7 Financial Reasons Why Downsizing Is a Good Fit for You
Getting a new house in your golden years is a fantastic new opportunity. The market for downsizing homes has increased significantly in recent years, which has resulted in more townhouses and other options becoming available at a very affordable price. Downsizing can be a great fit for you and your lifestyle. If you’re still on the white picket fence about downsizing, here are a few more reasons why you should consider it.
Boost Retirement Savings
As you weigh different questions and advantages that relate to downsizing, remember that one of the most profound benefits is its ability to boost your retirement and allow you to make it through at least the next 30 years with financial security. Even if you’re comfortable with the savings that you already have, a lot can happen, and it’s always nice to have that extra security.
You Can Save a Ton on Taxes
A recent article from Forbes explains that additions or renovations that you made to your home over the years increased its value. This, along with other costs incurred with the selling of your home, might be eligible as part of a major tax break when you decide to sell it. Usually, you would have to pay taxes on some of the profits from selling your home, but you can avoid much of that by taking advantage of this break. As you start looking for your home, look online to get an idea of prices in the new area you’d like to move to. Look around and see what kind of size you’d like and if the prices are a good fit.
Free Up Home Equity
If you’ve been making regular payments on your home or your home’s value has appreciated over time, you could be in a very good position to free up a lot of money from home equity. This can help you pay for a new home and tuck away some extra cash for retirement.
Decrease Costs Associated with Home Ownership
Recent reports suggest that the cost of utilities, property taxes, and other expenses can total around $9,000 per year. One way to reduce these costs is to move to a smaller location. As a result, you’ll be paying less for electricity and water and larger repairs. You can also save on services you hire out for maintaining your home. For example, if you no longer have a yard to maintain, you won’t have to hire a company to mow your lawn.
Eliminate Mortgage Payments
Mortgage payments are the biggest expense many homeowners face every month. The chance to pay for a new home in cash and eliminate monthly mortgage payments is a major incentive for empty nesters to downsize their living situation.
Pay Off Debt
Some people find that selling their home and downsizing gives them a chance to pay off expensive debts and achieve financial clarity. If you’re dealing with extra debt, downsizing is a great opportunity for you to improve your financial situation and get some peace of mind.
Reduce Cost of Living
When you’re living in a bigger space, you might feel the need to fill that empty space. However, moving to a smaller space will force you to get rid of the items that don’t actually serve you. You can sell these items (and get a little bit of extra cash) or donate them.
From freeing up home equity to gaining tax breaks, you can enjoy the benefits of downsizing. You’ll pay less on bills and cost of living, and you can live in a house that is more suited to your situation. It’s a healthy choice that will pay off now and in the long run.