by Karen Telleen-Lawton, Noozhawk Columnist (read the original in Noozhawk by clicking here)
My book club has been reading and nattering together for over 30 years, since most of us had kids in the same neighborhood grade school. A generation later, our needs have changed. A few of us are eying the leap to retirement communities. What considerations enter the decision to move from a long-term house?
Your unique situation may offer compelling financial reasons to stay, to downsize, or to move into senior living. Sometimes the financial “best choice” aligns with your emotional inclination, while other times they are at cross purposes. Identifying the underlying issues can help you to sort out and discern a “smart heart” decision.
Will selling the family home save you money? The differences in cash flow can be evaluated by measuring maintenance, cleaning, and gardening expenses against a monthly condominium or residential fee.
Property tax and insurance are other cash flow costs that generally will be lower or zeroed out if you downsize. Be sure to compare apples to apples, accounting for amenities such as dining, medical, or athletic fees.
Cash flow is only part of the picture, of course. Your home is an investment. When that investment is cashed out and mortgage retired, you will be investing the proceeds in something with a different potential return. Real estate generally performs well over the long term, but it is absolutely possible to lose money even in a “short term” as long as a decade or more. (We’ve done it!)
If your idea is to sell your home and gradually spend down the equity for living expenses, consider reviewing your financials with an expert. Your banker or a financial advisor can help you determine a sustainable level of withdrawal. A financial advisor can also help evaluate choices with major life implications.
Even if the financial factors seem to point to an obvious decision one way or the other, it’s important to consider the factors that can’t be quantified. Your life and priorities have changed since you moved into your current house. You may relish the empty-nester space to spread out projects. You have more time now to dig in the garden or tinker in the garage.
On the other hand, maybe you feel like you’re rattling around in a too-big space. Perhaps you want a “turn-key” condominium to leave easily. Maybe the kids have ended up clustered in another area and you want to relocate. Some move to a lower-tax state for tax purposes.
Another factor to consider is repurposing the value in your home. Having a house to exchange or rent out is a great way to make traveling more affordable. We have used Home Exchange for years, and enjoy dropping into neighborhoods as “locals” all over the world.
Whether or not you consider yourself sentimental, leaving a long-time home can be emotionally fraught. You’ve celebrated major life events there. You planted and nurtured the trees that are now mature friends in your yard. The kids’ heights are marked on the door jam in the closet.
Besides sentimental reasons, there’s the stuff. Are you prepared to face decisions regarding your kids’ childhood art, books and other mementos? If the kids aren’t prepared to take their stuff, will you clean out or haul them with you? Downsizing sounds refreshing until you’re faced with the detailed choices.
Before the pandemic, we were thinking we would sell our house the next time the real estate market was hot. If we weren’t ready to move into our favorite retirement living facility, we’d rent a place in a different area of town for a penultimate adventure.
Now we were grateful not to have followed up our impulse with a move. We’re comfortable at home making our own decisions. Yet our friends in retirement facilities are grateful to have been cocooned in retirement living. Their lives were more curtailed than ours, but their meals were delivered, frequent COVID testing facilitated, and outdoor entertainment provided where possible.
There’s no right decision. As seniors, however, we have the experience to enter this next phase with our eyes open. Test drive your preferred solutions by visiting and listening to your trusted friends. Do the math with an advisor. And take the long view with a smart heart, so your kids don’t take the matter into their own hands.
Karen Telleen-Lawton, Noozhawk Columnist
Karen Telleen-Lawton is an eco-writer, sharing information and insights about economics and ecology, finances and the environment. Having recently retired from financial planning and advising, she spends more time exploring the outdoors — and reading and writing about it. The opinions expressed are her own.