In crafting retirement plans for my clients, housing is typically a key topic. The concept of where to live during these golden years is a top consideration of retirees. Some are thinking of downsizing while others are thinking of moving a few neighborhoods away, and others still are weighing the benefits of buying a second home.
My favorite option, no matter the details, is for retirees to be mortgage-free.
In the research for my book, “You Can Retire Sooner Than You Think,” I found that the happiest retirees on the block are those who have either completely paid off their mortgage or are fewer than five years away from doing so. In fact, these folks are four times more likely to be in the clear – or within sight of being clear – of that monthly house bill than their unhappy counterparts. So, how much you owe on your house when you call it a career can have a significant impact on your quality of life.
I understand that as people head into retirement they may be looking for a fresh start, and this may include considering a new home. In today’s tight housing market, relocating may seem to offer an added financial bonus if you believe you can sell your home, purchase a less expensive place and pocket the difference. But is this windfall scenario realistic?
Take the current Atlanta market, for example. According to an AJC article on the topic by Michael E. Kanell, “average prices by mid-2018 were up a resounding 170 percent from early 2012 with much of the surge driven by a shortage of lower-priced homes.” Kanell explains that, in a healthy market where neither buyers nor sellers have the upper hand, inventory should represent six or seven months of sales. As of late last year, we were operating at four-months’ worth of inventory. So, while the market is still slightly tilted toward sellers, we’re getting closer to equilibrium.
And, with a move like that, you lose things that go beyond dollars and cents – likely your community, friendly neighbors and proximity to family and friends.
Making the decision to downsize is, primarily, a money conversation. But the intangibles associated with making a big move are also important.
Meet “Tessa.” She recently came to me for advice on the topic of downsizing. Her story illustrates the importance of intangibles perfectly.
Tessa is close to retirement and has lived in her home for many years. But, she recently lost her husband and thought that a new home could help her move forward in this new phase of her life. Of course, we can all empathize with her situation; it must be challenging to remain in a home that you shared with your spouse after they pass away.
Still, Tessa was torn. While she wasn’t sure if she was truly emotionally ready to move, she had taken steps to list her home for sale.
During our conversation, I encouraged Tessa to think about the social aspects and other intangibles that figure into the notion of “home” – things that she wouldn’t necessarily have right away if she picked up and moved. For instance, I wanted her to consider whether she had a great relationship with her neighbors, whether her home was close to other friends and family, and whether her community fostered her key core pursuits in life. Like the cycling group she has participated in and loved for years.
These intangibles are important, and when we move, it takes time to reestablish them.
While decluttering her home in preparation to get it “show ready,” something changed in Tessa’s thinking.
After sorting through all the things she had accumulated over decades of living in the same space, Tessa’s feelings about the house shifted. Tidy-Up Tessa came back and told me that, after downsizing her belongings, the place just felt different.
Tessa came to the realization that, after almost three decades in the same home, there were some things that she could let go of to give her home new life. The “stuff” had made her feel overwhelmed, and without it, she breathed easier.
In the end, Tessa decided to postpone selling for now. Today, she’s living happily in her “new” home with all its intangible benefits. While Tessa doesn’t know what the future will bring, she’s going to stay for a while.
The lesson we can learn from Tidy-Up Tessa, especially if we are considering downsizing, is this: With just a little polish, what’s old might just be new, and right under your nose.
Read the original AJC article here.