My husband and I recently reached a huge milestone in our life together. Our youngest child graduated from high school, so soon we’ll have an empty nest. Once he goes off to college, it’ll be just the two of us, alone in a home that’s more than three times the size of the first house we bought together some twenty three years ago. We moved numerous times over the years, always needing a bigger place to fit our growing family. But now for the first time in our lives we’re considering moving again, but not to grow, but to downsize.
The benefits of downsizing for empty nesters are obvious. A smaller home usually means a smaller or shorter mortgage, less taxes, and cheaper utilities. Smaller homes are also cheaper and easier to clean and maintain. Then with the money you save you can start working on that “bucket list.” If this is you, if you’re in the same wonderful boat we’re in, the time to act is now. Waiting too long to downsize is a common financial mistake empty nesters maker. Many of them could have downsized years earlier but waited because of sentimental reasons, nostalgia, or just not wanting to change.
From a financial standpoint, owning a big, expensive home is generally not the best investment. The average home grows in value by only 3-4% per year and you can typically earn a better rate of return through balanced investments in stocks, bonds, and securities, so it just makes sense to get out of that big home sooner rather than later.
Still, before you decide to downsize you should plan carefully and weigh costs and benefits. Decisions you make on where to move to save money could end up costing you more than you thought. For instance, you may save money in gas by moving closer to your work, but that area might have higher car insurance rates. You might also think moving to a small condo will be cheap, but be prepared to pay large dues and fees that come with condo living. These trade-offs can be complicated so it’s important to do your homework and talk to your REALTOR® about your concerns.
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