Like anything big decision in our lives, there are many pros and cons in making the choice to downsize in retirement. After reading this story of baby boomers who decided to downsize their home, you will feel more informed about what kind of lifestyle you want to live in retirement and if downsizing is right for you…
As a retiree, I’m always looking for ways to cut expenses without degrading my lifestyle.
It’s a good plan, and it’s working. But it wasn’t feasible until two years ago, when Tricia and I downsized.
We moved out of the house where we’d spent the past 25 years. When we moved in, it seemed so big. We had lots of rooms with no furniture. We never thought we would fill it up. But we did. And then some. This was the house where our children grew up.
Then, suddenly, we were empty nesters. We wanted to do a lot of the things we had put on hold while we raised our children. Like traveling. And getting out of Florida during the summer.
How to pay for it was the question. The answer appeared when I looked at how much we were spending on the house. It was by far our biggest expense. Many Americans are in the same boat.
According to the most recent Bureau of Labor Statistics survey, Americans spend twice as much on housing than they do on anything else. Housing expenditures average 34% of take-home pay. And if you live in a major metro area, such as New York or San Francisco, your percentage may be even more.
Mark’s take on housing is that it is the No. 1 determinant of your lifestyle burn rate (LBR). He discusses calculating your LBR here.
A bigger house, of course, costs more money to buy. But that’s just the beginning. You’ll pay more in property tax. It also costs more to maintain, heat, cool, and furnish.