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Millions of older Americans are choosing to go small in retirement.
According to a Zillow report, 46 percent of baby boomers who sold homes in 2017 were in the process of downsizing.
Downsizing is a major decision, influenced by unique financial and emotional factors.
Decluttering a large home is no easy feat. Selling your house, finding a new one and moving your belongings adds further complexity.
In this guide, we explore the reasons people downsize for retirement and share advice from experts on how to navigate the transition.
We also look at other aspects of the process, such as getting your home market-ready and estimating moving costs.
Moving is a stressful experience at any age. Downsizing for retirement carries unique challenges.
Before you get started, determine why you’re moving.
In a 2018 study by Merrill Lynch, the number one reason given by respondents for moving in retirement was to be closer to family. The desire to reduce expenses came in a close second.
Not everyone makes the conscious decision to downsize. Sometimes a move is immediate and necessary because of rapidly declining health, the loss of a spouse or an unexpected financial crisis.
Understand your own motivation for moving. Weigh the pros and cons so that you feel comfortable with the decision.
It’s also important to communicate early and often with your family.
If you’re married, discuss any concerns your spouse may have about the process.
Make sure your kids know what’s going on, too. Let them come over and help you sort through items, especially if they grew up in the house. This can prevent conflict and resentment down the road.
Saving money is one of the primary reasons people downsize in retirement. Cheaper housing is an easy way to boost your budget and increase your retirement savings.
But before you make a move, get a handle on your finances. Hidden costs and poor planning can eat up potential savings if you’re not careful.
“Selling a home isn’t cheap,” Alan Caldwell, a financial advisor based in Nashville, told RetireGuide. “And you almost always spend more money when you move than you planned to.”
That’s why Caldwell, founder of On Track to Retire LLC, says it’s critical to get estimates from moving companies and set a budget in advance.
“During major life events like a move, we tend to think, ‘Well, I’m in a special time right now. It’s OK to spend money because I can control it later,’” Caldwell said. “But you need to be careful and track your spending as you go.”
You’ve decided to move. Now it’s time to start downsizing your current possessions.
But where do you start?
It isn’t a simple process. People have created entire careers out of helping others downsize for retirement.
It may seem daunting, but don’t let the task ahead overwhelm you.
“Decisions about what to keep and what to do with the rest can create decision paralysis,” Anna Novak, downsizing expert and owner of Simply Downsized LLC, told RetireGuide. “It’s a huge reason people have a hard time getting started.”
Novak and other experts recommend setting goals and timelines. Hold yourself accountable.
“Generally, once people know where they are going and can envision themselves there, they can start the process of letting go and get excited about a positive change,” Novak said.
Rushing a move can amplify an already stressful experience.
Experts, like Novak, suggest starting small. Tackle one room before starting on another. Give yourself enough time to do the job right.
You won’t finish everything in one weekend. Most experts say the downsizing process takes at least six months to a year to complete.
So it’s helpful to put a plan in place.
You can find free detailed plans for two-year, one-year and six-month timelines on HomeTransitionPros.com.
The website also offers a 15-minutes-per-day plan along with a “Planning for Downsizing” workbook with checklists and activities to help you prepare.
It’s easy to fall in love with objects — and often very difficult to let them go.
“Downsizing involves letting go of 70 to 80 percent of the belongings it took you 20 to 30 years to accumulate,” Novak said.
Be realistic. Take a hard look at each item in your home. Identify the things that are most useful or loved. If you haven’t used something in more than a year, donate it or throw it away.
Downsizing involves letting go of 70 to 80 percent of the belongings it took you 20 to 30 years to accumulate.
Get in a habit of finding obvious things you can get rid of, such as duplicate household items, outdated paperwork, clothing that no longer fits and old magazines.
It may be easier to let go of your home if you can remember how it once looked.
Take pictures of rooms in your house before you start downsizing. It can be comforting to look back at your old place or see the progress you’ve made getting it organized.
Measure the furniture you want to bring and write down the dimensions to ensure it will fit in your next place.
Document furniture arrangements and the placement of family photos on the walls. You can reference these later when you unpack in your new home.
Selling unwanted items is a good way to raise extra money for your move.
It also helps to clear space, and there’s satisfaction in knowing that your old items will benefit others.
You can use websites like Craigslist or Facebook Marketplace to list belongings. You can also try apps like LetGo, OfferUp and NextDoor.com.
Make sure to accept only cash offers to avoid scams. You may also want to meet people at a public place for these transactions.
For smaller items, or those with lesser value, consider holding a yard sale. Other options include selling to collectors, used bookstores, online auction sites or music stores.
Return items to the people they belong to. Is your 40-year-old daughter’s prom dress still hanging in the closet? Ask her if she wants it. If she doesn’t, get rid of it.
Some charities, such as the Salvation Army, can pick up items from your doorstep free of charge.
Another option is a website called Give Back Box. Just pack your unwanted items in a box, go to the website and print out a free shipping label.
The box will then be mailed to a local charity. Give Back Box will even email you a receipt for a tax deduction.
A growing industry of professionals offers services to help retirees downsize.
Senior move managers specialize in helping older adults and their families with the emotional and physical aspects of relocation or aging in place.
They even have their own trade organization — the National Association of Senior Move Managers, or NASMM. Its membership has grown from 650 in 2012 to roughly 1,100 in 2020.
Similarly, professional organizers can help you declutter your home, offer emotional support, facilitate the disposal, donation or sale of unwanted belongings and set up systems that help you stay organized.
These professionals work alongside you. They do not provide cleaning services.
Costs can vary by state and job, but rates usually range between $75 and $150 an hour.
That may seem pricey, but the time and effort you save might be worth it.
“It’s like hiring a wedding planner for a wedding,” Mary Kay Buysse, executive director of NASMM, told RetireGuide. “Yes, you can probably do the job yourself. But if you want it done seamlessly and want less stress in your life, then hiring a professional is a smart move.”
Buysse said these professionals often offer a menu of services that can be tailored to fit your budget.
“It isn’t an elitist thing or something that only people with lots of money can afford,” Buysse said. “Sometimes families will only hire someone for part of the process.”
Home-service provider directories like TaskRabbit and Angie’s List are good places to find local help.
You can also use the NASMM’s online directory to find a senior move manager near you.
Wading through a lifetime of memories is daunting — and draining.
Downsizing can uncover a well of emotions, including sadness, anxiety, stress and grief.
If something’s been a part of your home life for 40 years, it’s not easy to say goodbye.
According to a 2018 letter from the Harvard Medical School: “Understanding the triggers for these feelings and using strategies to navigate them may not change how you feel, but it may help the downsizing process go more smoothly so you can focus on your next chapter.”
If you find yourself in emotional turmoil, talk to someone. Invite a friend or family member over to help you sort through rooms.
Loved ones can listen to you reminisce about sentimental objects while providing you with a gentle push to let go of things you no longer need.
“If something’s been a part of your home life for 40 years, it’s not easy to say goodbye,” Buysse said. “Our items tend to become like members of the family.”
Even venting to an old friend over the phone after a stressful day of decluttering can calm your nerves and keep you focused.
If you don’t have someone to lean on, consider professional help. You may want to visit your primary care doctor or speak with a therapist.
Selling a home can be a time consuming, complex process.
But if you’re downsizing in retirement, it’s also important to understand taxes and how profits from your home sale can affect government benefits.
The Internal Revenue Service and several states levy capital gains tax on the difference between what you paid for your home — known as your cost basis — and what you sell it for.
The good news is that this probably won’t affect you. You can usually exclude up to $250,000 of capital gains on real estate if you’re single and $500,000 if you’re married and filing jointly.
So, if you first bought your house in the 1980s for $200,000 and you sell it today for $400,000, you won’t owe capital gains tax.
A few things may disqualify you from claiming that $250,000 or $500,000 exclusion. For example, the house must be your primary residence and you must have lived in it for at least two out of the last five years.
If capital gains tax is unavoidable, you may still qualify for a zero percent tax rate in 2021 if your income is less than $40,400 for a single person or $80,800 for a married couple filing jointly.
Otherwise, you may pay either a 15 percent or 20 percent tax rate. It depends on your filing status and income.
Owning a home won’t prevent you from collecting certain government assistance benefits, such as Medicaid or Social Security Income (SSI) disability.
But selling your home is a different story. This boosts your income, and the sudden cash may disqualify you from Medicaid and disability benefits.
For example, you must have less than $2,000 in countable assets to keep your Medicaid or disability coverage. Selling your home will net you more than $2,000.
To keep Medicaid, sale proceeds must be legally spent down or protected by the end of the following month.
With SSI, you have three months to buy a new home after selling your old one. If you do so and have less than $2,000 in your bank account, you will keep your SSI benefits.
If you don’t, you will lose your benefits for each month your assets exceed the permitted limit.
If it takes you more than 12 months to spend down money from your home sale, you may have to start the entire disability application process from the beginning.
And keep in mind that you’re not allowed to transfer money to a family member.
There are several legal ways to work around government benefit asset limits after selling a home. Consult a trusted legal professional for more information.
According to an October 2020 poll conducted for North American Van Lines, 45 percent of people who recently moved said the experience was the most stressful event in their lives.
One way to cut down on stress is by developing a solid moving plan that fits your budget.
This can allow you to keep items that are too difficult to part with.
According to Zillow, the average national cost of a storage unit ranges from about $50 per month for a small unit to $300 or $400 for larger units.
If your main reason for downsizing is to cut costs, you need to be mindful of this added reoccurring expense.
Expert Tips on Downsizing for Retirement
Vickie Dellaquila is a Pittsburg-based professional organizer with nearly two decades of experience. She is the owner and founder of Organization Rules, Inc. and has given presentations at several national conferences and conventions. She is also the author of the book, “Don't Toss My Memories in the Trash: A Step-by-Step Guide to Helping Seniors Downsize, Organize, and Move."
Downsizing is extremely emotional and physical work. You’re going through a lifetime of memories. It’s exhausting. Let yourself experience those emotions, whether you want to cry, laugh or be angry. Giving yourself enough time will also help you process those feelings.
You’ve spent a lifetime accumulating stuff. It’s going to take time to go through it all. I always tell people to start now. You may be able to do it in a month, but I tell people to give themselves at least six months. A year or two years is even better.
When you start the process, put a downsizing session on your calendar, the way you would a doctor’s appointment. So, from 9 a.m. to noon on Saturday, I’m going to work on the kitchen. Stick to it. Try to avoid procrastination.
Start with areas you don’t really live in, like spare bedrooms, the basement or the attic. Many times, these spaces have lots of things you aren’t using, or that you forgot you had. The garage is another good place to start because this is usually an exit route. It can be physically easier to move things out of this space.
If you know where you’re moving, getting a floor plan will certainly help you make decisions. It can also help you figure out where everything will go and how much space you really have.
When you’re looking for a new residence, take time to consider your needs. Make sure the space fits your lifestyle, budget and level of independence.
You may decide to purchase a new home, move in with family, transition to an assisted living facility or rent a townhouse or condo.
A great freedom in retirement is the chance to live where you choose. You may have bought your former home because it was in a good school district or close to work. Your life is different now, so explore your options.
Look for housing that puts you closer to things you care about, like your family, an airport, public transportation, a grocery store or your favorite nature preserve.
It’s also critical to be realistic about what your physical limitations will be in the future. For example, a one-floor house will be easier to navigate than a two-story house.
Moving to a new location isn’t right for everyone. Some people want to stay in their home but still want greater financial independence.
There are a few options if you’re interested in downsizing without moving.
Downsizing for retirement means something different to everyone. It’s often stressful and requires careful planning and financial considerations.
But it can also be a rejuvenating experience. Focus on the positive aspects of the transition, and work toward making your new space feel like home.
The movement of the financial markets can seem mysterious and yet, if we look back over long periods, we can see definite patterns that consistently repeat themselves. As an investor, how should you respond to these market cycles? To begin with, its useful to know something about the nature of a market cycle and its connection to the business or economic cycle, which describes the fluctuations of the economy between periods of growth and contraction. Issues such as employment, consumer spending, interest rates and inflation can determine the stage of the business cycle. On the other hand, the market cycle refers to whats happening in the financial markets that is, the performance of all the different types of investments. The market cycle often anticipates the business cycle. In other words, the stock market may peak, or hit bottom, before the business cycle does the same. Thats partially because the financial markets are always looking ahead. If they foresee an event that could boost the business cycle and help the economy, such as the Federal Reserve lowering interest rates, they may become more bullish on stocks, thus driving the market up. Conversely, if the markets think the business cycle will slow down and the economy will contract, they may project a decline in corporate earnings and become more bearish on stocks, leading to a market drop. Once youre familiar with the nature of market cycles, you wont be surprised when they occur. But does that mean you should base your investment strategy on these cycles? Some people do. If they believe the market cycle is moving through a downward phase, they may try to cut their perceived losses by selling stocks even those with strong fundamentals and good prospects and buying lower-risk investments. While these safer investments may offer more price stability and a greater degree of preservation of principal, they also wont provide much in the way of growth potential. And youll need this growth capacity to help reach your long-term goals, including a comfortable retirement. On the other hand, when investors think the market cycle is moving upward, they may keep investing in stocks that have become overpriced. In extreme cases, unwarranted investor enthusiasm can lead to events such as the dotcom bubble, which led to a sharp market decline from 2000 through 2002. Rather than trying to time the market, you may well be better off by looking past its cycles and following a long-term, all-weather strategy thats appropriate for your goals, risk tolerance, time horizon and need for liquidity. And its also a good idea to build a diversified portfolio containing U.S. and foreign stocks, mutual funds, corporate bonds, U.S. Treasury securities and other investments. While diversification cant protect against all losses, it can help protect you from market volatility that might primarily affect just one asset class. Market cycles often draw a lot of attention, and they are relevant to investors in the sense that they can explain whats happening in the markets. Yet, when it comes to investing, its best not to think of cycles but rather of a long journey one that, when traveled carefully, can lead to the destinations you seek. Chad Choate III, AAMS828 3rd Avenue WestBradenton, FL 34205941-462-2445chad.chaote@edwardjones.com This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.Edward Jones, Member SIPC
We understand that the golden years should be about enjoying life to the fullest, pursuing passions, and embracing new opportunities. One way we support this vision is through our Independent Living communities, designed to offer a blend of comfort, convenience, and community for active adults and seniors. But what exactly is Independent Living, and how can it benefit you or your loved ones? Lets explore.Understanding Independent LivingIndependent Living is a level of care and lifestyle option designed for seniors who are able to live independently but want to enjoy a lifestyle free from the responsibilities of home maintenance. Whether you are still working or are looking for a community after retirement, Independent Living is ideal for older adults who are looking for a community environment with various social, recreational, and cultural activities while still maintaining their independence.Features Of Independent LivingPrivate Residences: At The Gallery senior living communities, we offer different living options for Independent Living at each of our communities. At The Gallery, you will typically find a range of living options, from studio apartments, to larger two-bedroom units, and private villas. At The Gallery at North Port, there are private villas available for Independent Living residents that come with a garage, screened-in porch, chefs kitchen, and more. These residences are designed with aging adults and seniors in mind, providing a safe, accessible, and comfortable environment.Maintenance-Free Living: One of the biggest advantages of Independent Living at a senior living community is the freedom from household chores and maintenance. Say goodbye to mowing the lawn, shoveling snow, or fixing a leaky faucet. Our dedicated team takes care of these tasks, allowing residents to focus on what they love.Community and Socialization: Independent Living communities are vibrant and active, offering numerous opportunities for social interaction. From organized experiences and clubs to casual gatherings and outings, residents can easily connect with their neighbors and build meaningful relationships.Dining Experiences: Independent Living communities at The Gallery provide optional meal plans and dining experiences, ensuring residents enjoy nutritious and delicious meals by our in-house culinary team without the hassle of cooking. At The Gallery, we offer gourmet dining experiences that cater to various tastes and dietary needs.Amenities and Activities: Our Independent Living communities are equipped with a variety of amenities, such as fitness centers, resort-style pools, libraries, movie theaters, and more. Additionally, a robust schedule of daily experiences keeps residents engaged and entertained, from fitness classes to art programs, educational lectures, and off-site events.Safety and Security: Safety is a top priority in Independent Living communities. With features like emergency call systems, 24/7 staff, and secure buildings, residents and their families can have peace of mind knowing help is always available if needed.Benefits Of Independent LivingEnhanced Quality of Life: Independent Living allows seniors to lead an active and fulfilling lifestyle. With access to various amenities, social opportunities, and recreational activities, residents can pursue their interests and hobbies without the constraints of home upkeep. According to the CDC, social isolation and loneliness are linked to a 50% increased risk of dementia, a 29% increased risk of heart disease, and a 32% increased risk of stroke. Regular social interaction can lead to happier, more fulfilled lives and better long-term mental health for seniors.Sense of Community: Living in a community with peers fosters a sense of belonging and reduces feelings of isolation. The friendships and connections made in Independent Living communities can significantly enhance emotional well-being.Peace of Mind: For both residents and their families, Independent Living at senior living communities offers peace of mind. Knowing that help is available if needed and that daily chores are taken care of alleviates stress and worry.All Pets Welcome: All senior living communities at The Gallery accept pets of all sizes, setting us apart from most senior living options. We enthusiastically welcome pets as they are known to bring immense happiness to their owners and can significantly enhance mental health, fostering a more joyful and fulfilling living experience for our community members.Health and Wellness: Many Independent Living communities prioritize health and wellness, offering fitness programs, health screenings, and wellness initiatives. Staying active and engaged can lead to improved physical and mental health.Is Independent Living Right For You?Independent Living at senior living communities is an excellent option for aging adults and seniors who are still active and independent but want to enjoy a community lifestyle with added conveniences and amenities. If you or your loved one value independence but seek a supportive environment that enhances quality of life, Independent Living at The Gallery communities could be the perfect choice. To find out more about if Independent Living at a senior living community is right for you, take our 4-minute survey below to get valuable information and insights.
If youve been thinking about life insurance, especially if you have family, loved ones, or anyone who depends on you financially, you might be curious about the different kinds of policies available. Which type is right for you?Essentially, you can look at two main categories of life insurance: term and permanent.Term insurance is a pay-as-you-go option that covers a specific amount of time, usually 20 years or fewer. Term insurance benefits are paid to your beneficiaries free of federal income taxes if you pass away during the coverage period, but theres no opportunity to build cash value.Permanent insurance, such as whole life or universal life, offers coverage for as long as you pay the premiums, and in addition to providing a tax-free death benefit, also offers a chance to build equity, or cash value, on a tax-deferred basis.When determining which type of insurance is appropriate for your needs, youll want to consider these factors: Cost Term insurance is generally affordable for most people, which is why it may be particularly suitable for parents and young adults who may be at the beginning of their careers. Permanent insurance is typically more expensive, largely because it is meant to last for one's lifetime and some of the premiums go toward building cash value in the policy and paying for other features. Generally, the younger and healthier you are when you purchase permanent insurance, the lower your rates will be. Length of time insurance is needed If you think you will only need life insurance for a certain period perhaps until your children are grown you might lean toward term insurance. If you feel the need for life insurance for other goals throughout your lifetime, for whatever reason you might have a special needs child, or perhaps you want to use your policy to help pay for retirement, or you wish to include the policy as part of your legacy and estate plans you may want to consider some type of permanent insurance. Investment preferences You may have heard the phrase buy term and invest the difference. Essentially, this just means that an investor could purchase low-cost term insurance, and then invest the money that was saved by not getting permanent insurance. This can be a valuable strategy in some situations, but people often dont actually invest the difference. A permanent insurance policy, through the payment of premiums, may result in a steady buildup of cash value or continued contributions to the policys investment components. For many people, this discipline is helpful. Future insurability If you have health issues, it could become difficult to get permanent insurance after youve reached the end of a term insurance policy. (Some term insurance policies do offer the opportunity to convert to permanent coverage, usually without the need for a medical exam.) You could avoid this potential problem by purchasing permanent insurance when you are still young and healthy.Ultimately, you will need to weigh the various factors involved in the permanent-versus-term decision. You also might benefit from consulting a financial professional, who can evaluate which type of insurance is most appropriate for your situation. But whether its term or permanent, make sure you have the coverage you need to protect yourself and your loved ones. Chad Choate III, AAMS828 3rd Avenue WestBradenton, FL 34205941-462-2445chad.chaote@edwardjones.com This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Alder Terrace Gardens is a welcoming and nurturing environment for seniors who value their independence but may need some assistance with daily activities. The focus on creating a home-like atmosphere is wonderful, as it helps residents feel comfortable and at ease in their surroundings. Providing home-cooked meals adds an extra touch of warmth and familiarity, while the weekly entertainment and Wellness and Mobility Center offer opportunities for socialization and physical well-being. It's clear that Alder Terrace Gardens is committed to not only meeting the needs of their residents but also enriching their lives with meaningful experiences and a strong sense of community. The location amidst serene surroundings offers a peaceful environment conducive to well-being. The variety of room options ensures that residents can find the accommodation that suits their preferences and needs.The provision of three chef-prepared meals a day, along with snacks and catered holiday events, reflects a commitment to providing nutritious and enjoyable dining experiences. The on-site Wellness & Mobility center further enhances residents' quality of life by focusing on preventative strength building, stretching, and appropriate exercise. This personalized approach to fitness promotes overall health and vitality.Most importantly, the promise to exceed expectations and prioritize the well-being of residents underscores the dedication of Alder Terrace Gardens to providing exceptional care and support. Families can trust that their loved ones will be nurtured and cherished in this welcoming community.