Many people decide to sell their current homes as a part of preparing for retirement. They want to buy a smaller house where their life will be simpler, utility bills will be lower, and maintenance will be easier. However, if they are not well informed, they can get much less profit than they have hoped for. Here’s a list of common mistakes people make when downsizing in retirement and ways to avoid them.
Overestimating or Underestimating Your Current Home’s Worth
The majority of people think that their house will fetch a high price. It’s easy to be optimistic and dream about the profit you’ll have, but knowing the current state of the local real estate market is very important. Some websites and banks are offering online estimators to determine a home’s value. To get a better picture of what you can expect to get for your home, you should check several of these sites because they might use different formulas in their calculations.
However, the best step you can take is to consult a reliable local real estate agent and get an estimate of your home’s current market value. You may ask them for advice about inexpensive things you can do to boost that value. Significant renovations are rarely cost-effective, but some home staging steps can be helpful. Have in mind that you’ll have many costs related to selling your current home, such as:
- Sales commissions
- Legal fees and other taxes
- Fixing and repairing what is necessary
- Basic staging of your home
- Cleaning services
- Storage costs,
- Moving costs, etc.
If you’ve owned your home for many years and remember what you paid it is possible that you will underestimate the value of your home and accept the first offer you get. Even though you may be eager to get on with your retirement, don’t accept an offer that’s less than you deserve.
Underestimating the Cost of a New Home
Just as you have to research about local real estate market when selling your home, you must do the same thing for buying a new one when downsizing in retirement. You can use online tools to check recent sales prices in the desired neighborhood for the type of home you plan to buy for your retirement. If you want a home with certain amenities, that is energy-efficient, keep in mind that you may have to make some significant initial investments.
A new home comes with various new costs. New construction may require landscaping, and you may need to buy new furniture which will fit better in your smaller space. Also, you’ll probably pay for establishing new services and shutting off the old ones. There might be some fixing, upgrading, painting, decorating, etc.
Moving into an Unfamiliar Neighborhood
Moving to a new area as a senior can be challenging, and researching the new environment and spending some time there is crucial. Don’t make the mistake of moving on impulse into a totally unfamiliar neighborhood only because you found a reasonable price for a particular home. Downsizing may be good for paying off your mortgage, but that’s also something that you’re doing for your calmer future and more enjoyable retirement. So, you must make a wise decision and avoid regretting it later.
Always research the cost of living in the new area, and think about how you’ll fill your days there. Remember to check healthcare options in a new neighborhood, as well as proximity to pharmacies, banks, ATMs, grocery stores, farmer’s markets, some entertainment facilities, and everything you might need in your everyday life. Proximity to your family and friends is another factor to consider. You may not want to be too far away from your children and grandchildren or your close friends.
Not Hiring a Moving Company, or Choosing an Unreliable One
Older people may feel great and consider a DIY relocation. However, you’re probably not as fit as you once were. Moving large and bulky items can cause injuries or serious health issues. Hiring a professional moving company has its price, but as a result, you can have peace of mind. There are plenty of moving services, that offer packing, loading, transport, and unpacking. However, some disputes with movers are always possible.
You can do your part by hiring a reputable moving company with a recommendation and good online reviews. Be sure to read the contract carefully and you may want to buy additional insurance for your belongings. After a move, there might still be a need to resolve issues with the company you hired. If you had a delay, damage, or a problem with the bill, try to stay calm, polite, clear, and objective, and you’ll soon find the right way to handle the moving dispute.
Not Having a Plan for Your Money
The decision to downsize in retirement can be driven by money or a desire for simplicity. Still, it’s crucial to plan for what to do with your money. You can put some money into long-term investments, but you must decide which ones. As soon as the money is available in your bank account, you should have a plan. That will help you avoid spending too much at once on the things you might regret later. You should, of course, consult with your spouse and your children before making any significant financial decisions in retirement that can affect your future.
Conclusion
Planning for your future after you retire is exciting, but it can also be overwhelming. There will be many choices and many decisions to make, and certainly, some of them will be tough. You must know your priorities, and you’ll have to make some compromises as well. The main benefit of downsizing in retirement should be a life with less stress. You deserve more tranquility in the years to come, so think of it as your primary goal.
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