You might have a dream of what your retirement will look like — more time to travel, some well-earned relaxation, maybe increased time for some of your main hobbies. And you may even know where you want to spend your retirement years — a small beachfront town, perhaps, or within the heart of your favorite city.
But one thing that tends to escape some soon-to-be retirees’ minds is what that living space will look like. Do you still need a 3,000-square-foot home with five bedrooms, or would an upscale townhome better suit your retirement lifestyle?
Here are some important considerations for all empty nesters and retirees when determining whether to downsize in retirement.
Compare different scenarios — and set your priorities
You may feel ready to move into your retirement space tomorrow, but in reality, you’ll need to give yourself time to consider the logistics of downsizing before you actually do it, says Donna Peterson, Retirement Income Strategist at Wells Fargo Advisors.
Start by comparing the scenarios that deliver on your downsizing goals. Peterson recommends evaluating the pros and cons of different home options, such as single-family, townhome, and condominium, based on your objectives for scaling back.
Here’s how it works. “Pick out a smaller home in a location that you’d realistically consider buying as a way to estimate actual homeownership costs, such as property taxes, heating bills, maintenance, and any upgrades you may need to do later to accommodate you as you age,” Peterson advises. Then, do the same research on other types of residences, such as condos or townhomes. Also consider what your life will be like in the future and how that will impact how you want to live. You may have no problem taking a flight of stairs every time you want to get something from your bedroom now, but will a single-level home be more suited to your physical abilities in the future?