Any Anti-Downsizers Out There?

[angie411]

Hey guys--
I am a reporter with one of the national personal finance magazines. I'm trying to find early retirees (or even non-early ones) who lived somewhere they loved, maybe in a house they loved, and didn't want to downsize in retirement. Ideally, this person might have felt pressured to downsize after seeing neighbors/friends flee for cheaper markets or smaller homes, but ultimately found a way to make it work in their current house-- maybe by taking a part-time job for a little extra cash or smartly managing their investment portfolios, for instance.
If anybody fits the bill and would let me interview them, I'd really appreciate it! I'm at amarek@hearst.com, and I can tell you a lot more about the story when you e-mail.
Thanks, and hope to hear from some of you--
All the best,
Angie

 

[brewer12345]

So this is a case of script the story first and then find "facts" that you can make fit into it? Lovely.

 

[angie411]

To be clear: This is a case of financial planners telling me this is a phenomenon they see often, but not feeling comfortable providing me with contact info for their clients. I have to find those myself!

 

[brewer12345]

Sniff, sniff...

Watch out: don't step in it.

 

[ziggy29]

Sniff, sniff...

Watch out: don't step in it.

At least she's not trying to sell annuities, right?

 

[brewer12345]

At least she's not trying to sell annuities, right?

There is that.

 

[SteveR]

FYI.

This poster is NOT KBellNYC who reportedly also works for Smartmoney Magazine.

The Mods. on this board allow these kinds of posts as long as they don't get out of hand or start selling something.

If you wish to contact Angie do so privately at her posted email address.

Thanks

 

[TromboneAl]

They've already designed the SmartMoney cover:

You Don't Need to Downsize
to Retire Early!
We'll Show You How

That's a real magazine seller. Now, they only need one or two people to interview. Here's how it starts:

Think you need to downsize in order to retire early? Bob and Marylin Smiley of San Francisco sure did, until they realized that they could keep the house they loved, stay in their wonderful neighborhood, and still get out of the rat race.

"We felt pressured to downsize after seeing neighbors/friends flee for cheaper markets or smaller homes." says Bob, but they ultimately found a way to make it work in their current house. Marylin took a part-time job turning tricks and Bob used SmartMoney's tips to successfully manage their investment portfolios .
​

 

[ziggy29]

"We felt pressured to downsize after seeing neighbors/friends flee for cheaper markets or smaller homes." says Bob, but they ultimately found a way to make it work in their current house. Marylin took a part-time job for a little extra cash and Bob smartly managing their investment portfolios

...until Marylin lost her job and Bob's investments went into the tank. And they had to sell the house into a horrible real estate market. Next thing you know, Bob's begging his former boss for a new job when no one is hiring.

 

[brewer12345]

...until Marylin lost her job [/quote]

Turning tricks? That be something to see. Is it like the old joke about the elderly couple whose social security wouldn't cover the bills anymore, so reluctantly the wife went out on the streets? After a "hard" day of work, she came back and showed her husband her earnings: $25.05. He asked, "who gave you the nickel?" She answered, "everyone."

 

[FinanceDude]

...until Marylin lost her job [/quote]

Turning tricks? That be something to see. Is it like the old joke about the elderly couple whose social security wouldn't cover the bills anymore, so reluctantly the wife went out on the streets? After a "hard" day of work, she came back and showed her husband her earnings: $25.05. He asked, "who gave you the nickel?" She answered, "everyone."

 

[ziggy29]

...until Marylin lost her job [/quote]

Turning tricks? That be something to see. Is it like the old joke about the elderly couple whose social security wouldn't cover the bills anymore, so reluctantly the wife went out on the streets? After a "hard" day of work, she came back and showed her husband her earnings: $25.05. He asked, "who gave you the nickel?" She answered, "everyone."

Ha! But I should point out that he added "turning tricks" after I replied!

 

[M Paquette]

Ideally, this person might have felt pressured to downsize after seeing neighbors/friends flee for cheaper markets or smaller homes, but ultimately found a way to make it work in their current house-- maybe by taking a part-time job for a little extra cash or smartly managing their investment portfolios, for instance.

There's a pretty spectacular gotcha here for longer term homeowners trying to downsize.

In some states (California, Oregon, for example) there is a property tax cap on the taxable valuation of the home. That is, if someone bought a home 30 years ago for $30,000, their property taxes are based on a capped percentage (typically around 1%) of that valuation, not the current market value.

When the downsizer sells that $30,000 home for $250,000, they might 'downsize' to a nice little $180,000 home. Alas, their annual property tax may well jump from $300 to $1800, even as they downsize. Oh, they could probably re-invest the net gain from the move and use that to cover the taxes, but I bet a goal of that downsize was to free up cash for retirement, not the nice man at the tax office.

This provides a powerful incentive to not move. (If my home were reassessed to current market levels, 10% of my retirement income would go for property taxes. Ouch.) A lot of people in these states will retire in place.

Note that in California, if downsizing and staying within a county, and the homeowners are over 55, they might be able to keep the old property tax rate under Proposition 60 (1986). A few counties will transfer in the tax level from another county under Proposition 90. Only Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara and Ventura counties currently allow this transportation of a current property tax into their county. Those familiar with property prices in California will recognize that those counties aren't exactly big downsizer destinations.

 

[aenlighten]

I didn't feel any pressure to downsize

I did compute the costs of moving and found it horrendously expensive. Giving up my property tax basis and paying capital gains would have been on the order of $100k. While I no doubt could move to a less expensive area, it would be much less desirable to me. I chose to live where I do, planned for it, and paid off my house when I retired. Any stretching was in other areas to own it. I might even prefer to move a limited distance closer to the ocean, but those costs are extremely high so I will probably stay put for a very long time. The cost of living in different areas is not that different other than the cost of the home.

 

[aenlighten]

If prices fall enough by the time I reach 55

I might even be able to afford to move.

 

[Milton]

So this is a case of script the story first and then find "facts" that you can make fit into it? Lovely.

Surely this doesn't surprise you? That's how journalism works.

 

[Zoocat]

The issue of downsizing is a complicated one. Retirees who plan to keep their big house in the suburbs might be interested in reading this article from The Atlantic "The Next Slum?"
The Next Slum?

A quick summary:
Rising gas/heating prices may make it so expensive to keep a suburban McMansion that owners will leave, landlords will buy and turn the homes into apartments, thereby turning suburban neighborhoods into slums. The author does give a disclaimer that suburban neighborhoods near public transportation and near city centers will likely hold their value.

Also, interestingly, the author speculates that small/medium towns may have a comeback because all the necessities of life are close at hand. It is the neighborhoods that require long commutes to jobs, services, shopping that will suffer.

 

[SteveR]

We are in the middle of "right sizing" . Our current home is larger than our desires to keep it heated, cooled, cleaned and maintained. Taxes are constantly going up as are the utilities. But our ultimate reason is we are sick of winter. It is snowing again today as Spring tries to break through Winter.

We have a contract to sell and a contract to purchase a new home. We close on both June 2 and move June 3 and 4. The new house is smaller and all on one level. it is a down size but we really believe it is more in-line with what we are willing to take care of and live in for the next few years.

 

[Midpack]

Turning tricks? That be something to see. Is it like the old joke about the elderly couple whose social security wouldn't cover the bills anymore, so reluctantly the wife went out on the streets? After a "hard" day of work, she came back and showed her husband her earnings: $25.05. He asked, "who gave you the nickel?" She answered, "everyone."

Congrats to Trombone Al for sending it in this direction, but I laughed my ass off at Brewer's joke (still laughing)...

 

[W2R]

In retirement, I can choose where I live instead of being bound to a location by my job. I have selected a small midwestern town with a lower cost of living.

The home I purchase for retirement will therefore cost less than my present home. However, the square footage is likely to be greater than that of my present home.

I guess this is downsizing to a larger home?

I know what you mean about living in a house you love. I really do love my home. Katrina changed my plans.

 

[nwsteve]

We downsized about 2 years ago--moving from high priced Puget Sound market and 3800 sq ft to a college town in Eastern WA with 2200 sq ft.
Property taxes dropped from $6800/yr to 2200. Insurance likewise took a drop since our new house market value is less than half of the house in Seattle. Size does matter! Lower utilities, insurance and up-keep all put $$ in the bank.
We walk to a lot of stuff on campus and a trip to town is 5 minutes for all we need. In and out of the bank in less than 10 minutes.
No anti-downsizer here--sorry!
nwsteve

 

[Khan]

My house (paid for) is worth $70K on a warm day. When I move (at some point after the cat dies) I just might give it away to my neighbor as a tear down.

 

[UncleHoney]

Downsizing when you retire is something new to me. We have what we want, where we want it.

Having lived in our house for thirty three years, I've seen a lot of people retire over the years and there is only one reason any of them ever leave, the squad comes and takes them.

I still have neighbors that remember my grandparents living in our house before 1975. One old guy across the street lived in his house for 69 years before they carried him away.

There is a couple down the street that want to move, but they have both been retired about 30 years and it's time to move to assisted living.

We're too attached to our house to want to move, it's been in my family for 78 years. DW says they will carry me off just like they did my granddad, on a gurney.

 

[figner]

I suppose by the OP's definition I might be an anti-downsizer. I live in expensive SoCal, and for now I'm not planning to move when FIREd. Family, activities, weather are all reasons why I'm staying. So I'll just have to plan for a portfolio to cover the higher expenses. If the excrement really landed on the propeller blade, though, I'd consider moving to a lower cost area as an emergency Plan B.

 

[kumquat]

Us too, I guess. Our defintion of FI included being able to [-]spend[/-] do what we want. DW likes our oversize house. We can afford it according to FireCalc. What's your point?