8 Replies Latest reply on Mar 3, 2016 11:47 AM by sherylbug

    New here-will we save money by downsizing


      I hope I'm posting in the right place as I am new here.

      My spouse and I could use some feedback on whether to downsize or not, especially whether we'd save enough money to be worth it.  We are struggling with our  emotions when it comes to our home.

      We have  lived in our home for nearly 30 years and thought we would always live here. Over the years, we have created a place that feels like "us"

      But we wonder if our emotions are clouding our judgment. Is staying in our home the best financial decision as we head into retirement?

      A bit more about our situation  :

      We  live in an area of the country where home prices appreciate slowly. We bought our 3000 sq ft home nearly 30 years ago for 160k.

      We would be lucky to sell it for $300,000  now ( especially without some updates) so obviously our home hasn 't exactly soared in value over the years, especially compared to some place like California.  Low home appreciation is typical here.

      We have no mortgage or significant debt. However, the home maintenance is becoming more costly and we are concerned about even more costs as time goes on ( an aging roof and home) Our combined gas and water "budget" is over $429 dollars monthly . Our electricity is $138 monthly..

      To get the best price for our home, we'd need to replace carpeting, update the master bath (for functionality, not just looks), repaint, etc. Would the expense pay off?

      If we bought a reasonably well maintained and  smaller home we could definitely save on utilities and probably maintenance. A ranch style would work nicely as we age (ours is 2 story).

      We are in our 60s  and my spouse hopes to work till 70. The extra Social Security would certainly help our retirement budget but he also loves his job.

      Our kids are now adults and all but 1 are self supporting. One is special needs and lives with us.

      We have 2 grandchildren. They live 4 hours away and visit about once a month.. So we need at least 3 bedrooms. One for us, one for our son and one as a combination bedroom/office. A 4th bedroom would be ideal.


        • Re: New here-will we save money by downsizing

          Much as I would like to be reassuring, the truth is: there is no hard-and-fast formula for easily estimating such factors as dual retirements, elderly health issues, kids in perpetual need, and regional RE. Financial planning is never easy and even with a financial plan, you would still have a set of options that only you could decide on which one is "best".


          Recognize that "the best option" can change depending on how you feel. Only you can decide, because each action will have positive and negative aspects; it's up to you (and your spouse) to decide which negatives you can best live with.


          My MIL knew that selling her home was the most practical thing to do, but that didn't stop her from regretting leaving it, every day and maybe even every moment. The money gave her a comfortable lifestyle without worries, but her heart always yearned for what she had. She was the type who preferred the comfort of the past to the uncertainties of the future. She just couldn't bring herself to easily "let go."


          We, OTOH, could sell our home tomorrow and go live somewhere else. Mind you, we love our home, but in the end it's just a building. We have customized it to fit us, within reason (since we always knew we would someday sell it). We recognize, however, we can make new memories somewhere else. In our eyes, the future lies ahead and it will be what we make it to be.


          It is a tricky thing, taking that big step forward....scary, too. You can do it, if you set your mind to it.

          But do you NEED to do it? Maybe. If your budget is so tight that a run of bad luck will put you permanently under the bus, then yes, you do need to make some decisions. Because I can say, after five years in retirement, once you are on a fixed income there is a lot less wiggle room in your budget. One or two mini-crises, maybe; but two or three big emergencies? You need to think about what can happen and plan for it.

          I will also say, please plan for your special-needs child BEFORE something happens to you. If there is any chance that child will outlive you, you and your entire family need to have some planning agreed-upon and ready to put in place.

          Find a good RE agent - or maybe two - and talk to them. Don't be afraid of being spammed or bothered later; make it clear you are merely considering options. Ask for advice; they're professionals and it's their job. What's the selling price of your home if you can only do cosmetic changes? What changes should those be, to have the best impact? Take down notes; ask questions.


          Forget putting up the grandchildren with a third or fourth bedroom. Desks come in all sizes, including fold-up ones. You're not a hotel, and downsizing means just that. If somebody has to sleep on a sofabed for a couple of nights, it's not going to kill them or you. And yes, I can tell you that managing stairs when you're older is a real pain (pun intended). I broke my leg when I was 54 and it was FOUR MONTHS before I saw the MBR suite again.


          That was no fun at all, and makes you look at what's important in a whole new way. Now I wouldn't live anywhere without borrowing a walker and seeing if I could get it through the bathroom doorway - just in case! We were lucky I could fit my walker into the main floor bathroom sink alcove and shut the door behind me with less than 2" to spare.


          A lot of people try to do financial planning but do a very poor job of it. Planning properly means thinking about risk - the bad things that could happen, and how likely they are. You already know many risks, such as investing, RE values, etc., are not within your control. If a recession hits, your car develops engine trouble, your spouse slips and lands in the hospital with a lengthy convalescence time - you want a plan that helps you decide the options you do have, and how to pick the best one depending on the circumstances.


          Planning is a process, to help you make decisions. You always have options; but you want to narrow them down to the basics: prioritizing wants vs needs. Think about the situation in terms of visualizing another family in your situation. What would you advise them to do? Sometimes you need to remove yourself and "step back" from a problem, in order to see the possibilities that are there.


          Best of luck going forward to you. HTH!

            • Re: New here-will we save money by downsizing



              Thanks for the reality check about there being no hard and fast formula- that perspective makes sense.i know how emotions can muddle things because my last surviving parent could not leave the family home even after it became very expensive to maintain as well as potentially dangerous for an elderly person. Luckily, the money lasted for a lifetime but it gott pretty tight in some years.


              We won't be that emotional about moving..although I jave  to confess that it will sting some  to leave this home. . We do have a will and trustee arrangement for our special needs kid ( now an adult).However, it may need updating soon.


              We are furiously decluttering and getting rid of possessions now so we can be ready to move as soon as possible - and if we decide we can afford to stay the decluttering will still be a benefit.


              I honestly don't know-at this point-  what I'd advise another family to do. But I'll think long and hard about that, Good suggestion!

                • Re: New here-will we save money by downsizing

                  Glad to see you making progress on your retirement plans. You mention having a plan for a special needs child. Whereas I am neither into or leaning towards annuities, that approach seems to promise a means to guarantee a level of income for that child for life. Perhaps some portion of your TIAA retirement savings could be invested in an arrangement where the child is a surviving beneficiary of such an annuity. I again recommend the morningstar forum where many very, very savvy TIAA annuity owners regularly participate. They make my head swirl with the details but knowing your circumstances, I am confident they can cut through much of the annuity complexity and come up with a few well-thought out options. GOOD LUCK!!!!!   :-)))))

                  • Re: New here-will we save money by downsizing

                    I agree, decluttering is a good first step regardless.  I bought my house from a couple in the process of retiring.  The house had been on the market for a year.  The furniture was too big for the rooms, there were 3 chest freezers in the basement, the garage was so packed that you couldn't step into it.  That, and the condition of the house, had a lot to do with why they had no offers.


                    I've been in the house 10 years and recently did a big remodel based on the decision that I want to stay in the house at least another 10 years.  I did some decluttering up front just to have room for the chaos of remodeling  (good thing -- eventually it stretched to all 3 floors).  But I'm still decluttering as though I planned to sell.  I'll want to sell someday, and I'm in better shape to go through the process now than I will be in 10/20/30 years.  And if I don't make it to the assisted living stage, my brother or niece or whoever winds up with the house won't have as much to deal with.


                    And too, it's just more relaxing to live in a space where everything has its place.  It's a new feeling for me, and I like it.

                • Re: New here-will we save money by downsizing

                  YES!!! You can get some good advice here, Frugal!. As always, jkom, provides excellent advice in such matters. She has been associated with a financial planner in her past life and she also brings real-life experiences to her well thought-out advice. Read her post very carefully and relate it to your circumstances.


                  Before I launch into our experiences on relocating, may I suggest that when you are posting such questions on an open web site like this (these are NOT not you friends or church or paid adviser) that you spare the details because you never know who is out there and your posts last forever. One can talk in more general terms and still get great advice.


                  Our experience is similar to yours in that we lived in one very nice, large suburb of a major city for close to 30 years. It's hard to fathom leaving all of the things that have become "your life". For us, this beautiful town was far from where we were raised so that lightened the load a great deal. We were also fortunate in that a large part of our family would be very close in the new far away location.


                  One "constraint" that you may have that could be a major factor in your decision and in any solution. That is your husband loves his job and wants to keep working. That will severely limit how far you can move and the real estate options based on where you are now located. This is not trivial. We moved far away and our savings were considerable, $10,000's initially and $1,000's annually,, both in property costs but also living expenses and taxes. You may not be able to significantly benefit from these if you live in a large, expensive area that would limit the cost of living and housing prices. Only you and your husband can resolve that decision.


                  But that is just one of the constraints or limitations on your decision. The real hard ones are the emotional ones that only you can resolve and live with the results. I suggest that you and your spouse start 2 lists that include pro's and cons. Can you get the pro's to outweigh the cons? Again the emotional ones are hard and personal. For any that are dollar related like living expenses, taxes, utilities, housing costs, commuting costs, etc., I strongly suggest that you put these into hard dollar terms in a spreadsheet. Many indecisions can go around and around until you can put them into firm dollar decisions.


                  Now let's say that the pro's look like they are winning. You can greatly reduce the cost of moving. First, ask at least 3 Realtors with excellent reputations in your area (and eventually also in your target area(s) too) to make proposals on the value of your house, services that they will provide like advertising and their commissions. Their costs ARE negotiable and can affect your net gain. Get it in writing. I suggest that you limit the period you will give them an exclusive like 90 or 120 days, depending on the market and your asking price.


                  On the matter of working with a Realtor in a new and probably unfamiliar area, we created a set of questions and called the 3 largest Realtors in the area. We asked for the sales manger. When we got the manger, we asked that he/she identify and put us in contact with his.her absolute BEST relocation agent. The rational is that this person frequently works with large companies bringing sophisticated  employees who have much experience with buying. The agent WILL understand your needs very well and get right down to what you want and can get there. My spouse was listening as I asked such an agent our questions. When I hung up, she told me that that was the ONE. This was based solely on hearing my side of the conversation and deducing the questions that this agent was firing back at me. She found us a beautiful home, but we had to stick to our goals and desires since she tended to favor her listings and area. An agent is NOT "your agent". They represent the seller.


                  As to how much work you should do to prepare your old house, just remember that many buyers want convenience. They do NOT want to have to move in, find contractors and pay for fixes. Also remember that many are "seduced" by curb appeal. "Oh, Hon, isn't it pretty!" Forget the big upgrades. Think clean and pretty. That means paint and things like carpeting. Anything that you want to do, make sure that you get contractor/vendor references and look for good prices, not "elegant".


                  Our last house had not been painted inside or re-carpeted in over 15 years (NOT with a bunch of kids!!!). We got painting bids from $10,000 to $2,800 from a reference by our neighbor. Which one would you take? And he did an exceptional job too due to the referral. Similarly, carpeting can be very expensive for your house size which is similar to ours. It was well-known in our transient town that one put in carpeting called "Our Town" beige. It was clean, neutral, bright and cost only $3,000 and installed rapidly. Also pay somebody a few $100 dollars to climb around and wash your windows inside and outside. We also did some exterior concrete fixes on driveway, entrance stoop cracks. THIS WAS A MISTAKE! The work lingered, potential buyers passed through it and it was NOT something they valued. Bottom line: Ask you Realtor candidates what is the minimum work I need to do to get a good price.


                  Your approach is excellent! Get as much advice as you can, especially locally. GOOD LUCK!!!!    :-))))

                    • Re: New here-will we save money by downsizing

                      Thanks, everyone. We don't have debt but do wonder if it might be worth taking a home equity loan to replace some old windows,  one barely working sliding glass door, and also update a terribly old bathroom ( new counter and vanity to replace,a vamity with drawers which barely open and a counter with some stains,that won't come out)


                      Otherwise, we've maintained our home welll. We'd need to repaint  and add basic inexpensive carpeting  but that Be relatively inexpensive and add to the visual impact.


                      At one point,years ago, we hired a home stager instead of a home decorator because we wanted expert advice on creating attractive rooms without paying high  designer prices. And we actualky were considering moving but fell in love with our home again after the stager worked her magic.


                      For a small price  she  took our possessions and arranged them attractively,  moved our  furniture around to add visual appeal to rooms, repainted our old bedside tables,put molding around a basic bathroom mirror to give it a custom look, hung attractive blinds in some of our windows,etc. and suggested the perfect paint colors for our bedroom, living room, etc. We did have to  additional for the paint  and painter but it was still inexpensive,


                      We are still,living with most of those changes- which happen to be very comfortable rather  than simply looking staged.

                    • Re: New here-will we save money by downsizing

                      There's some really good advice in both of the posts.  W.r.t. real estate, I bought my condo and then my house after they had been languishing on the market for a while because the owners didn't want to fix anything or even to paint.  When I sold the condo a decade later so I could buy a house I had walls painted, floors finished, replaced the dishwasher, etc. and got a very good offer. See a Real Estate agent before you spend money.  What you like and what will sell in your market could be two completely different things.


                      You say that your husband wants to work until 70 but you could use the SS income.  Did you work long enough to draw SS on your own?  Perhaps that would be a way to supplement your income.  I'm not retired yet and not married so others here are more qualified to advise in that area.

                        • Re: New here-will we save money by downsizing



                          We paid for a Social Security program to figure out the optimum amount we could get by timing our Social Security  choices properly (my Social Security, spousal,benefits, etc). I don't know if I am allowed to name the service we used but it was worth the relatively small amount we paid to discover how to  make the most of our benefits.


                          The various options would have been very confusing and the  large variety of mathematical calculations extremely difficult for us to complete by ourselves. This way we could see how we could be at peace about making decisions which would optimize our Social Security total during  our retirement years.


                          The downsizing decision could make a huge difference in how much we'd have to  invest ior save- and could also lower monthly expenses enough to live more comfortably on our savings, Social Security, and investments. Home maintenance on a larger home can be very daunting!