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“The less you own, the less that owns you.” – Nicole Snow
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Downsizing is a real consideration among pre-retirees and retirees. My wife and I decided that downsizing was right for us. We downsized and lived in a small patio home for the last 10 years.
Let’s Talk About Some of the Pros and Cons of Downsizing Your Home
At what age do most people downsize their homes? The age at which most people downsize their homes is between 69 and 77 years old, according to the National Association of Realtors. Baby boomers and the Silent Generation sell their homes to move close to friends and family or because their homes are too big.
My wife and I don’t fit the previous statement, as we moved to a new city and downsized at the age of 62. Transferring my dental practice to a younger practitioner afforded us the opportunity to move to another location and into the smaller patio home we had previously purchased.
We had many considerations that we evaluated before selling our larger home and moving to a smaller patio home. After living in our patio home for 10 years we have decided to rightsize to a larger home. We lived very comfortably in our patio home for 10 years. It was perfect for my wife and me and fit our needs. Over a 10-year period, our needs changed as our family grew and we found our small patio home no longer fit our needs. We decided to rightsize to a larger home.
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Was Moving Into a Larger Home Absolutely Necessary?
The short answer is NO! Our small patio home was perfect for our needs. We could have stayed in our patio home, but it became more problematic, especially for family gatherings and entertaining. Because our patio home no longer fit our family’s needs doesn’t mean it wasn’t a good decision ten years ago, and we could have stayed in our smaller home regardless of family considerations.
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Let’s look at some of the pros and cons associated with downsizing:
*Less maintenance– A smaller home generally means less maintenance when compared to larger homes. Both our home and yard were smaller than our previous home which meant I spent less time maintaining both home and landscaping. When the initial landscaping was done, a watering system was installed, which also cut down on the amount of time spent maintaining the landscape. Our home was new construction, and that also factored into the minimal amount of maintenance needed.
*Less taxes– downsizing to a smaller home in the same area means downsizing your tax liability since property taxes are based on the square footage of a home. This may not be 100% true if moving from an area with lower property taxes to an area with higher property taxes. Even with a higher tax rate, smaller homes tend to have a smaller property tax assessment.
*Less utility usage– Less square footage means less space to heat and cool. This equates to lower utility costs and lower utility bills. Retired people tend to spend more time at home than those who work and this may multiply utility savings from downsizing. Even though more time is spent at home, it’s spent in an environment with smaller utility demand.
*Less cost for home– Generally, smaller homes will also carry a smaller price tag, especially if remaining in the same town or moving within the same geographic area. Moving to a smaller home in an upscale area or to a smaller home in a state with higher real estate prices may negate some of this benefit.
*Less stress– owning a less expensive patio home was actually less stressful. It costs less to purchase, less to maintain, less tax burden, and less of a need to “keep up with the Joneses.”
*Freedom to do other things (more time)-Because of the decreased size of our patio home and lot, it required much less time to maintain. Upkeep of the house and yard was less time-consuming.
*Freedom to do other things (more money)– because our monthly and annual expenses declined, we felt we had extra money to do other things. For example, our insurance costs (auto, homeowners, flood insurance, and umbrella policy) at our new home were several thousand dollars less than our larger old home. We effectively had several thousand dollars more in free cash each year to spend due to the decrease in insurance costs.
*Forced closeness– a smaller house with less square footage meant that my wife and I spent more time together, either in the same room or in close proximity in an adjoining room. This can be a good or bad thing, as forced togetherness can potentially be a stress creator. Either way, it’s something to consider!
*Different demographics of homeowners– we found that the demographics of our neighbors were different in our smaller patio home. Generally speaking, our neighbors were either single, divorced, widowed, empty nesters like us, or newly married without a family. These demographics suited this home size.
*Less storage space– smaller square footage means less available space for storage. This can also be a good or bad thing. For homeowners who can’t seem to get rid of things, it can be a really bad thing!
*Less garage space– less square footage means less garage space. One of the things I really missed when we moved into our patio home was adequate storage and/or workspace in the garage.
*Reduced clutter– downsizing can be a great opportunity to consolidate and reduce clutter. Prior to moving into our patio home, we had three garage sales and donated large amounts of “stuff” we had accumulated over the years and didn’t use.
*Releasing equity– Selling a larger home and moving into a smaller home is normally a way to release the equity built up in the bigger home. Generally, smaller homes cost less which means there’ll be money left over after the purchase of the new and smaller home.
*Moving costs– moving from a larger house to a smaller house normally requires the services of some type of moving company, adding additional cost to the process of downsizing.
*Cost of buying and selling– there are also the normal real estate costs associated with buying and selling a home.
*Freedom from “Things.” A chance to declutter– there is a certain amount of freedom, derived from getting rid of many things you’ve held onto for years that you can’t continue to hold onto because you don’t have room for them anymore. Once these things were sold or donated, we felt a certain freedom. We realized that we did not truly need a lot of the things that we were holding onto.
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Final Thoughts
Downsizing was certainly a wonderful thing for us. It gave my wife and I the opportunity to evaluate living a simpler, less expensive lifestyle in a small but well appointed patio home. We experienced a certain sense of freedom after selling our larger, more expensive Home.
Although it was not our primary directive, downsizing allowed us to reduce our spending in many different ways.
Now that we are upsizing, we look at that 10 year period and realize how much money we saved by downsizing. These savings will help pay for the increased expenses of our larger home.
We certainly could have continued to live in our patio home very comfortably and without regret. Our decision to move was driven by external forces, and not by the living conditions of our patio home.
In a future Blog and Podcast I’ll discuss the pros and cons of buying a larger home after living in a patio home for ten years, in addition to what drove our decision.
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