Canada’s current generation of retirees, or those on the cusp of retirement, are stuck between a rock and a hard place. The inflationary climate has made it challenging for seniors, forcing older Canadians to maintain their living standards and navigate a turbulent economic environment. One facet of this struggle is housing. For many retirees, downsizing to a smaller place is a common strategy.
At a time of higher mortgage rates and higher post-pandemic prices, the decision of where to live can be an important one for retirees. This requires them to properly weigh the pros and cons of the different options related to their living arrangement in retirement. This evaluation typically involves an overview of personal finances and retirement goals.
Do they intend to travel a lot? Do they want to move to a warmer place? Do they want to be closer to their family or further away? Do they want to spend less on their property to gain more financial freedom? These are common questions to consider.
Unsure if it is right for you? Well, here are some reasons why downsizing could be the best move for your retirement:
Tap Your Equity
For retirees with significant home equity, downsizing can be highly beneficial. They can purchase a smaller and less expensive property and potentially buy it in cash using the proceeds from the sale of their larger property. This would generate significant savings and allow retirees to better utilize their old-age benefits.
Harder to Maintain
As you age, you tend to have less energy and motivation to maintain a large home. Many seniors find it difficult to tend to their lawns or shovel snow. Regular home maintenance and repair tasks can become more challenging to manage as the years go by. Of course, you can always hire people to do these things, but this can become expensive and waste your savings.
Downsizing can help eliminate these problems, save money and time, and avoid the physical exertion of managing all these tasks independently. This is especially true for people who have limited physical abilities. For example, some individuals cannot climb stairs or have the physical stamina to clean many rooms or maintain their lawns. Moreover, downsizing and finding a property closer to stores and restaurants can provide additional convenience to seniors.
Nobody will argue with the fact that retirement should be a time to relax and be free from daily tasks and burdens. You have worked hard all your life, and when you retire, you want to reap the benefits of those years you have put in at the office.
By downsizing, you can reduce responsibilities you do not need to carry on your shoulders at this stage in your life.
Travelling
Let’s face it: Many retirees like to travel. All their lives, they have yearned to visit Paris, Venice, Berlin, and Madrid. While it can be an expensive journey, downsizing can be a much more cost-effective strategy. There is little logic in keeping and maintaining a large property if you only spend limited time there. By downsizing, you can have a place to return to but, at the same time, have more savings and cash to travel better.
Remember, if you sell a large property and downsize to a smaller one, you will already have made a good profit. You can even invest the remaining money to fund your retirement expenses and focus on things that matter to you and your family. When you retire, you aim to engage in things that make you happy and fulfilled. Downsizing can help you achieve many of those goals.
Is Ownership Still Necessary?
Studies have revealed that many seniors choose to live the rest of their lives in their homes rather than transition to retirement centres or assisted living communities.
At the same time, personal finance experts purport that retirees do not need to own a property. Selling your large home and then shifting to rental accommodations, be it an apartment or condo, is no harm. This can lower your cost of living and give you more cash to pursue activities you may have wanted to do all your life.
Additionally, rental communities for seniors typically offer many features and amenities and can allow retirees to engage in activities and meet new people. Plus, retirement communities, condos, and apartments offer basic amenities, such as snow removal and lawn care. You can also take advantage of gyms, pools, book clubs, and other community activities without commuting or travelling far.
Higher Living Standards
In the end, downsizing is a tool that can often improve the quality of life for seniors.
The smaller space does not mean they have given up their comfort or the things they cherish, but it enables them to live with less clutter, upkeep, and stress (physical and mental!). Downsizing is the ultimate opportunity to declutter and eliminate things that have always taken up too much room in your old house without being used. While this process may seem overwhelming, it can help you become more organized and create space for things that matter.
Be Happy
Homeownership can be stressful, whether because of unforeseen circumstances (a new roof, for example) or persistent internal and external maintenance. You spent much of your life mowing the lawn and repairing garage doors. Now it is time to enjoy every moment of your golden years: spending time with your grandchildren, visiting exotic locations, and eating spicy food. Downsizing could be the answer to these challenges.
