Avoiding the Retirement Downsize Mistake

Let’s face it.  Real estate mistakes are expensive.  5% (or so) real estate commissions, land transfer taxes, lawyers, movers, new décor, let alone the cost of renovations you may do to make it your own.  Regretting your move and having to move again in a short period of time isn’t just a lot of work, effort and upheaval, it can be a financial disaster.  If you are contemplating a change of real estate, especially for retirement, a time of life when you are relying on your financial assets to see you through your lifetime, avoiding expensive real estate mistakes is critical.    If you are contemplating a retirement downsize, here are 3 things to consider:

  1. Location – We have all heard the adage, location location location when it comes to real estate. Usually it relates to valuation today and investment returns tomorrow. But in retirement, location is also about what you plan to do with your time now that you aren’t working.   What are those interests that you want to pursue? Does the location you are moving to offer proximity to allow you access to those interests?   What about access to health care?  In retirement there are those who leave the suburbs and move to major centers for the urban lifestyle.  Usually that brings access to hospitals and specialists should health become a concern.   But there are also those who can’t wait to leave the city behind and look for tranquility and/or a lower cost of living and leave those urban centres with their hospitals and specialists behind.   How is your access to health care should you need it in the location you are moving to?  If you don’t have access to quality care, hospitals and specialists in your new community, you may be at risk of having to relocate again in the event of a health issue.  That second move could prove costly, not just in terms of transaction costs, but potentially moving back to a more expensive centre.
  2. Relationships – who are the people you love? Who do you want to spend time with?   If moving, are you leaving your friends, family and social network behind?   Are there people you know (and like) living in the area you are contemplating moving to?  The vast majority of people need interaction with other people.  It is where we get our sense of community and belonging.   It can be very hard to move somewhere where we don’t know anyone, no matter how appealing the location (or its weather) may be. Don’t just think about today, but think also about tomorrow.   It is amazing the draw grandchildren can be.  It isn’t uncommon for a newly retired couple to make a decision to move, only to welcome grandchildren to the family a few years later  and want to move again to be closer to them.  Before making a downsize commitment, try to think about how your family may change and evolve over the next 5 years.   If those changes might mean you would move again, perhaps delay making that downsize decision until things become clearer.
  3. Spend Time There – Most people wouldn’t think of buying a car without a test drive. Moving is a bigger commitment than buying a new car. If you are selling a house and moving to a condo, how do you know if you will like living in condo, where you share not just a wall but a hall with your neighbours?   It is very different than a fence!  If your downsize includes a change of location, spend time there, lots of time.  Meet people, see what sorts of community activities there are.  Rent is a small price to pay to give your new type of home (condo, townhome, bungalow, etc) and/or community a try to see how you like it.  Even before you sell, consider a short-term rental for a few months and see how it goes.  Use it as an opportunity to evaluate what you like and what you don’t like so you really know what to look for when it is time to make your purchase.   If you don’t like it, the cost of renting for a few months is a whole lot less than the cost of selling and moving again.

A downsize in retirement can be a great opportunity for adventure, realizing a dream and freeing up money to be able to do those things that bring you joy.  Just make sure you do it right and avoid the financial disaster that can come with multiple moves over short periods of time.


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