Three Things to Keep In Mind Before Deciding to Downsize

April 24, 2018 10:03 am

Betsey A. Purinton, CFP®

Managing Partner & CIO

If you’re nearing retirement, or settling in to your new retirement routine, chances are you’ve considered downsizing. Whether you’re looking to take advantage of mortgage savings, a warmer climate, or adding a second home, downsizing can be an integral part of your desired lifestyle in retirement.

Downsizing is defined as the liquidation – or selling – of your assets, usually before or during retirement. Most of the time, downsizing refers to the selling of your home to opt for a smaller, more manageable property. But it can also refer to the selling of your personal belongings, vehicles, or acreage.

Want to learn more about the benefits of downsizing? Download our free downsizing guide here.

For many people, downsizing is an obvious solution to immediate concerns. If you no longer have children in the house, you may decide that the home is too cumbersome to maintain. If your mortgage payments are high, you may be want to improve your cash flow in retirement by eliminating a mortgage altogether.

But you should look beyond immediate issues and consider a variety of factors before you begin the downsizing process. Whether you’re looking to relocate, purchase two smaller vacation properties, or find a more cost effective home, keep these things in mind:

  1. It’s a good idea to try before you buy

Relocation is a huge motivator when downsizing. Perhaps you’d prefer to live in a warmer climate. Perhaps there are appealing retirement communities in another state. Or, maybe you’d like to take steps to live closer to family and friends.

No matter your motivation to downsize and relocate, it’s often a good idea to try before you buy. That means, if you’re thinking of moving to an area you’ve never been before, don’t just rely on word of mouth or internet research. All too often, people move to a different area and find the amenities weren’t as advertised. Others may find the distance makes traveling home to visit family too worrisome.

Instead of buying a new, permanent residence, spend a year renting in the area you’d like to move to. Renting a property will allow you to ease into your transition without making an enormous financial investment. You’ll have the opportunity to explore the area to find the best neighborhood. And, a full year of renting will allow you to determine whether travel is too difficult. After your year of renting, you’ll be in a much better position to determine your next home purchase.

  1. Smaller isn’t always better

Once the children leave the house, the empty bedrooms may feel like a waste of space. If your home is on multiple stories, you may find it becomes too cumbersome to clean and maintain. For this reason, many retirees choose to buy a much smaller home.

However, this may not be the best long-term decision. If spending time with family is important to you, you should consider purchasing a home with a guest bedroom to host children and grandchildren. You may also find that you need additional rooms to house your hobbies or carve out personal space for yourself or your spouse.

At the same time, the layout of the home can matter a great deal. It is important to try to plan for your entire retirement – not just what is convenient tomorrow. That may mean finding a house or condo with the master bedroom, bathroom and laundry on the first floor and the extra bedrooms on a second floor.

  1. Downsizing may not be cheaper

A condo with a scenic view may not cost less than the original home where you raised the kids, and it may even cost more! If you do not need the extra cash, the swap of size for location may be a perfect solution to your retirement dreams. But if you are looking to downsize in order to create extra retirement savings and/or decrease your monthly cost-of-living expenses, you may need to set a price limit on your new home or select your retirement community carefully in order to keep your retirement lifestyle affordable.

Downsizing offers wonderful opportunities to start a new and exciting chapter in your life. But it is a big commitment that you want to get right the first time. So take your time, work out the finances and carefully review all options before making the final decision.



Betsey A. Purinton, CFP® is Managing Partner and Chief Investment Officer at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail her at

The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Betsey’s opinions and comments expressed on this site are her own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.