When Should Retirees Downsize Homes?

For many retirees, it makes better financial sense to downsize sooner rather than later. Over time, the financial benefits can make a big difference in extending the life of a nest egg. Some of the hesitancy stems from the belief that trading a home with a paid-off mortgage for an apartment or condominium with maintenance or association fees will produce higher monthly costs — which experts say is not necessarily true. Lawrence Glazer, a financial planner at Mayflower Advisors, states, “In a home, the expenses are hidden. It’s maintenance, a roof, a boiler, heating, and landscaping.” Others are concerned that family — specifically adult children and the grandkids — will not have a place to stay when visiting. Glazer says that, depending on the frequency of the visits, it is more economical in the long run to put family and extended family up in hotel rooms. In addition, he adds, most adults do not really want to go back to their parents’ house “and stay in the room with their old posters on the wall.” Switching to a rental or condo can help with money planning, too, Glazer says, as seniors will be able to determine what their fixed costs will be. Downsizing can have a major impact on a retiree’s financial plan. Even with a mortgage that is 100 percent paid off, housing often accounts for as much as 30 percent of retirement expenses, according to Steven Sass of the Boston College Center for Retirement Research. | Read More