DOWNSIZERS: HOW AND WHY YOU SHOULD THINK ABOUT DOWNSIZING
There is a time for everything, and a season for every activity under the heavens. – Ecclesiastes 3
The decision to downsize is not easy or simple. It’s difficult to leave the home you’ve known and loved. Sorting through years’ worth of belongings forces us to reconcile with the reality that life, indeed, does move on.
Letting go can be painful or it can be liberating, depending on how we consider change.
“I got rid of about 90 percent of everything I owned and feel totally ‘liberated.’ This is a word used by most of the homeowners I interviewed. Most of them missed nothing they gave away and are happy to live a less cluttered life.”
– Sheri Koones, author of ‘Downsize: Living Large in a Small House’
A Simpler Life
Chinese philosopher Confucius once said, “Life is really simple, but we insist on making it complicated.” He could’ve well been referring to the size of our homes. In 1950, the average home was 1,000 square feet. Today, despite smaller families, the number is up to 2,600 square feet.
Simplification is an opportunity to create a life filled with meaning—a life lived on our own terms. Living a simple life means stripping away the nonessential stuff to focus our time and energy on the things that matter the most. Living simply can help us find meaning and grow spiritually, making us shift the focus away from material possessions to look inwardly. It can also connect us more closely to the world.
Some empty-nesters or soon-to-be retirees choose to downsize and move closer to cities or higher-density communities so they can connect and engage more actively with people, make a positive contribution, and prevent the negative health effects of loneliness and social isolation.
Others, wanting to remain in close proximity to their loved ones, are downsizing “in place,” using the home’s available space to build auxiliary dwelling units, or ADUs—also referred to as accessory apartments, second units, or granny flats.
Still others are looking far ahead, knowing that there will come a time when they won’t be able to give their existing home the necessary maintenance which will lower its value.
A Cost-Effective Decision
No matter the goal, downsizing, simplifying, and decluttering our lives is good for the mind and soul. It’s also good for the wallet.
A lower mortgage payment and reduced maintenance and utility costs free up cash you can use to boost your retirement savings, help your children pay-off their student loans faster, reduce your own debt load, or to fund the dreams you have been putting off for years. Many, for instance, are using the savings afforded by downsizing to live abroad part-time.
How To Prepare
The key to a successful transition to a smaller home is proper planning and proper counsel. It is wise to start thinking of downsizing a few years before your retirement and as your children prepare to fly the nest.
Sorting through your stuff will take time. Deciding what to keep, what to donate, and what to toss is not easy. Taking enough time to properly sort prevents hasty decisions which you may regret.
A well-thought out financial plan provides clarity and peace of mind. Selling your existing home at a significant profit, for example, has capital gains tax implications that must be considered. The IRS will tax any gains of more than $500,000 for a couple, or $250,000 for an individual (click here for details).
Whether you’re downsizing because the time is right or because you’re looking to simplify your life, Julie and her team are ready to help you draft your plan and connect you with the proper financial and tax advisors.
When the moment comes, we can even assist you in sorting through your belongings, selling your existing home, and finding that perfect place for you to write a new and exciting chapter in your life.
Can We Help?
For more information on how we can help with your downsizing needs, please contact Julie at 650.799.8888 or [email protected] to schedule a free consultation.
