Is your home a nest or nest egg?

Dec 12, 2018
Senior couple sitting on couch

If you’re lucky, the decision upon retirement of whether to stay in your home or downsize is an easy one. Either you’re very happy where you are and have no reason, financial or otherwise, to move, or you’ve planned for years to move from the suburbs to relocate.

For many retirees, however, deciding whether or not to downsize is a struggle. Here are some things to consider in making a decision.

Enriching your retirement

Some people may have retirement dreams bigger than their budget, and a home that represents a sizeable amount of their net worth. Selling the home could be a ticket to world travel. Others may consider such a sale to increase retirement income and ensure they won’t outlive their savings. Downsizing purely for economic gain can be especially tempting if it’s the difference between postponing retirement or working part-time during retirement years.

It’s important, however, to weigh the sale of the home against the purchase of your next home and the cost of living elsewhere. Downsizing doesn’t always net as large of a gain as hoped.

Practical Reasons

You may wish to downsize for less home to take care of. A smaller house means less maintenance, and a condo means no lawn to mow, no snow to shovel, little work at all. Perhaps you’re selling because you don’t need the house – you’ll spend winters down south and stay up here during warmer months at your vacation property.

On the flip side, you may have practical reasons to stay. You want to hang on to your home in case an aging parent or unemployed child moves in. Or you want to stay for now, with the option to sell in the future if the need arises, like covering the cost of a retirement residence.

From real estate to estate

Estate planning can be a factor in whether or not you sell the house. You may wish to stay in the home, since the principal residence becomes a large, tax-free inheritance for your children. On the other hand, selling the home and downsizing may enable you to give your children a cash gift now.

Matters of the heart

For some people, downsizing is not an option simply because your home is your home. It’s the source of warm family memories, the place where you feel most comfortable. And perhaps your neighbours and neighbourhood are meaningful to your life. Leaving would be difficult emotionally, plus there’s the stress of the move itself.

If you find yourself wondering about downsizing, speak with an Assante advisor. We’ll assess the financial picture while you think about the emotional side.

Locate an advisor near you