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Right Sizing for the Future

Retirement Funding Housing

Have you woken up in the morning and been welcomed by an eerily quiet home? Your footsteps seem to echo as you walk to the kitchen to start your day. Your home used to be filled with noisy breakfast rituals and races to get the kids to school on time.  But now, your kids are grown and have started their own morning rituals, maybe even with their own kids. In the peace and quiet, you notice the wear and tear all that racing has put on your home. You might begin to recognize that the house, well-suited for a family of six, is far too large and requires too much maintenance for the adjusting family of two.

Because we often feel attached to the places that have protected and cared for our families over the years, we pause or even resist the change for a plethora of qualitative reasons. So instead of ‘downsizing’, we ‘right-size’ because occasionally it is in your best interest to find the right home for the next chapter.

Downsizing is by far the most common way of gaining equity through right-sizing.  For a retired couple, selling a too-large house can present a great opportunity to invest the equity accumulated over the years into the future. This type of strategy can not only help to fund retirement income but can eliminate expenses that could drain savings unnecessarily.

For Example –

Hattie is a 70-year-old widow, proud mother of two, and grandmother of six.  She loves her family dearly and has nothing but warm memories from the home they shared for over 30 years. But, since her kids moved out, the house has felt too large, and the sudden passing of Stan (72), Hattie’s husband of 45 years, has added to the stress of home maintenance.  While the finances of the household were in order, this unexpected loss caused great distress for Hattie and the rest of her family. After six months of processing and grieving the passing of Stan, Hattie decided it was time to sell the home where they raised their family.

This was not an easy decision as Hattie was very attached to their home.  Every room shared multiple memories of her kids or husband.  While these memories were sweet, they also reminded her of how her life was forever changed by the passing of her beloved husband.   She knew, both emotionally and financially, she needed to adjust to her new phase of her life.

Hattie’s house was in impeccable condition and sold quickly for $25,000 over the asking price.  This profit, combined with the equity accumulated over 30 years, allowed Hattie to walk away from the sale with $525,000. She found a reasonably sized condo near her children’s families that had enough room for herself as well as guest rooms for her grandkids. The HOA dues included property maintenance, which greatly reduced Hattie’s stress, as well as a pool her grandkids could play in during the summer.  She looks back fondly on the life she shared with her husband and children in their old house, but she is very pleased with the outcome and is looking forward to this new chapter in her life.

Right-sizing can be a great option for navigating the later stages of retirement, like Hattie. It can also be used to accumulate more home equity as your family and income grow. Review these trade-offs with a financial advisor to determine the best way forward.

GW Financial, Inc. is a fee-only firm and offers a complimentary Getting Acquainted Call to help set you on the right path. Click HERE to schedule a 30-min personal check-in. 

Photo by Tierra Mallorca on Unsplash