Poll: Downsizing the Home - When to do it?

[chinaco]

The Poll Question is Would you down-size your home before or after you retire if you were within 5 years of retirement?


We are intending to downsize our home when we retire. We will stay in the same general area. We are still about 4 years from ER. We have much more house than we need. Matter of fact, we have enough furniture to furnish two smaller houses with full living rooms and dining rooms. I am a little too embarrassed to elaborate. It will suffice to say that some relatives will be enjoying some nice furniture gifts.

As a side note: We almost Built an even larger Home. Boy am I glad we passed on that. More taxes, more expenses. But it would have been a very very nice money trap!

I am trying to decide if we should try to down-size before or after we ER. We will owe about 40k on the mortgage when we ER. That is not a problem since I could just pay it off. The issues is more related to time and effort. I feel that we will have more time to spend working the house hunting and move.

[Orchidflower]

If you are busy with working and not just cruising along, then it only makes sense to me if you downsize right after retirement. More time, no rushed decisions leading to mistakes you will regret later and more time to do those things you wish to do yourself and not hire out--all at your own leisure.
When I still had my business, I worked obnoxious amounts of hours. I had no time to do much of anything else but work.

[cute fuzzy bunny]

I downsized right after retiring. Seems the right time...you arent working so you have plenty of free time, your brain is still in work mode and wants something to do all day.

Just dont overdo it...we ended up re-upsizing a few years later. But then my family size increased a little bit.

[REWahoo]

I think you can make a case for either option.

As Orchidflower says, you should have more time to devote to the task if you wait until after retiring. You may also find that what you think you want in a post retirement house changes after you finally make it over the finish line, and waiting gives you the option to make those changes at a much lower cost to both your portfolio and your mental stability.

We built prior to retirement and that worked better for me for a couple of reasons. It provided a great outlet for the "I-just-can't-wait-to-get-the-Hell-out-of-here" syndrome which seems to strike hard in the last couple of years prior to FIRE. It also allowed some peace of mind, knowing while we built the place I still had an income to cushion any surprises that came along - and to discourage going overboard since it would only delay FIREing.

Whatever works best for you...

[jIMOh]

I think this depends on numerous factors. In my case I think I will be FIRE before kids turn 18. In this case I could downsize MORE if I waited until kids were done with college.

In my case I may also FIRE before wife stops working... so we cannot move where I (we??) want to move immediately anyway.

Timing is 90% of life- being in right place at right time means so much to things working out.

[OAG]

I have found that all of my homes over the past 32 years have COST more. Technically I retired from the military in 79 but worked at several other "jobs" until about 89 when I, more or less, fully retired. Anyways, over those 32 years we changed personal residences 5 times. 1 in Alexandria, VA (79); 1 in Orlando, FL (86), 2 in Jacksonville, FL (87 & 95) and the last one in central OH (05). All but the last one were SF residences. The last one is a Ranch Style Condo. Funny thing is that in almost all cases the size of the home INCREASED; the current Condo being the largest in square footage; additionally, the purchase price of EVERY one increased over the last one. I felt the Condo was "down sizing" because of the significant reduction on labor required to maintain it over a SF residence. That may or may not turn out to be true -- as you can always find something to improve your living conditions.

So I did not see the response that would fully fit my/this situation, but, I selected AFTER retirement.

[lazygood4nothinbum]

i ran a few scenerios through fire-calc and it shows my highest swr by downsizing and adding proceeds to the portfolio in 4-6 years. i don't understand it but for some reason it says that's better than doing it now or after that window.

i was planning to hang here another 5 years anyway so it happened to work out just right.

[kcowan]

We downsized 7 years before retirement. As empty-nesters, we wanted more leisure time. I took a week of holidays to run the contents and garage sales. We also had some curbside recycling of old appliances and furniture. We had a scrap metal dealer come and take extra copper piping, electrical wiring and some sump pumps I had intended to repair. That reduced the weight charges at the dump. Then it was three trips to the dump in the friend's half-ton truck.

Once in our new place, a penthouse apartment, we had Saturdays given back to us. That made a big difference to us. I had some "handyman withdrawal" and have a small workshop in half the guest room closet. The patio is large (1350sqft) so provides ample room for some handyman working and gardening.

With the benefit of hindsight, I wish we had done it 5 years sooner. While it was a big project, proper planning made it go very well. Had we done it after retirement, it would have taken much more work because we had the time.

[TromboneAl]

If I didn't hate building houses, I'd build a very small, super energy efficient home (by "build" I mean "have contractor build"). One with double thick walls, passive solar heating, no high ceilings, and a floor plan conducive to heating with a wood stove.

[wallygator69]

We ran away with the money on our first house and moved into an apartment that was more like a condo complex. Pools, tennis excercise room etc. about 5 years before planned FIRE. I wanted to be sure we were up to Condo living before buying one. (Actually bought a condo after the apartment for about 3 months but was underwater literally and got out. Try to block that period of my life out completely)....

Did not work out, we are house people. Also decided that 1200 sq feet was not enough.

Worked out very well...

W

[Life_is_Good]

My course of action was to downsize right at the time of retirement. That allowed me to sell my appreciated california house and buy out of state at 1/3 the cost. The rest is invested at Vanguard and I'm enjoying my ER from the investment income. Life is Good!

[AltaRed]

Quote:

Originally Posted by Life_is_Good My course of action was to downsize right at the time of retirement. That allowed me to sell my appreciated california house and buy out of state at 1/3 the cost. The rest is invested at Vanguard and I'm enjoying my ER from the investment income. Life is Good!

Did similar because I re-patriated effective last day in the office. Purposely downsized into a bungalow villa (e.g. similar to patio home). Had I not been re-locating, I would probably have chosen to downsize after retirement for reasons of: 1) seeing what retirement meant first, and 2) more time to 'enjoy' the downsizing.

[simple girl]

We have downsized before retiring. We knew we were going to be traveling quite a bit on assignment. When we first moved, we bought a 3 bdr townhouse with a 1 car garage. We moved from a 4 bdrm house, 3 car garage, on 2 acres. Quite an adjustment! Our little 1 car garage was packed to the ceiling with "stuff". We gave tons of stuff away just to clear out our garage.

We now have downsized to a 2 bdr apartment. We had some stuff in storage for a while and finally have adjusted mentally/emotionally to letting go of some more stuff. We've spent the last 3 weekends sorting things into keep/sell/trash piles. Quite an ordeal. Had a yard sale yesterday, and now realize it would have been easier to just give it all away and take the tax break. It's been really interesting the emotions you go through getting rid of "stuff" you've had for years.

We really hope to retire in 3 to 5 years and want to live a rather nomadic, travelling lifestyle for a while. So we need to be "lean and mean" regarding how much we own/want to move/store/etc. Although it has been challenging, I think it has been better doing this ahead of time. More time to go through things and lament over what we are getting rid of would drag out the whole process. Also, with each step of downsizing, it's a mental boost - feel like we are getting closer to our goal. Additionally, living in a smaller space is not only cheaper (and will help us FIRE sooner) but also is a good way to test out if we can handle living in a smaller space.

It's amazing how much stuff you don't "need" or miss once it's gone.

[Alex]

I think it depends on the area you live in. If you are in a part of the country where the appreciation of real estate has historically been slow, downsize before retirement and invest the difference. If you live in an area like Los Angeles or NYC, keep as large a home as you can afford, the appreciation of the property will only add to your nest egg when you downsize after retirement. Obviously prudence is always the best course, don't buy a home so large that you can't afford it!

[Nords]

I'm going to take a contrarian stance on downsizing. If it has to be done to boost an ER success rate, and if you're doing it for other reasons as well, then it's a good thing.

But if ER success rate is the ONLY reason for downsizing then maybe it's worth working longer or figuring another way to keep the homestead.

We were in a somewhat contentious phase of our lives when spouse found our current "dream home" exactly seven years ago today. ("Happy Father's Day, now get in the car so we can show you what we want to buy you!") I think my comment an hour later was "Gosh does the timing suck, but we have to buy this place."

So in Aug 2000, as the market was imploding portfolios and as we were less than two years from my ER, we closed on this place. We went from 1873 sq ft to 2400, from a 5400 sq ft lot to 15,688 with more privacy, from one story to two, and a huge upgrade in materials/quality of construction. We got a tremendous view and cooler tradewinds. We also moved to one of the state's best high school districts and to a much more kid-friendly cul-de-sac.

So while downsizing can do a lot to improve an ER, it might be worth keeping an open mind on the issue.

[ziggy29]

We downsized before. We left a 2200 square foot house in Houston for a less than 1200 square foot house way out in the country last year. I think we already have our retirement home now. Property taxes are way lower, utility bills are way less and the smaller size of the house makes us very cautious about accumulating more stuff and makes it easier to avoid catching "affluenza."

Basically it's a good opportunity for us to downsize not just our home, but also our lifestyle -- getting out of the fast lane, simplifying and helping us determine how much we need to live on in this home and with this lifestyle. I think that would make FIRE planning easier as we can probably plug in more accurate numbers with respect to what we need our portfolio to generate for us each year.

[AltaRed]

Quote:

Originally Posted by Nords So while downsizing can do a lot to improve an ER, it might be worth keeping an open mind on the issue.

Precisely. Less maintenance, no @)%&*#% stairs to climb and clean, a neighbourhood generally with empty nesters of similar age and no howling kids to contend with. We downsized when the kids left the nest. There is a time and place for almost every kind of housing and one should remain flexible according to one's own lifestyle.

[Moemg]

I'm still wrestling with the downsizing dilema.Most of the time there is just the two of us but when his family comes ( 4 boys,2 wives ,1 girlfriend ,4 grandkids )our house suddenly seems small .What we need is a house that expands as needed.

[Nords]

Quote:

Originally Posted by Moemg I'm still wrestling with the downsizing dilema.Most of the time there is just the two of us but when his family comes ( 4 boys,2 wives ,1 girlfriend ,4 grandkids )our house suddenly seems small .What we need is a house that expands as needed.

I know of two: they're called "resort hotels" and "cruise ships".

Better still, you don't end up having to be hosts, cooks, housekeepers, maintenance staff, entertainment directors...