31 Replies Latest reply on Apr 23, 2014 12:46 PM by MyR Community Manager

    Downsizing?

    lexi

      Hello All,

      I am new to this and hoping to hear from seniors in similar situations.  Living in my home for 37 years but had to refinance to give ex his share and now still have a 30 year mtg looming over me.  My social security plus very moderate pension will not be enough to pay my current mtg and the oil bills, etc.  Do I sell and try to purchase a one bedroom co-op cash?  Would this be a smart move financially?

        • Re: Downsizing?
          MyR Community Manager

          lexi, thank you for creating a new discussion thread! We appreciate and enjoy your participation in the MyRetirement online community and look forward to your future contributions.

          • Re: Downsizing?

            The real estate market is on an up swing in most areas.  This would be a good time to think about selling. Moving to something you can physically manage for the long haul before you need to makes sense.  Downsizing will make you more mobile over time.

            • Re: Downsizing?
              BoBraxton

              Not so similar - spouse and I remain together (since 1967). Personally, I dislike having to take some money action under duress (extreme pressure). For us, I prefer not to downsize (at least for another 15 years or at least another decade) at ages 69 and 70. Our place (indoor space) is small enough as it is. We have lived here since 1984. That means our own 30 years is approaching - coming to a close. We still owe (a little).

              • Re: Downsizing?

                I am single and 67. I own a large 4 bedroom home with a large yard to maintain. I would like to quit working but can not afford to stay in my house if I do. Unfortunately I still have a large mortgage balance so I will not get more than about $35,000.00 profit after all of the expenses. To purchase a condo in a respectable and safe area $35,000.00 would be a drop in the bucket. Luckily my family is belong relocated to Michigan where nice housing is far less expensive than here in Illinois. If I am careful I should be able to find a nice condo that I can afford within my social security and modest retirement fund. Fingers crossed in Illinois (glad to leave this state anyway)

                • Re: Downsizing?
                  yanushkevich

                  Hi Lexi,

                   

                  To me your problem is not a real problem, but if you are like most folks, by that I mean attached to material values, then you do have a problem.  Let me show you my side:  After I quit work and retired, I started renting an apartment to live in, no more mortgages, climbing on ladders, painting, expensive repairs or upgrades, I am just paying rent.  Since then, I have moved a few times, each time was a cinch, with minimal furnishings to pack and giving away most of my belongings to Goodwill.

                   

                  I love the freedom it gives me, I can travel any time and not worry, I don't have to shovel snow or put out the trash, and I only have a couple of bills, rent and electric.  When I sold my last home, I invested the money instead, and it gave me a nice income;  I actually used the income and part of the principal every year to live on, and it lasted me 15 years, by that time, I was already getting my social security benefit and was beginning my mandatory distributions out of my IRA.

                   

                  Last, I want to say, I don't even own a car, I lease mine and get a new one every three years;  my kids will be grateful when I pass, because there won't be any probate, mostly because I don't own property and my other assets have beneficiaries.

                   

                  I recognize this lifestyle is not for everyone, but for me, it works like a charm!  Good luck Lexi!@

                  • Re: Downsizing?
                    yanushkevich

                    One more thing Lexi, most homes are on two levels, my brother and sister in law have lived in such a home for the last 43 years and just can't make up their mind to move out of their house.  Their solution is to wait until one of them becomes incapacitated, then bite the bullet and move.

                     

                    My advice to my brother and sister in law, "It's too late"  you will be under pressure and make a snap judgment bad decision.  Better to plan your life while you have time and energy left.  That said, if you have a two story home Lexi, then think about this "what happens if I can no longer walk the stairs"?

                    • Re: Downsizing?
                      char_r

                      Hi Lex. I think your problem is very similar to most. I intended to rent as the other person had mentioned. But alas, that was not the case. However, I currently own a 3bdrm/3 bath condo that has a set of stairs, not a problem for me. I think what might be best is to create a plus/minus or pro/con list and attach values to each category.  For example, one category might be:” move to a smaller home”. You could assign a value of 3. Depending on your answer it could be +3 or -3. Assign values for all categories, probably no more than 10-20. Tally-up the answers to all categories and it might give you a hint as to your preference. The higher number is the way you are leaning. I’m in the process of doing this myself.  Good luck in your decision.

                        • Re: Downsizing?
                          yanushkevich

                          Hi Char,

                           

                          Your approach is quite analytical, perhaps it is your background, anyway it is very logical and a propos, except we are dealing with something which is not logical, and that is called "emotion".  My advantage is that I have no roots, born in France from parents who were already immigrants, it was easy for me to live in many of the States of the Union and move back and forth across the Atlantic a couple of times.

                           

                          Emotion is what my sister in law cannot deal with, she does not want to lose her friends, or her local farmer's market, so they don't move, even if their home has become a burden to them.  Living in your own home is a frame of mind, that is difficult to transcend when you move to an apartment, PEOPLE RESIST CHANGE.

                           

                          However, once you make up your mind and are willing to give it a few months time, then change becomes tolerable and even likeable because you meet new friends and develop new favorite places.

                           

                          so you are right Char in having brought up this point, psychological change can be traumatic, at first, it just takes a positive attitude and time to heal it.

                            • Re: Downsizing?
                              char_r

                              Very good point about "emotions". People will do most anything not to

                              change. I remember working at a company that put together seminars because

                              the company was involved in a merger, people just didn't accept the idea

                              that there would be no more employment. They were in denial.

                               

                              Very astute, yes I've been in computers for all my career and for the last

                              15 years in fundraising, from a data perspective. I also have 2 brothers

                              who are tied to their environments/scripts.

                               

                              What is your background if I may ask?

                               

                               

                              On Wed, Apr 9, 2014 at 1:54 PM, yanushkevich <

                                • Re: Downsizing?
                                  JoeW519

                                  Yes, emotions are involved ... but that is exactly what makes your point valid: by allowing some time between the downsize and the NEED to downsize, the role of emotion is diminished and it's easier to make a more objective decision.

                                   

                                  I say more objective decision because of course emotion is involved even now, and it is emotion that keeps people from wanting to "face facts." We don't want to downsize, as the current example, because of fear. We're afraid of getting old, of losing our independence and even our competence, and in our mind we don't really feel so very old. Youth is 'just like yesterday.' We don't want to admit it's nearly over; we fear we will lose all the good memories of good times. And it makes us afraid, I guess.

                                   

                                  Fear breeds stasis ... a deer-in-the-headlights response.

                                   

                                  Now if our attitude could somehow be changed ... if we could come to see downsizing not as a major loss but as a major opportunity to retain independence and perhaps even embark on new adventures ... it would get much easier, I suggest. Of course, and unfortunately, some people are unwilling, and others are incapable, to change the inside so their outside could begin fresh.

                                  • Re: Downsizing?
                                    BoBraxton

                                    another computer person (but no fund-raising). Computer programming 1974 - 1985 plus office automation; consultant "beltway bandit" 1985 - 1997; help desk (computer support) 1997 - 2009. My last day of paid employment was almost five years ago. We are living in the same house for just about three decades.

                                • Re: Downsizing?
                                  yanushkevich

                                  Hi Char,

                                   

                                  No wonder you started with a logic tree, that works as long as it is a physically solvable problem.  Unfortunately, you cannot apply such a technique to a relationship for instance (a mistake I did early in life LOL).

                                   

                                  If you want to know, I came to this country at the age of 14 and got a technical education, but my background and resulting lack of confidence made me shy away from any entrepreneurial endeavor.  For my money, a technical education is the best there is, but unfortunately most engineers stay in engineering instead of applying this skill set  to another career.

                                   

                                  So I always worked for a technical company which allowed me to take site assignments in the USA and in Germany, because I always loved to travel.

                                   

                                  On the other hand, my nature is to refuse professional advice, preferring to spend the time mastering the subject, as opposed to just letting someone else do it and then (often) suffering the consequences (I still do my own taxes).  So by dabbling in finances and making a few mistakes from which I learned, I mastered enough investing know-how, that allowed me to retire early and enjoy my time with my offspring.

                                • Re: Downsizing?
                                  jocee

                                  Every situation is kind of unique but here are my thoughts and also my experiences in downsizing.  We have moved a lot during my husband's career but deciding what we wanted in retirement was a different problem.  We definitely wanted to downsize both the square footage and the 1 acre of lawn but were stumped on how much down we could go and still feel comfortable with 2 people.  We looked a long time and finally found a house we thought would work for us.  Due to some previous health issues my husband had, we definitely wanted a one story house which also made the search harder.  After each house hunt visit, I would review with my husband "if we bought house A - these are the rooms we would lose, if we bought house B - these are the rooms we would lose".  It helped him visualize things better.  We also talked about what we would do in each room - would an extra bedroom hold an easy chair for quiet reading if someone didn't want to watch TV?  You really have to ask yourself a lot of questions to know what is best  for you.  We have heard of people downsizing too much and then having to move again.  Other friends have actually bought bigger homes for retirement which they regretted but had to hang on to during the housing recession.

                                   

                                  So not knowing how big your current house is, whether you have family nearby or if you get frequent guests overnight, you might want to think about that before buying a 1 bedroom condo.  You might want to rent in a development that you favor just so see how you like the space and community before buying.  Also, if paying cash for the unit leaves you with no emergency funds or even some extra funds beyond the emergency funds, you might want to think about that too.

                                   

                                  I agree with the person who said it is better to sell before you are forced to make a snap decision.  If you are sure you can't afford to continue to pay for the house, why wait any longer?  The housing market is improving in most places and it might be a good time to sell.  Just make certain you have figured out where you are going before you put the house on the market.  My sister Is in a similar position, can't really afford her house and definitely can't afford any major repair that might come up.  We have been visiting her every year and helping fix things up so she could sell the house when she is ready.

                                  • Re: Downsizing?
                                    JerryD

                                    Lexi, it's hard to give specific advice with little knowledge of your background and location. The best one can do is relay what they have tried.

                                     

                                    When I finally told the spouse "I AM retired", we decided that the suburbs of the large Midwestern city we lived in was too expensive and that we did not really need all of those city features given our rural upbringing. There was a BIG "NO!" vote for going back home which is rural and currently has over 300 inches of snow. Even an offer to fit in an extended Florida winter vacation did not sway.

                                     

                                    We had been traveling for years to visit one kid and family in a Southern state in various seasons of the year. Whereas we are obviously cold environment people and I personally dislike "hot" this locale is very pretty, much more laid back and significantly cheaper. We moved. We were also fortunate for various reasons to reunite the entire family here.

                                     

                                    I knew we done good when the tax bill was a full 2/3 cheaper on a much larger house on a creek with multiple acres. And we put money in our pocket when we sold. But I dispensed with that surplus in the first few years as we upgraded features of this already bigger house that we didn't need. But it sure is pretty here and I never thought I would ever live or afford a home in such a place. You might want to view a couple pictures of the area during various seasons at my profile. I threw in the last harbor picture to give you a feeling of what winter is like back home (don't understand why the spouse wouldn't like that).

                                     

                                    Several have commented about this being an emotional decision and it certainly is. How will I fit in? What will I do since I know little about this area or anybody there? And on and on. I suggest that you do a couple of visits in different seasons to see if you can handle it. Try to meet some people there. Much to our surprise the natives here are the most polite and accepting people. This AIN'T the city!

                                     

                                    After all of this, it is still a personal thing. I walked out the door, locked it and I was gone to live a new life. The spouse has more inertia and it took a few years to settle the pull between old and new. But now I doubt that the spouse would ever leave here. It takes different amounts of time for everybody.

                                      • Re: Downsizing?
                                        yanushkevich

                                        Jerry D.  Downsizing is actually the first step of realizing that you are a senior and therefore need to adjust your lifestyle.

                                         

                                        At this point in your life only two things matter:  (1). How long will your money last, based on the bare necessities as well as the expenses you want to undertake like travel, automobile annual lease, contributions and gifts, hobbies, etc..  (2) How healthy you are and whether you anticipate heavy medical expenses, for instance I decided to have several implants done in order to save my teeth, and that ran close to $50K. I also invested in several hearing aids, and those don't come cheap either.

                                         

                                        Once this is out of the way, you need to prepare yourself for the inevitable, you cannot do as much, stairs are a problem, cold and heat are also problems, but at least in warm climes you can cool off, and not be snowbound without power.

                                         

                                        I traveled a lot in my professional life, so I feel comfortable anywhere, just need a few good friends.  My brother has had a pretty sedentary life, and for him and his spouse, leaving the old neighborhood is still unfathomable.  I am afraid when he finally will have to take the step and sell his house, the psychological shock will almost certainly affect the rest of his life.

                                         

                                        Do it now, while you are still healthy and hale, decide once and for all that you are a senior and act accordingly! Good luck to you Jerry!  Hope your spouse gets on your wavelength soon.

                                      • Re: Downsizing?
                                        jkom51

                                        In 1998 my DH's stepfather died, and his mother lived alone in their (very nice) 3bd 2ba home, complete with steep concrete stairs front and back. For 8 yrs she managed just fine - but she was cash poor and house rich. With excellent morbidity, she simply did not have enough $$$ to manage her old age. She could not envision needing care, or becoming disabled in any way, despite having severe osteoporosis.

                                         

                                        Finally managed to convince her to sell the house. The RE market was beginning to slide downwards, but we got her out of her home (she lived for 38 yrs) in just over one month's time. Slam-bang-thank-you-etc.! She moved in with us in 2006, and yes, to this day she has fond memories of her home, her neighbors, the stores she used to visit, et. al.

                                         

                                        But by 2004 it was clear living with us was not good for her. Her dementia began to increase markedly. My DH was resistant to moving her, saying "it should be her decision too." I finally put my foot down and said, "Look, she CAN'T make that decision. She can't even decide what she wants to eat for lunch, at this point. She needs to be in a facility, where someone is there 24/7 to help take care of her and reassure her."

                                         

                                        We moved her to the facility we picked, in Nov 2013. It was so much easier for her, because her studio apt at the facility is even nicer than her bedroom was with us, including a lovely view of the hills (she can actually see our home from her window).  Because she sold her house, she has enough money for her old age, which relieved our minds greatly. We ourselves have no attachment to our home, although we love living here. We plan to sell before we get too much older, and use the proceeds to move somewhere else (also downsizing).

                                         

                                        I think in the OP's case, if you cannot manage the home financially, you are risking your entire future. You can carry memories with you, by believing that you're strong enough to manage this change in your circumstances. A house is just walls, floor and a roof. A home is in your heart.

                                         

                                        Don't confuse the two.

                                          • Re: Downsizing?
                                            yanushkevich

                                            Older age is a problem all around, we avoid dealing with it, hoping it will go away, but it won't.  It is our duty and responsibility to address this issue, before we give someone else the unpleasant task to do it for us. 

                                             

                                            One more thing, the longer we wait before making this decision, the harder it becomes.  In this case, downsizing is just one of many other issues that need to be settled.

                                              • Re: Downsizing?
                                                BoBraxton

                                                Decision means it is not a forgone conclusion. For now (70 or close to 70) our decision is age-in-place. To that end we just had two (tiny) bathrooms re-done with age in mind (including grab bars, higher seat, shower built-in seat, good lighting, non-slip and so on.

                                              • Re: Downsizing?
                                                lexi

                                                Thank u......u r right....

                                                 

                                                 

                                                 

                                                Brunie

                                              • Re: Downsizing?
                                                potteryjan

                                                One thing is to purchase a smaller home but don't dump all your cash into i,t as it is not easy to get it back out when needed. Just use the bank's money and think of it as rent ie. your mortgage payment. And invest the rest in mutual funds to generate income to pay your "rent".