Downsizing for retirement is a good way to simplify your life and cut down on expenses. Making some key changes, like moving into a smaller home, could reduce financial strain and improve your quality of life. It could also give you room to grow in new, unexpected ways.
As you approach retirement, here are some things you’ll be glad you downgraded.
Your Home
There’s a reason retirement experts often suggest downsizing your home or living space in retirement. It’s perhaps one of the most significant ways of lowering costs while simplifying your lifestyle.
“Downsizing to a smaller and newer living space can often translate to less cleaning and maintenance costs in retirement, which can optimize your cash flow in retirement and remove the stress of constantly having to upkeep your home,” said Steve Sexton.
Moving into a smaller or energy-efficient space can also cut down on your utility bill. If you were spending a lot of time or money on your outdoor space, downsizing can make things easier here as well.
Before taking the plunge, there are a few things you should do first, though.
“Make sure you consider all potential factors,” Sexton said, “like HOA fees, property tax, homeowners insurance, closing costs, real estate agent fees, interest rates, moving costs, etc., to make sure this makes financial sense for you.”
Your Work
While you can work full-time until the day you retire, Taylor Kovar, CFP and CEO of 11 Financial, suggested cutting back on your work-related commitments and working part-time for a while instead. This is something you can even do after you’ve officially retired if you still want or need some structure or additional funds.
Switching to semi-retirement or switching to part-time work can lead to a better work-life balance and more flexibility in your life. It also can cut down on any work-related stresses you might have had previously while giving you greater financial stability.
Your Investments
If you have multiple investment accounts, retirement could be a good time to combine or streamline some of them.
“I’ve advised clients to simplify their investment portfolios, moving from a diverse array of complex investments to more straightforward, lower-risk options,” said John F. Pace.
Doing this can cut down on account management fees, which is another plus for those trying to cut costs. Plus, it shifts the focus from wealth accrual to wealth management which, depending on your situation, could be a good change.
Your Financial and Legal Affairs
If you’ve been dealing with a relatively complex financial situation over the years, you might want to simplify it before retiring.
“Simplifying financial and legal affairs can greatly alleviate the stress and confusion that often accompanies retirement planning,” said Marty Burbank.
This includes consolidating any financial accounts you have — in addition to your investment accounts. It also involves creating clear-cut estate plans and ensuring everything is current when it comes to your legal documents.
“This simplification allows for an easier transfer of assets when the time comes and ensures that [your] wishes are respected,” Burbank said.
It also brings about peace of mind for both you and your loved ones.
Clutter
If you’re like most people, you’ve probably accumulated a good deal of clutter over the years. This can include sentimental items as well as other things you no longer need or use.
“While you’ll want to hold on to family heirlooms or things that have sentimental value,” Sexton said, “decluttering your space and selling off items you don’t need — sports/workout equipment, outdated electronics, furniture and clothes that no longer fit — can help you organize your space while making some extra cash on the side.”
https://www.gobankingrates.com/retirement/planning/things-you-will-be-happy-you-downgraded-in-retirement/?hyperlink_type=manual&utm_term=related_link_1&utm_campaign=1288640&utm_source=yahoo.com&utm_content=2&utm_medium=rss
