Published March 30, 2022
Downsize or Upsize—Which Is Right for You?
At one time, it seemed that everything you read in the newspaper’s real estate section had to do with downsizing—the practice of selling off the family home and moving to a small, low-maintenance villa or condominium. The favored communities for downsizing were often located in the South, offering good year-round weather and no more snow shoveling. It sounded like a great deal—pre-pandemic.
At that point, many families found themselves living in small
condominiums with adult children and college students returning home for
quarantine. Everyone thought it would be for a week or two, at most. Now,
almost 2 years later, some families are looking to re-upsize, either by buying a
new, bigger home, by installing an accessory dwelling unit (ADU)
in the backyard, or by renting an additional apartment in order to provide
better options and a little more elbow room for their families.
Once COVID is in the past, these homeowners will have to decide whether
they want to re-downsize or if more room makes more sense. Meanwhile, Gen-X
homeowners are thinking ahead and wondering whether downsizing really works for
the active retirement they’re envisioning.
What should you consider before downsizing? How do you know whether
downsizing is a viable option for you and your family? Here are some questions
to consider.
Where will you celebrate holidays?
If you and your
spouse think of yourselves as the head of your extended family, how would
downsizing affect your holidays? Do you want enough space for everyone to come
home for a family feast or will you be just as happy celebrating with your
adult children in their home? Can you see yourself renting a larger vacation
home over the holidays if you need more room, or do you want everyone gathered
around the hearth at their childhood home?
Do you have family members who may move back in?
If you still have
children in college, are they expecting to come back home for a few months
after graduation? Do you have adult children who are single and who may need a
soft place to land in the event of a job loss or financial reversal? Do you
have elderly parents or other family members who may be expecting to live with
you when they can no longer remain in their home? The unexpected has a funny
way of happening, so having a little extra room may make all the difference.
Will you want the grandkids to come to “Camp Grandma and
Grandpa” each summer?
You may be
envisioning a fun-filled retirement in a resort-style community where
temperatures are warm and the sun shines all year long. However, if your
retirement community restricts visits by those under 55, you may find that your
children and grandchildren can’t visit as often or as long as you would like.
Worse, you may find that you don’t have room for the grandkids to stay over
without throwing your downsized home into chaos.
How often do you travel?
If part of your retirement
plan involves frequent travel, you may be able to get away with a smaller home
in retirement. After all, if you’re not planning to spend much time there, the
lack of space may not be a problem. However, as you slow down with age, or if
mobility becomes an issue, you may be spending more time inside and wishing for
a little more space. When deciding whether to downsize, think both short-term
and long-term for maximum satisfaction.
What is your retirement lifestyle like?
Gone are the days
of sitting in a rocking chair and watching the world go by in retirement.
Today’s active adults are often starting second careers, returning to school,
heading up volunteer organizations, or starting home-based businesses. You and
your spouse may both need a home office or hobby space and you may be collaborating
with employees and colleagues, requiring additional room.
Do you enjoy playing the host?
During your working
years, you may not have always had time for dinner parties, cookouts, and other
opportunities for entertaining. Now, however, you may be thinking about
refining your cooking skills, hiring a caterer, or crafting a signature
cocktail. If entertaining friends and family is on the menu, make sure you’ve
got spaces that are both fun and functional.
Can you afford to re-upsize?
If you tapped into
the equity in your home to downsize, and then spent the rest of your closing
funds paying down debt and buying a new RV, you may not be in a position to go
back to a larger home. In addition, if your income is reduced after retirement,
you may not have the funds to maintain a larger property with the accompanying
larger utility and tax bills. Talk to your financial advisor and find out how a
return to a larger property may, or may not, make sense for you.
If you’re committed
to downsizing your space, it’s important for you to downsize your possessions
as well. You’ll find yourself frustrated if every closet and cabinet is packed
to the brim from day one. Rather than putting it off, go ahead and do a
thorough decluttering and clean-out. Give items away to your kids, list items
online, and donate to charity to free up space in your smaller home.
Not sure whether
downsizing is right for you? Considering upsizing after a frustrating and
unsuccessful downsizing experience? Wondering what options are available in
your favorite community? Talk to The Cindy Slack Team - we can help you
crunch the numbers, look at listings, and make a more informed decision.
