Many people favor the idea of selling their current home and downsizing to a smaller location can provide an income for their retirement years. If done correctly, downsizing is a good idea for retirement.
However, avoiding these common pitfalls will make this retirement idea a successful reality.
Overestimate
The Smiths down the street sold their home for an over-asking price and boarded first-class flights to spend their sunset years in Hawaii. However, what did the Smiths really net from their home sale? Instead of hoping your home will sell as profitably, do some homework.
Check with local realtors or use websites like Redfin or Zillow to get an estimate of what your home could fetch. Knowing a realistic assessment of your home’s worth will inform your retirement decisions.
Underestimate
Just like overestimating your home’s worth, underestimating the cost of your new downsized property is a trap to avoid. Researching the recent sales in the desired area can go a long way. Additionally, plan a visit to the new location. Even renting for a bit in the new area to extend the research would be time and money well spent before overextending on a smaller property.
Tax Implications
Selling a home could result in owing the IRS income tax. In addition to income tax, there are other tax implications to think about. Moving to a new state should include investigating the property tax, sales tax, and even income taxes. All these taxes could affect how retirement dollars are stretched.
High-Maintenance House
Large lawns, detailed landscaping and pools look beautiful, but can be costly to maintain. Spending retirement money on maintaining these elements can be expensive too.
When looking for a new retirement property, opt instead for townhomes or condos that have outdoor services included or have minimal outdoor areas to keep up.
High Taxes
Retirees should exercise caution when buying homes in high-property-tax locations. Local property taxes can vary widely. Researching these before making the move is critical, as they can dramatically impact monthly expenses.
Closing Costs
Selling your home comes with costs. Title, legal, and recording fees all add up. Don’t forget about the real estate agents commissions as well. Before signing the mountain of paperwork, be prepared with what costs will be once the sold sign is put in the front yard. Preparation can alleviate unexpected costs and ensure maximum profits.
HOA’s
Homeowners Associations (HOA) can offer amenities and services, but they can also be a source of high expenses. Asking what the assessments are and if there are plans to increase the fees in the next few years are essential questions when looking at properties with HOA fees. Many 55-plus communities offer fabulous clubhouses and even maintenance services, but the fees can creep up, especially if the services are not utilized.
Historic Woes
Despite their charm and potential, historic homes contain the possibility for high home costs. Aging plumbing, HVAC systems, and electrical systems are costly repairs. Finding a home that is ready to move can eliminate unexpected expenses as well as make retirement dollars last longer.
Stairs
While mobility might not be a problem when buying a downsized property, it can become one later. Retirees should buy homes with essential living spaces and bedroom(s) on a single level. Stairs on the outside of a home can also become a challenge. Single-story living is ideal when choosing a retirement home.
Rural Property
Being away from the hustle and bustle is appealing for a retirement home, but being too far from civilization can also be challenging.
11 THINGS YOU’RE TOO OLD FOR AFTER AGE 50
They say 50 is the new 40. While there’s nothing to fear about hitting the half-a-century mark, here are certain things you should avoid for the sake of your health and your sanity.
11 THINGS YOU’RE TOO OLD FOR AFTER AGE 50
47 SURPRISING IDEAS TO EARN AN EXTRA $1,000 A MONTH
As inflation rises, making ends meet is getting harder and harder. Fortunately there are many options today to earn extra cash. Here are 47 ways to earn an extra $1000 a month.
47 SURPRISING WAYS TO EARN AN EXTRA $1,000 A MONTH
11 QUARTERS WORTH $10,000 OR MORE
Have you checked your spare change lately? These 11 quarters may look fairly common, but they are worth serious money to collectors. Find out how to spot them!
11 QUARTERS THAT ARE WORTH SERIOUS MONEY – $10,000 OR MORE
THE DECAY OF OUR SOCIETY: 10 THINGS THAT WERE ONCE GREAT THAT HAVE BEEN LOST FOREVER
While society has made progress in some areas, many things were just better in the past. Here are 10 things we wish hadn’t disappeared in the name of “progress”.
The Decay of Our Society: 10 Things That Were Once Great That Have Been Lost Forever
10 U.S. CITIES THAT ARE SHRINKING AT AN ALARMING RATE
While some downtowns are undergoing a rebirth, other cities are rapidly dying out. Here are 10 cities that are fighting for their survival.
DYING CITIES: 10 U.S. CITIES THAT ARE SHRINKING AT AN ALARMING RATE
