinking About Downsizing in Vancouver?
The process of buying or selling your home is a big task in and of itself. But downsizing has a more specific set of challenges that can make it a difficult process. At the West Haven Group, our dedicated team can assist from start to finish. Whether it be determining your goals or helping you to sell or find your new dream property, we are always here for you.
To find out if now’s a good time to downsize, or for any other information, please reach out and connect!