Selling the Big House: A Wealth Management Solution

By Jeremy Sorci | May 07, 2016

Our retirement plan advisors often field questions about downsizing homes in preparation for retirement. Pre-retirees wonder how to optimize the sale of a home in order achieve a simpler lifestyle that's amenable to retirement planning.

Jeremy Sorci is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyA recent study from the Demand Institute indicates that 40 percent of Americans between the ages of 50 and 64 plan on moving within the next five years; of these, many choose to downsize their homes and/or move to a less expensive location. These decisions may be a result of a desire to use home sale proceeds to help finance retirement, to save money on mortgage payments, or to live more simply in a smaller space now that the kids are out of the house. 

These tips help you maximize your downsize when you leave your big home behind.

Consider the Many Possibilities and Do Your Research

The first step in any home selling or buying scenario starts with research. Today's digital technology means it's easier than ever to not only find that dream home, but to look at the many possibilities -- and alternatives -- that may exist.  

Think about what you value most. Cost? Convenience? Urban amenities? Rural peace and quiet? Proximity to grandchildren? Explore the possibilities before you make up your mind. 

And part of the research process? A trial downsizing run at home. Moving from a large, spacious home -- with more than enough room for your possessions -- to a smaller home with less storage can represent a shock to the system. Ease yourself into the transition by downsizing your stuff in your current home. The process accomplishes three objectives:

  • You'll have less stuff to move
  • You'll get used to living with less
  • You'll make some extra cash if you sell -- or receive tax deductions if you donate -- unwanted possessions

Jeremy Sorci is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyFinancial Strategies: Real Estate, Timing and the Web

Many lenders are reluctant to finance until your current home is sold, so selling before you buy may be a must. You may want to test the waters by putting your home on the market early; this will help you determine your home's market value. Just be ready to rent for a bit if you get a great offer!

Remember, equity is key to downsizing, so be sure to get the most out of your home. That means creating curb appeal, an uncluttered interior, and -- especially -- an online presence with impact. Today's real estate market is all about the Internet, so you'll need to make your home appealing both in-person and online. Consider using the services of a real estate agent for both staging and digital marketing expertise.

Creating a Comprehensive Financial Plan Around Downsizing

Most downsizers purchase a home that's worth almost $30,000 less than the one they sold, according to the National Association of Realtors. That's not an extremely significant difference in value; the real savings comes from using cash from the sale of your current home to pay for the new mortgage. However, with careful planning, you may also benefit from:

  • Lower property taxes
  • Reduced maintenance costs
  • Decreased utility expenses

Jeremy Sorci is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountySit down with your retirement planning advisor and develop a detailed budget and expense plan to eliminate surprises and make the most of these lower expenses over time. 

Once you have your plan, here's the fun part: Scouting out the perfect location for your new, smaller home. While the median move for homeowners ages 65 and up is 71 miles, about a quarter of retirees move 1,000 miles or more, so dream big!

The key is to research each potential area carefully, considering factors such as property taxes, cost of living, access to services and amenities, climate and quality-of-life factors such as walkability. With a bit of planning and help from a trusted retirement plan advisor, you can turn your dreams of a simpler life into reality -- and make it easier to continue growing that nest egg


Posted in Financial Planning, Retirement Planning