The kids are gone, off to school or married or otherwise embarking on independent lives. Suddenly the house feels too big, or like too much to care for, and you’re trying to figure out how to downsize your home without sacrificing your quality of life.
Reaching retirement age is an inflection point for many homeowners, especially ones experiencing an empty nest. You start to take stock of your home and your lifestyle needs.
Maybe that knee arthritis is a little worse than a morning twinge these days. Maybe you can’t or don’t want to mow the lawn, dig in the garden, or do those routine household chores like you used to do.
If you’re part of the last lap of the baby boom generation – that population juggernaut born roughly between 1946 and 1964 – that’s now climbing into their early 60s, downsizing the family homestead might be at the forefront of your mind these days.
You’re not alone.
By 2030, an estimated 73 million people aged 65 and older are expected to downsize, according to Pressconnects.com.
The typical home seller is 45, but Zillow reported that 24% of home sellers are aged 60 or older. About two-thirds of those sellers plan to buy another home after they’ve sold the family homestead.
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That depends. For some it might be when the last child is packed off to college. For others, it’s when the property or home upkeep feels daunting. A health scare or serious illness could be a wake-up call that there’s just more house, or property, than you really want or need.
Vivian Young-Grey, a Realtor with Morganelli Properties in Hellertown, Pa., says the downsizing process typically takes from six months to a year, once a homeowner commits to it.
A sudden health crisis, death of a partner, or divorce can force the decision, however. In those cases, the homeowner may need to downsize on a shorter time frame, which can make this important decision even more challenging, she says.
But if you have the luxury of time, start the process as early as possible. You’ll need to downsize your possessions, which can take several months. Then, Young-Grey recommends factoring in the time it will take to find a new home once you’ve sold your previous one. If you’re able, you may want to purchase the new home prior to selling the current one.
Or, make arrangements in advance to stay with a friend or relative, or secure a short-term rental, so you’re not scrambling if your home sells faster than you’re able to find a new one. That’s not uncommon in the current market, where demand for homes far exceeds supply in many places.
Besides, you want to give yourself enough time to find the right house to downsize into
Downsizing in retirement has a number of benefits, including the potential for lower housing costs. If you’re still paying a mortgage, a smaller home could mean smaller monthly payments.
Even if you own your home outright, and plan to purchase the new house with cash, less square footage and less property can reduce your maintenance, upkeep, and lawn care costs.
Owning less home can also free up your time. Because you have fewer responsibilities around the house — and the ones you do have can be completed faster in the smaller space — you’ll have more time to spend with loved ones, travel, and on your hobbies.
For some people, downsizing in retirement gives them a chance to relocate. Perhaps your children and grandchildren live in another state, but you didn’t want to move while you were still working. Now that you’re retiring, you want to move closer to spend more time with them.
Maybe you’ve always dreamed of leaving cold winters behind for year-round sunshine in a southern or southwestern state. Here’s your chance to downsize into a bungalow in a warm weather climate, where you can enjoy the outdoors 12 months out of the year.
Whatever your motivation for downsizing, this can be a great lifestyle move as you enter a new chapter in your life.
Before listing the home for sale, you’ll likely need to do some decluttering and reduce your belongings.
Unless you’ve practiced minimalism for many years, chances are that a home you’ve lived in for decades will have filled up with stuff. Take an honest assessment of your belongings to estimate how long it will take you to pare them down.
Even if you don’t plan to list your home for sale for, say, six months to a year, it doesn’t hurt to start now with sorting through sentimental items and keepsakes and downsizing them.
There are a few ways to do this.
Young-Grey said the first step in paring down is to take a critical look – at everything. This can be a good time to give treasured family heirlooms, furniture, or other items to loved ones.
You have the opportunity to share the significance of the gifts with them, and downsizing your possessions will make it easier to move into a smaller home.
If you’ve accumulated a great deal of items over the years that you don’t intend to give family or friends, consider holding a garage sale or listing the items on craigslist or ebay. You may be able to make money on furniture, art, home decor, curtains, and even linens and clothing you don’t want to bring to your new space.
Note that if you plan to post items on craigslist, it’s a good idea to have a family member be present when meeting with a buyer to exchange the items. At the very least, let someone know when and where you plan to meet buyers.
“I get asked all the time, should I sell this, or donate it,” says Kendra Feeney, owner and designer at Brick House Design in Lafayette Hill, Pa.
She recommends high-end consignment shops as a great place to consider selling high-value and good quality items in your area.
“If the piece is well made, solid wood, and is a timeless piece, like older dining room sets, kitchen tables and chairs …there is a market for those kinds of pieces. Younger couples are still looking for those pieces,” she says.
Even bedroom sets can be repainted and repurposed, so consignment shops may well be interested in what you have to offer.
You want to avoid having lots of furniture pieces or other odds and ends cluttering up your new space, especially if it will be smaller than your current home.
Anything that can’t be sold or given away but is in good condition can be donated to Goodwill or other charities, and they may even come and take items away for you.
For those who don’t know where to begin, or are paralyzed at the thought of weeding through the attic or addressing bedroom closets, hiring a seasoned pro like a Senior Real Estate Specialist (SRES) – who is also impartial about your stuff – might be a good option.
According to seniorsguide.com, an SRES can help assign value to items and get them set up on appropriate social media platforms, or arrange for onsite estate sales, or auctions. They can also help with sorting, packing, and moving.
Think carefully before you part with your possessions, though.
Feeney said for the most part, her suburban Philadelphia-area clients know what pieces they want to keep and incorporate into the new home.
“Some clients want to start fresh and keep very little, while others may want to keep everything and have a hard time letting go,” she says. “They’re starting fresh and it’s a new chapter in their lives. It’s a new start.”
For some people, a new start means buying new things to mark the transition. But others may want familiar belongings to make the change easier.
Possessions can evoke strong reactions, and parting with a home you’ve lived in for 30, 40, or more years can be a traumatic experience.
Young-Grey said emotions often run high for those making this milestone decision.
“They are [usually] very attached to their home, and it’s a difficult situation. They know they need to downsize, and they still have a hard time letting go,” she says.
Young-Grey says professionals involved in the decision-making process, as well as adult children, should offer compassion and understanding. Ultimately the downsizing choice rests with the property owner, and what’s in their best interest.
“They need [confirmation and affirmation] they’re making the right decision,” she says.
Adult children may be broken up about the sale of the sprawling family homestead. Having open, frank conversations up front goes a long way toward reducing anxiety, for them and for you.
You may be surprised to find that your kids are relieved that you’ll be downsizing, Young-Grey says.
“If it’s a situation where the family property can’t be taken care of by family members, and [the property owners] don’t have the luxury of children who are able to help out,” downsizing may be the right choice, she explains.
Knowing that you’ll be living in a more manageable property may be a weight off your kids’ minds, especially if they live far away from you or they don’t have the capacity to pitch in with maintenance or upkeep expenses.
On the other hand, your children may be distraught at the idea of selling the family home. No doubt they will want what’s best for you, but the sooner you tell them your plans, the more time they will have to adjust to the idea.
To ease the transition, you might offer them the option to take keepsakes from the home that are particularly meaningful to them. You might also arrange a family photoshoot at the house before you start preparing it for sale so everyone has a remembrance of the home and being there together.
Square footage isn’t the only thing to consider when downsizing in retirement. Think about your lifestyle and healthcare needs, and how they might change as you get older.
Importantly, reflect on whether you plan to age in place or move into an assisted living community at some point. If you intend to stay in the home as long as possible, you’ll want to think about accessibility and mobility features.
Questions to ask as you look at potential properties:
- Would you be most comfortable in a single-level home?
- If it’s a two-story home, are there essential facilities — bedroom, bathroom, kitchen — on the first floor?
- Are there stairs to the front door or is it ground-level?
- What are the landscaping and maintenance requirements?
- Do you prefer to manage the property yourself, or would you be more comfortable with a homeowners association that handles lawn mowing and snow clearing?
- How close is the home to grocery stores, community centers, entertainment, and healthcare services?
- Are there public transportation options if at some point you’re no longer able to drive?
- Are you near family or friends, or close to an airport so visiting loved ones (or having them visit you) won’t be challenging?
Another point to consider is proximity to family and friends. If you’re buying a home near loved ones, you may not need space for them to stay while visiting. But if they live far away, you may want to have at least one guest bedroom to accommodate their visits.
You might also consider the possibility of multigenerational living. In the past several years, multigenerational households have become increasingly common, with parents moving in with their adult children or older relatives moving in with siblings or nieces and nephews.
Multigenerational living can benefit everyone in the home and strengthen bonds and traditions. It can also be more cost-effective, as you can pool your resources to purchase the home.
You have a few options when downsizing to a new home.
After selling your old home, you could use cash to purchase another property. You could also take out a traditional mortgage to buy the home.
But there is a third option if you’re 62 or older: a reverse mortgage.
You can use a home equity conversion mortgage (HECM), which is backed by the Federal Housing Administration (FHA), to purchase a home with no monthly payments, as long as you pay the property taxes, insurance, and maintenance and upkeep.
To purchase a home with a reverse mortgage, you’ll need a substantial down payment, likely between 30-50%. But the balance of your loan will not come due until you leave the home or pass away.
You can make monthly payments, but you’re not obligated to, provided you stay current with the property taxes, homeowners insurance, and maintenance and upkeep. That means that you can keep more cash on hand for daily living expenses, medical needs, travel, and other lifestyle expenses.
Eligibility requirements for a HECM for Purchase loan include:
- All borrowers on the loan must be 62 or older
- The home must be your primary residence
- Sufficient funds for the down payment
- The home must be a single-family residence, a multifamily property with a maximum of four units, or a condo or manufactured home approved by the U.S. Department of Housing and Urban Development (HUD) and the FHA
- Completing a HUD counseling course on the terms and obligations of the HECM for Purchase loan
- Ability to afford property taxes, homeowners insurance, maintenance and upkeep, and any relevant homeowners association fees
When the last borrower leaves the home or passes away, the reverse mortgage balance comes due. This happens if you decide to sell the house, the home is no longer your primary residence, or you have not lived in the home for a year because you are in a medical or rehab facility.
You, or your heirs, have a few options when the loan comes due. One is to pay the loan in full. Your heirs can also take out a traditional, forward mortgage in their names to keep the home. You, or they, can also sell the home to pay off the loan. Any profits above the loan balance go to you or your heirs.
HECM for Purchase loans are non-recourse loans, which means that you can never owe more than the home is worth*. If your loan balance is higher than the home’s appraised value when you leave the property or pass away, you or your heirs will only owe up to 95% of the appraised value.
If your spouse is not 62 when you take out the reverse mortgage, you can refinance to a new reverse mortgage when they turn 62 or you can name them as a non-borrowing spouse on the loan.
As a non-borrowing spouse, they will be entitled to stay in the home even if you pass away, as long as they continue paying the property taxes, homeowners insurance, and maintenance and upkeep. The loan will come due when they leave the home or pass away.
How to downsize FAQs
Start by decluttering. Organize your possessions into categories of items you want to keep, sentimental items, and things to sell or donate. If you have sentimental items you want to give to loved ones, make a point of mailing them the gifts or giving them the next time you’re together.
If you need help with selling or donating, contact local charities or consignment shops. They may be able to pick up the items for you or tell you whether they’ll accept what you have. From there, set limits for yourself on any new purchases. You may want to create guidelines for deciding what to bring into your home so you can break old patterns.
It can also help to let family and friends know you’re downsizing and taking a more minimalist approach to possessions. This may encourage them to give you consumable or experiential gifts, rather than more household items you’ll eventually need to sort and give away.
Sometimes it’s easiest to start with the low-hanging fruit. Bag up any household items you’ve been meaning to throw out or donate, along with any clothes you no longer wear.
Then move onto the more challenging items — things that have sentimental value but which you no longer want. If you struggle to give away or donate such items, you might look into the KonMari method, pioneered by Marie Kondo. She advocates expressing appreciation for those items, and for the people with whom you associated them, and then releasing them. That can be a therapeutic way to downsize without feeling guilty.
Be honest with yourself as you sift through your possessions. Do you really need or want this or that item? Focus on keeping things that are practical, heavily used, or, as Marie Kondo suggests, spark joy. The more critical an eye you take to your belongings, the easier it will be to identify what can go.
Downsizing gives you a chance for a fresh start in retirement. A new space, perhaps in a new city, where you can invest in your hobbies and time with family and make the most of your time now that you’re not working. It’s an opportunity to choose a home that suits your lifestyle needs today and throughout your retirement.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.