The Benefits of Downsizing for Extra Retirement Savings

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The Benefits of Downsizing for Extra Retirement Savings

In the United States, we live in an environment where big is assumed to be better. Supersizing is the norm for most Americans and so for that reason, downsizing is not usually a consideration or an appeal. In Texas, for example, people will oftentimes boast on how big their state is. However, Alaska could assume the most bragging rights because it is twice the size of Texas. Mount Rushmore exemplifies our passion for size. There are four presidential sculptures that are at a colossal height of sixty feet tall. Why say all of that? Well, if you are saving towards retirement, big is not always better. Many people, though, are not keen on trading in their expensive vehicles for an affordable one or their big mansion for a two bedroom townhome or condominium. That would be asking too much, right? No, it wouldn’t.

 

Retire Comfortably

If you want to retire and be able to live comfortably, you may have to consider doing so. Downsizing should not be an option. It should be part of your retirement plan. It is a necessity to use this as a survival strategy in order to extend your savings to the end of your life. Remember, an unfortunate and unexpected life event can catapult your retirement plans into a spiral.

Planning for Retirement

If you are over fifty years of age and you own your home and the kids have left the nest, you may be suffering from empty nest syndrome. You may want to hold on to the sentimental value of that home. You may find reasons to keep it, probably hoping that the children would come back home. It is time to accept that you are going into retirement some time or other. You should also accept the fact that you have to make certain changes. It is best to downsize earlier rather than later.

Do it Sooner

Don’t wait to downsize. Take the necessary plunge so you can be prepared for your retirement. Here are some things you can do to downsize your life:

  •       Eliminate clutter
  •       Donate things you don’t need (You can actually use this as a tax deduction)
  •       Trim your budget in order to improve your bottom line
  •       Sell one of your vehicles
  •       Cut down insurance deductibles
  •       Move into a townhouse or condo and sell your large home

Reduce Dwelling Space

As it relates to your dwelling space, less is always more. If you want to enjoy substantial savings, housing is the major area to examine. When you downsize your dwelling space, you reduce the added requirements of maintaining the property. It is better to get a smaller space with less maintenance. Downsizing also helps you to save money on home insurance and property taxes. This can greatly affect your cash flow in a positive way. You will also lighten and reduce your mortgage or rent load.

Even with all the savings involved when you downsize your home, there are many people who are not able to make up their minds to do it. The emotional attachment is too much for them and so they end up carrying all that debt right into retirement. That is not a sensible decision. It is best to speak to your financial advisor about this.

 

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