Getting ready to retire? Whether you’re thinking about moving to a smaller home or relocating to a retirement community, there are a lot of factors to consider before you finalize your retirement living options. Here are a few important questions to help guide your decision:
- Is your current home suited for aging in place?
- How important is it to stay close to family, friends, or your current community?
- Will your retirement income support your preferred lifestyle and housing choice?
- Do you need more convenient access to healthcare or medical facilities?
- Are you planning an active lifestyle or something more relaxed?
- What activities or hobbies matter most to you?
As you consider these questions, check out our guide below for the benefits of downsizing in retirement, as well as potential drawbacks.
Pros of Downsizing in Retirement
Moving into an apartment, townhome, condo, or even a smaller house comes with fewer expenses, less stress, and usually more amenities. Here are some key advantages of downsizing your home in retirement.
Pro: Home Equity Gains
One major benefit of downsizing or selling your home in retirement is the opportunity to cash out on the equity your home has built up over the years. With home prices rising, longtime owners may be sitting on substantial gains. Many homeowners can exclude up to $250,000 in capital gains from taxes when they sell ($500,000 for married couples), provided they meet IRS requirements. This can make selling a smart financial move as you transition to retirement.
Pro: Cost Savings
Downsizing for retirement is a great way to save money on mortgage payments, property taxes, insurance, utility costs, and more. You’ll also be able to cut back on maintenance and upkeep services like lawn care and snow removal when you downsize from a large home to a smaller home.
Pro: Opportunity to Declutter
Downsizing in retirement provides the opportunity to sort through your belongings and let go of anything you no longer need. If you have items you treasure but don’t use often, consider renting self storage to free up space while keeping your memories safe. Decluttering your home can be a difficult process that requires smart decluttering strategies for success, but in the end, you’ll be more organized and have more space for the things that matter most.
Pro: Less Stress & Upkeep
Reducing the stress of maintenance responsibilities is among the key reasons to downsize your home. Depending on which retirement living option you choose, you won’t have to worry about the hassle of keeping up with home improvement, lawn maintenance, or unexpected repair costs—and moving to a smaller space means there’s less to keep clean.
Pro: More Time for Hobbies
Because you’re spending less time and money on maintaining your home, you’re free to pursue your retirement hobbies and interests! Whether you want to take advantage of social activities in retirement communities, learn new skills, travel, or focus on other fun things to do for retirees, downsizing can give you more freedom and flexibility in your golden years.
Pro: Ability to Relocate
Moving to a smaller home doesn’t mean you have to stay put in your current city. Relocating to a new city or state can be an excellent way to explore new things and meet new people during retirement. When choosing a new place to live, some of the best places to retire include areas with good healthcare, low costs of living, tax benefits, and senior activities.
Pro: Stronger Family Connections
Downsizing your home lets you move closer to siblings, adult children, or other family members. It’s also common in many cultures for retired people to move in with their children, which not only saves money but also allows you to bond with family and receive care from someone you trust as you age.
Pro: Convenient Amenities
Moving to a townhome, condo, or retirement community can provide you with access to helpful services and amenities like lawn care, snow removal, and elevators. If you need help with home maintenance, most rental properties provide the assistance you need. There are also beneficial amenities like gyms or pools to take advantage of, and many 55+ communities offer community activities like trivia nights, singles nights, and book clubs.
Pro: Proximity to Healthcare Providers
As health needs change with age, living near your doctor, specialist, or hospital can offer peace of mind and convenience. Whether you need regular check-ups or quick access in an emergency, proximity to care can make a big difference in your quality of life during retirement.
Pro: Better Accessibility in Your Home
By downsizing, you can find a senior-friendly home that offers better accessibility, such as fewer or no stairs. Condos are also likely to have elevators. Ranch-style houses are a great option if you’re looking to stay on one level. You may also want to look for ADA-compliant homes built with accessibility features like seated showers and wider doorways.
Pro: Access to Public Transit
Retiring in an area with reliable public transportation makes it easier to access essentials like grocery stores and pharmacies, while also supporting your independence. It can simplify errands, social visits, and community exploration, especially if you’re planning to lead a car-free lifestyle due to medical or personal reasons.
Cons of Downsizing in Retirement
Although there are several benefits to downsizing after retirement, space restrictions and emotional ties are important factors to consider before making a decision. These are a few disadvantages to downsizing in retirement.
Con: Minimal Savings if You Already Have Low Housing Costs
If your home is already paid off or you’re locked into a very low mortgage rate, you may not see significant financial savings by moving in retirement. In some cases, the costs of buying a new home—including moving expenses, HOA fees, or higher property taxes—could outweigh the benefits.
Con: High Buying & Selling Costs
When you’re in the process of downsizing, buying and selling real estate is an expensive venture. To sell, you’ll often need to perform repairs, inspections, and consider real estate fees and closing costs. Then, when moving out of your home, you’ll typically need to cover common moving costs, such as hiring professional movers or purchasing moving supplies. That said, these costs may be worth it if downsizing will save you money in the long run.
Con: Additional Fees & Expenses
Due to additional property fees involved, retirement downsizing can be an expensive process. There are apartment fees and condo fees that cover trash management, security, interior and exterior maintenance, and utilities. In some retirement communities and neighborhoods, there may be homeowners association (HOA) fees, along with restrictions and rules to follow. The average HOA fee for a single-family home in America is about $300 per month, and can vary depending on the home’s square footage and location.
Con: Adjusting to a New Community
Moving into a new neighborhood or senior living community can be an adjustment for retirees—particularly if most of your friends live near your old home. Though you can travel to see friends, it’s important to branch out to meet your neighbors, welcome new ones, and get involved in local clubs or community events.
Con: Loss of Emotional Attachments
Selling and moving out of your family home can be emotionally tough because of memories and sentimental value. It’s the place where you raised a family, spent time and money renovating your space to your liking, and hosted gatherings. It may be hard to say goodbye to your home, its sentimental items, and all the memories that were made there.
Con: Limited Space & Privacy
Some homeowners may feel cramped after moving to a smaller home. There may not be enough space to accommodate out-of-town guests or host a holiday party. And if you’re living in a duplex or apartment, you may need to adjust to shared walls and hearing people above and beneath you.
Con: Pet Restrictions
If you’re a pet owner, it’s important to factor that in when downsizing for retirement. Your new home may not have a fenced-in backyard for your dog to run around or enough space for your cat to explore safely. If you’re downsizing to an apartment, there may be strict pet regulations to consider, like breed, size, number, and type of pet. Ideally, you’ll choose a pet-friendly apartment with helpful amenities that make it easy for your furry friend to settle in.
What Are Your Downsizing Options?
Choosing where to move after retirement is a big decision, and one that should align with your current savings, goals, and health needs. If you’re wondering how to downsize in retirement, these are some retirement living options to consider.
Move In with a Child
Looking for a way to stay close to your family? If their living situation allows, move in with an adult child! This is a convenient option for retirement living because you can get assistance from them when needed and strengthen your relationship with your family. You can also discuss the possibility of adding an in-law suite to the home, which is a private living area with a separate bedroom, bathroom, and kitchen.
Buy a Smaller Home
Buying a smaller home is a common way to downsize. The benefits of less square footage include fewer rooms to heat and cool, lower utility bills, less home maintenance, and lower property taxes. If you want a mobility-friendly option, look for a ranch or an accessible tiny house to settle down in for retirement.
Rent an Apartment
Living in an apartment is a great option for retirement! Renting is often cheaper than a mortgage, and there’s less maintenance. In addition to a more accessible layout and square footage, apartment-living typically offers useful features and amenities—including enhanced security, as well as spaces like clubhouses, pools, gyms, laundry rooms, and more.
Look into a Townhome or Condo
Moving into a townhome or downsizing to a condo is a great option for retirement. The perks include less maintenance, a convenient location, sense of community, and great amenities. There may be less privacy from your neighbors, though, depending on the layout of your space and the number of shared walls.
Consider a 55+ Community
Take advantage of living in a 55+ community during retirement! This retirement housing option provides a sense of community with your peers, offering amenities such as swimming pools, fitness centers, and golf courses. Taxes are generally low in the area because there typically aren’t schools nearby. However, you should be prepared to pay HOA fees in some 55+ communities.
Opt for a Senior Living Facility
When downsizing, asking your family to move you into assisted living may be ideal if you’re no longer able to manage on your own. If you’re still independent but want a maintenance-free lifestyle, you might instead consider an independent living community for seniors. Both options can offer convenience and peace of mind when planning for your golden years.
Adventure in an RV
If you like adventure, consider purchasing an RV to live out of and travel the country! There are many types of RVs to choose from, like motorhomes, travel trailers, and campers. The benefits of living in an RV include no mortgage, energy bills, or homeowners insurance—plus, you can conveniently take road trips whenever you want.
Sail Away on a Boat
Want to live near the water in retirement? Consider living on a boat! Rather than paying a mortgage or rent on a house or condo, you’d pay for mooring or docking at a marina. You get the benefit of being surrounded by people, ease of travel, and the laid-back boat life. Plus, boat living is eco-friendly because it reduces your energy consumption compared to living in a traditional home.
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Planning on downsizing for retirement? Extra Space Storage has easily accessible storage facilities across the country where you can securely store belongings, helping ease you into retirement. Find self storage near you!
