Should You Relocate After Becoming an Empty Nester?
Your home has three extra bedrooms, two full bathrooms, and a spacious backyard where the kids can play. It's situated in an excellent school district. The local parks and rec department offers phenomenal sports and educational programs.
And now that your kids have grown and moved out ... are these amenities still improving your Return on Life? Between real estate taxes and your mortgage, you're certainly still paying for them!
Empty nesters should discuss these three questions with their spouses to decide if downsizing could be the right move.
- Are we happy in our current home?
If, all things considered, you'd prefer to stay where you are and potentially retire in place, then what are the other factors that have you considering downsizing?
If space is an issue, you might think about how to repurpose extra rooms, such as creating a dedicated office or hobby space, building a home gym, or making one of the kids' old bedrooms more accommodating for visiting friends and family. If you're having a hard time justifying your mortgage, taxes, and utility payments, look for other ways to economize. Without kids, do you really need that second – or third – car? Are you paying for any monthly subscriptions or memberships that you're not using? Will the monthly cost of household goods go down now that it's just you and your spouse?
- What would downsizing cost us?
The housing market has been booming this year, in part, because demand is far exceeding supply. If moving after retirement has always been one of your goals, your house could be a hot commodity right now. Just make sure you talk through potential tax implications with your advisor and CPA.
However, if your goal is to downsize expenses, a smaller house isn't necessarily going to be cheaper, especially if you move to another state with higher costs of living. Speaking of moving, that's not free either. What will it cost to ship all of your stuff? Or are you budgeting to furnish your new home?
Many seniors look to renting as a downsizing option. But the same supply and demand pressures that have heated up the housing market are driving up rent prices as well. You could end up spending more on a smaller home while building no equity.
Also, don't overlook the emotional costs of a big move. Selling your house can be a stressful and exhausting process. And once you do sell, you'll be elbowing around in this intense housing
market with everyone else who wants to move. Downsizing could very well begin to feel like a job, especially if it stretches out for months.
- What's on our bucket list?
Of course, the right sale and the right move could give your nest egg a cushion and open up some new possibilities for your retirement.
Moving could put you closer to activities you only got to enjoy on vacation while you were working, such as skiing, fishing, or country club sports. If your adult kids are starting families of their own, you could move closer to them so that you can be an important part of your grandchildren's lives. Or, perhaps you and your spouse want to see as much of the world as you can. Downsizing could allow you to dedicate more of your resources to long cruises, first-class flights, five-star hotels, and fine dining.
Your life is going to be very different now that you're not working and raising a family. As your retirement evolves, your feelings about your home might evolve as well. If downsizing is an option you want to explore in more depth, let's see where this transition could fit on your $Lifeline and start planning to get you where you want to be.