Being an empty nester can be an exciting stage of life. With your kids grown and out of the house, you may be thinking about moving to a smaller home. This could be a great opportunity to save money, simplify your life, and enjoy more freedom. However, it’s not right for everyone. Here are some things to consider before making the move.
Would you save money?
How do your current costs compare to the ones you might have in a downsized world? Understanding the numbers in your overall budget will help you decide if downsizing makes sense for you. This means looking at your overall expenses, including fixed expenses, variable expenses, and leisure.
Things to think about:
- Housing: Your mortgage or rent, any property taxes, and utilities.
- Transportation: Car payments, gas and maintenance, or the cost of public transportation.
- Food: Any essential groceries.
- Insurance: Premiums for items such as auto insurance, home or renter’s insurance, life insurance, and health insurance
- Medical: Regular health care costs, like doctor visits, prescription drugs, and medical supplies.
- Entertainment and leisure: Things like hobbies, travel, and going out to dinner.
- Miscellaneous expenses: Items such as clothing, personal care, and home maintenance.
The amount you can save by downsizing depends on several factors, including your present housing costs, the cost of your new home, the cost of living in your new area, and your overall budget. Do some research, consider which of these costs would be impacted if you downsize, and how much (if any) you would save.
Where would you move to?
You may prefer a smaller living space in your current neighborhood or decide to move to a different state. You may even want to experience living in another country. Popular destinations for empty nesters include places with a vibrant cultural scene, great weather, and plenty of recreational opportunities.
However, some areas have a higher cost of living than others, which could impact your budget and overall financial situation. Evaluating your income, whether on your own or with a financial professional, can help you figure out if your finances align with a particular place. Consider these income sources to get started:
- Employment: Any salary or wages from a job.
- Retirement: If you’re retired, this may include Social Security benefits, a pension, or other retirement savings.
- Investments: earnings from stocks, bonds, savings accounts, or other assets.
- Other sources of income: This could include things like freelance work, rental income, or even whole life insurance dividends.
What would your lifestyle look like?
Downsizing can bring many benefits. Having fewer responsibilities in the home could reduce stress, bring you a simpler lifestyle, or free up time and money to do the things you love. Maybe you’d like to travel, pursue passion projects or hobbies, or just relax with friends. Or perhaps you’d use your time to volunteer and connect with your community. Imagining what a downsized life means for you can help you decide whether to move forward.
How long would you stay?
There’s no right answer for how long you should stay in a downsized home, and downsizing does not have to be permanent. Some people enjoy the freedom and simplicity of smaller living and never look back. Others find that they miss having a larger house and eventually move back to a bigger property. And still others simply miss their old neighborhood. In the end, a successful and happy downsizing will depend on your personal preferences and circumstances.
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