Downsizing Your Home For Retirement: How To Prepare For The Future

Downsizing Your Home For Retirement: How To Prepare For The Future

Downsizing Your Home

A variety of factors will impact your decision, including: How close are you to medical care and transportation? How much income and expenses are you prepared to shoulder? How much debt are you carrying? How much income are you receiving? How much money is left in your savings? You can spend a lot of time and money saving up for retirement and not taking advantage of the opportunity to enjoy it. If your savings aren’t enough to maintain your current lifestyle, many people find that downsizing their home can give them the flexibility to make some of those expenses tax-deductible while significantly improving their quality of life. For example, many retirees use home equity loans to fund renovations to increase their quality of life.

Selling Your Home

Selling your house is, for many Canadians, the first step towards retirement. Once you’re out of the workforce, you won’t have as much time on your hands to devote to your house, but you still need to make sure you have somewhere you can live once you’re no longer in a job. As the rise of alternative housing options — such as Airbnb, student housing and even condos on Airbnb — demonstrates, a primary concern for many people who are planning to downsize is where to live once they have the freedom to stay anywhere. Some downsizers look to have their houses renovated, while others move to smaller homes — there are myriad options, but the important thing to remember is that a home is a home, and regardless of how big or small it may be, you can’t convert a house into anything else.

Most Canadians live in homes owned by someone else and this means there’s a strong possibility they will have a loan to repay in retirement. The average retirement loan is between 30 and 35 per cent of the property’s value. If you don’t want to wait until retirement to repay the loan, there are several things you can do now to reduce the burden. If you have paid off your mortgage, downsizing is more cost-effective because it reduces your housing costs. If you’re renting, downsizing can mean a reduction in rent costs and if you sell your home and put the equity in your new home, you may be able to reduce your mortgage. Strategies for downsizing include moving to a less expensive area, splitting your home with family or friends or moving to a smaller home on your own.

Planning For The Future

Depending on their lifestyle, individuals will need to decide whether they want to downsize to smaller quarters or stay in their existing home for as long as possible. As you contemplate your options, the most important factors to consider are how long you’re going to live in your retirement home, how much you’ll need your home to sustain your lifestyle, how much of a financial setback selling your home may cause and how you feel about having less personal space. Downsizing a home is not something that should be done lightly, as it will impact your lifestyle, your taxes, the value of your home and your lifestyle.

Conclusion

When it comes to preparing for the future, you don’t need to go all out. While the financial world can be intimidating, it doesn’t have to be. Whether you’re looking to downsize, get a second house, or even stay put, you don’t need to reinvent the wheel in this area.

If you are looking for an alternative way to sell your home that doesn’t involve putting in any work into it, contact us at Bow River Properties. We are private home buyers in Calgary and we specialize in buying properties in any condition, without listing on the market and multiple public showings. We don’t charge any commission or fees too! Fill in the form below to get in touch.

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