Downsizing in Retirement
The family home served its purpose, and now the stairs, the yard and the empty rooms are more burden than joy. Downsizing in retirement is as much a financial decision as an emotional one, and done well it can improve both your lifestyle and your finances.
The financial upside
- Unlock equity. Selling a larger home can free substantial cash to fund retirement, invest, or simply hold as security.
- Lower the cost of living. A smaller home means lower taxes, insurance, utilities and upkeep — month after month.
- Reduce the physical burden of maintaining space you no longer use.
How to finance the next home
You have options beyond paying all cash. A traditional mortgage keeps more of your proceeds invested. A HECM for Purchase lets you buy the right-sized home and finance part of it with a reverse mortgage, preserving savings with no required monthly payment. Which is wiser depends on how you want your money to work in retirement.
Do not assume paying all cash is automatically best. For some retirees, a modest mortgage or a HECM for Purchase keeps more money invested and working, while still providing a comfortable home. Run the comparison before you drain your savings for a cash purchase.