Author Topic: Why we chose not to downsize in retirement.  (Read 15787 times)

Greystache

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Why we chose not to downsize in retirement.
« on: March 24, 2016, 08:37:16 AM »
I continue to see lots of articles about the benefits of downsizing in retirement.  My wife and I took a serious look at downsizing and moving to a lower cost of living area.  Ultimately, we decided it was not the right decision for us.  Here is a short list of some of the reasons (rationalizations?) why:
1. The house is paid off and it would cost a lot to move.
2. I could find a less expensive place, but not  better climate (coastal SoCal).
3. I don't mind home maintenance and I have plenty of time to do it. I like having room for all my tools.
4. Taxes are high here, but I can manage them.  Property taxes are low, ($3.6K on $600K house). Sales tax is very high, but I don't consume much now that I'm retired. Ditto for state income tax, it is high, but I can manage my taxable income in retirement, so it is not too bad.
5. Yes, we are heating and cooling more space than we need, but due to the mild climate, it is not a huge expense.  We added solar electric to reduce or power consumption. It was expensive up front, but the ROI is better than most low-risk investments.
6. I have the option to use the extra bedrooms for rental income if I choose to.
7. We thought we might want to move to a less urban area, but the reality of being far away from airports, entertainment, etc. is a trade-off that we were not ready to make. Also, not yet ready to move away from children and friends.
So, while there are lots of good reasons to downsize, it may not be right for everyone.  Right now it is not right for us, but that could change as time goes by.

Rollin

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Re: Why we chose not to downsize in retirement.
« Reply #1 on: March 24, 2016, 08:44:36 AM »
Very many of my reasons as well. Marginal cost savings even over the long run (we also factor in that we got a good deal on our house).

Many people don't factor these things in, especially the "friction" costs of selling and buying. I had this conversation with a friend recently about the constant changing of cars for he and his wife. He said, "awe that difference in estimated value (current car and newer or new car) is only the price of one of our bikes." First, we have multi-thousand dollar bikes. Second, since I've known him and her (10 years) they have changed vehicles 7 times and are considering another now. So, 8 changes with all the depreciation, new car cost, dealer costs (always with a dealer), taxes, ouch!

acroy

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Re: Why we chose not to downsize in retirement.
« Reply #2 on: March 24, 2016, 08:46:59 AM »
Great post, Greystache
A lot of times the most sensible place to be is the place you're already in! Many folks forget the high costs of moving.

iris lily

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Re: Why we chose not to downsize in retirement.
« Reply #3 on: March 24, 2016, 08:52:37 AM »
We arent downsizing because we never upsized.

We dont have children, so our house is ine size fits all.

Im
Imwere single, though, Id move n a heartbeat.DH has tools,and atuff all,obver the basemwnt, and the harage ismjam packed.

Mtngrl

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Re: Why we chose not to downsize in retirement.
« Reply #4 on: March 24, 2016, 09:04:50 AM »
We did move at retirement, but we didn't downsize. We built a new, 2600-square foot house (moved from a 2100 square foot house) in a fairly HCOL area. But we were deliberate in our choices. We searched for years to find the place we wanted to live in retirement -- rural but not backwards, with great recreation opportunities, a real community, clear air, beautiful scenery and good neighbors. We built an energy-efficient "green" house, one-story (the old house was 2 stories). When you're young, stairs are no big deal, but I have seen my husband's parents, who are now in their 80s, struggle with stairs. One-story works better for "aging in place." The rooms we now use as my office and the guest room are in a separate wing with its own exterior entrance. That wing could easily be converted to an apartment for rental income but, more important for our plans, we think we could give a rental break to some young person in exchange for stuff like plowing the driveway in the winter and trimming the grass in the summer if we reach the point where we are physically unable to do this. In an area where rents are high, this would be a win for both parties.
We have plenty of room here for a big garden and greenhouse, and a big garage for our camping gear and other hobbies. Our utilities (except water) are lower than our previous house, taxes are reasonable (We pay $1600 a year for a $500,000 house), we have made friends with several other couples in the neighborhood and are really enjoying life.
There's no one-size-fits all for retirement, that is for sure. I enjoy reading how others are approaching it.

Gone Fishing

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Re: Why we chose not to downsize in retirement.
« Reply #5 on: March 24, 2016, 09:19:38 AM »
All good points, but have you actually run the numbers?  Not sure if you are retired yet, but if not, I would want to know roughly how many extra years I would have to work to avoid moving.  I would also like to know the difference in annual income once retired.  I ran the numbers for another member a while back with a highly valued house in a HCOL area and, if I remember correctly, the opportunity cost of staying in the house was somewhere in the $60-70k/yr range, more than most people's entire FIRE budgets.  If staying in your home is what you want, fine, but I think you owe it to yourself to at least know what you are "paying" for it in terms of opportunity costs.

RedmondStash

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Re: Why we chose not to downsize in retirement.
« Reply #6 on: March 24, 2016, 09:35:17 AM »
I've gone round and round with the idea of downsizing/moving. When we first bought our house, we figured we'd move within 7 years. 20 years later, we're still here. This house does everything we need, has a good location for most things except my current job (and if we're FI next year, that might not matter soon), has a great yard for our dog and for shelter foster puppies, etc.

I've actually looked at houses closer to my job, and smaller, older houses there are more expensive than the one we're in -- and I always thought this was a desirable neighborhood. Weird.

I get the benefits of downsizing. Our house really is bigger than we need. But we do use most of the space for something.

It's reassuring to hear about other folks choosing not to downsize. We will likely move someday, but there's no real rush.

Another Reader

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Re: Why we chose not to downsize in retirement.
« Reply #7 on: March 24, 2016, 09:41:26 AM »
One thing not mentioned in the OP is the capital gains tax on the sale of the high value coastal California property.  If you have owned the property for a long time, especially if you deferred the gain on a prior house when that was allowed, you may easily have a six figure tax bill to pay, even after the $250k or $500k exemption.  Not only do you have to pay federal capital gains tax, which could be up to 23.8 percent if the taxable gain is large enough, you have to pay California ordinary income tax on the taxable gain.

Fishindude

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Re: Why we chose not to downsize in retirement.
« Reply #8 on: March 24, 2016, 10:09:47 AM »
I won't downsize until I am physically or financially unable to maintain my places.
Might actually up-size and add a new barn.

opnfld

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Re: Why we chose not to downsize in retirement.
« Reply #9 on: March 24, 2016, 10:49:03 AM »
I think the decision to downsize/relocate should start with the question, "do i want to downsize or relocate?".  Despite your compelling rationale, it sounds like you never wanted to.

Altons Bobs

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Re: Why we chose not to downsize in retirement.
« Reply #10 on: March 24, 2016, 11:00:16 AM »
A lot of people we know talk about downsizing when they're going to retire. We choose not to downsize, we upsized instead. :-D

going2ER

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Re: Why we chose not to downsize in retirement.
« Reply #11 on: March 24, 2016, 12:40:01 PM »
You need to do what works best for your family. We love to travel and did think of moving closer to an international airport, but housing is much more expensive in that area and we don't know the area very well. Plus it would not be close to where any of the kids are right now, however, who knows where they will end up living.

We have decided that we love our neighbourhood, close to park, library, rink, shopping so when our neighbours passed away we purchased their home. We will be tearing it down this summer and likely be drawing up plans for a one level, smaller home that we will build in a couple of years time. We are thinking around 700sq ft should be good. I know that I hate cleaning, so the smaller the better and as someone else mentioned stairs and aging don't always go well together. It will also be more energy efficient than our current home. We are hoping things like triple pane windows and people to install geothermal healting will be available in our area in the next couple of years. Heating is currently one of our largest expenses.

J Boogie

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Re: Why we chose not to downsize in retirement.
« Reply #12 on: March 24, 2016, 12:53:52 PM »
My Dad is retiring in about a year.  They have a 4 bed, 3.5 bath house in the suburbs.  They have great neighbors and a sweet view a marsh out back.

I'm 30 and the youngest of 4 sons.  We all live nearby except one who lives 5 hours away by car.

They aren't downsizing (in fact they just installed a pool) I think because they enjoy hosting us.  I always tell people they installed the pool as a tourist destination to make sure their house would be the place to be.   We have dinner with them almost every Sunday and most holidays.

I like living simply, but I will probably be just like them.  I love family, love hosting, and I also have many tools and a burning desire to build a decent size shop.

I currently own and occupy the main unit of a duplex.  My inlaws live up top. 

mm1970

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Re: Why we chose not to downsize in retirement.
« Reply #13 on: March 24, 2016, 01:19:56 PM »
I continue to see lots of articles about the benefits of downsizing in retirement.  My wife and I took a serious look at downsizing and moving to a lower cost of living area.  Ultimately, we decided it was not the right decision for us.  Here is a short list of some of the reasons (rationalizations?) why:
1. The house is paid off and it would cost a lot to move.
2. I could find a less expensive place, but not  better climate (coastal SoCal).
3. I don't mind home maintenance and I have plenty of time to do it. I like having room for all my tools.
4. Taxes are high here, but I can manage them.  Property taxes are low, ($3.6K on $600K house). Sales tax is very high, but I don't consume much now that I'm retired. Ditto for state income tax, it is high, but I can manage my taxable income in retirement, so it is not too bad.
5. Yes, we are heating and cooling more space than we need, but due to the mild climate, it is not a huge expense.  We added solar electric to reduce or power consumption. It was expensive up front, but the ROI is better than most low-risk investments.
6. I have the option to use the extra bedrooms for rental income if I choose to.
7. We thought we might want to move to a less urban area, but the reality of being far away from airports, entertainment, etc. is a trade-off that we were not ready to make. Also, not yet ready to move away from children and friends.
So, while there are lots of good reasons to downsize, it may not be right for everyone.  Right now it is not right for us, but that could change as time goes by.
I live in Coastal So Cal.  While I'd like a bigger place, I'm kind of lazy. So I joke that we bought our retirement home.

You know how people buy a starter home, then trade up when they have kids, then trade down in retirement?  We are just going to skip that middle part.

I still think about moving to a cheaper place some day, but I doubt we will do it.  Only in the case of job loss really.  I love the weather, the lifestyle.

There is no need to "downsize" our 2BR, 1BA house.

Capsu78

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Re: Why we chose not to downsize in retirement.
« Reply #14 on: March 24, 2016, 01:38:34 PM »
My Dad is retiring in about a year.  They have a 4 bed, 3.5 bath house in the suburbs.  They have great neighbors and a sweet view a marsh out back.

I'm 30 and the youngest of 4 sons.  We all live nearby except one who lives 5 hours away by car.

They aren't downsizing (in fact they just installed a pool) I think because they enjoy hosting us.  I always tell people they installed the pool as a tourist destination to make sure their house would be the place to be.   We have dinner with them almost every Sunday and most holidays.

I like living simply, but I will probably be just like them.  I love family, love hosting, and I also have many tools and a burning desire to build a decent size shop.

I currently own and occupy the main unit of a duplex.  My inlaws live up top.

Your parents are about where we are- Kids and grandkids are 10 minutes away and we all like to host. Sunday dinner is always on, unless it's not. To get away from my high property tax, but paid off house, I would have to move no less than 45 minutes away and I would be in Podunk.  We also spent a good decade getting the current house into the configuration we like, have great neighbors and can forget to lock the doors from time to time and not have to panic. 

Cassie

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Re: Why we chose not to downsize in retirement.
« Reply #15 on: March 24, 2016, 01:59:40 PM »
Having moved a lot during the working years and being in 1 place now for the past 19 years we had no desire to move in retirement to a cheaper area. However, we did downsize the house. WE lived in the burbs with 1800sq ft 1/4 acre  and downsized to 1400 sq ft-1 story with a smaller city yard-walking distance to many things. We have a guest bedroom and an RV for people to sleep in.  Our property taxes were cut in half. I love not having steps and can clean quickly.  We also have enough room to entertain. However, I used to like to have 30 people for dinner and now enjoy having 10. I only have 30 if we will be outside. 

albireo13

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Re: Why we chose not to downsize in retirement.
« Reply #16 on: March 24, 2016, 03:14:22 PM »
Our house is over 3000 sq ft and its just me and my wife now. 
Taxes are bleeding so we will downsize soon. We pay almost $12K a year.
Live in NH

mm1970

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Re: Why we chose not to downsize in retirement.
« Reply #17 on: March 24, 2016, 03:38:08 PM »
I continue to see lots of articles about the benefits of downsizing in retirement.  My wife and I took a serious look at downsizing and moving to a lower cost of living area.  Ultimately, we decided it was not the right decision for us.  Here is a short list of some of the reasons (rationalizations?) why:
1. The house is paid off and it would cost a lot to move.
2. I could find a less expensive place, but not  better climate (coastal SoCal).
3. I don't mind home maintenance and I have plenty of time to do it. I like having room for all my tools.
4. Taxes are high here, but I can manage them.  Property taxes are low, ($3.6K on $600K house). Sales tax is very high, but I don't consume much now that I'm retired. Ditto for state income tax, it is high, but I can manage my taxable income in retirement, so it is not too bad.
5. Yes, we are heating and cooling more space than we need, but due to the mild climate, it is not a huge expense.  We added solar electric to reduce or power consumption. It was expensive up front, but the ROI is better than most low-risk investments.
6. I have the option to use the extra bedrooms for rental income if I choose to.
7. We thought we might want to move to a less urban area, but the reality of being far away from airports, entertainment, etc. is a trade-off that we were not ready to make. Also, not yet ready to move away from children and friends.
So, while there are lots of good reasons to downsize, it may not be right for everyone.  Right now it is not right for us, but that could change as time goes by.
I live in Coastal So Cal.  While I'd like a bigger place, I'm kind of lazy. So I joke that we bought our retirement home.

You know how people buy a starter home, then trade up when they have kids, then trade down in retirement?  We are just going to skip that middle part.

I still think about moving to a cheaper place some day, but I doubt we will do it.  Only in the case of job loss really.  I love the weather, the lifestyle.

There is no need to "downsize" our 2BR, 1BA house.
Oh yes it's hard to downsize from those expensive small houses in your area of SoCal unless you move far inland or out of state.

 I have a small 1000 sf 3 bedroom 2 bath place with an attached 2 car garage on a big lot and live alone. Bought it when I had several pets and needed a house. Now with one small pet left I really should downsize but really isn't anything here that is smaller and cheaper other than a condo so keep the too-big place until ready to move out of Calif.  My Sister just gave notice at her job though to semi-ER and will be moving in with me (and paying rent plus house and pet sitting while I travel) so will get some use from the extra bedrooms and bath.
Yeah, there are many things about my current house that I "regret".  From a pure money standpoint:
-We bought in 2004, still worth less than we paid for it.
-It's small. We don't have a garage.  We don't have a guest bedroom for visitors.  It's on a 5000 sf lot with a house behind us, so a fair bit of the lot is the other guy's driveway.

So, if the place were bigger, we could have space for visitors.  If it were bigger, we could have rental space - it's not uncommon for people to convert their garages and rent them out (sometimes legally, sometimes not).  There's also really not much room to expand, even if we wanted to - and even then, not sure the city would let us.

Cranky

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Re: Why we chose not to downsize in retirement.
« Reply #18 on: March 24, 2016, 04:29:44 PM »
I"m in the "we never upsized" club. Our house was a little small when we had 3 kids at home. Now we're rattling around the place. Really, the only place cheaper is a tent under the bridge, so I'm good right here.

flyingaway

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Re: Why we chose not to downsize in retirement.
« Reply #19 on: March 24, 2016, 05:32:13 PM »
In another place, I was talking about keeping a big house to hedge against inflation. I was told that is not a good idea. I think I just found some good justifications here to keep my big house.

MMM98

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Re: Why we chose not to downsize in retirement.
« Reply #20 on: March 24, 2016, 08:19:08 PM »
Two words: transaction costs.
« Last Edit: March 24, 2016, 08:20:41 PM by Toymiester »

GuitarStv

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Re: Why we chose not to downsize in retirement.
« Reply #21 on: March 25, 2016, 06:55:22 AM »
One-story works better for "aging in place."

I've often wondered about the wisdom of this commonly given advice.  If you live in a place with stairs, the exercise from climbing those stairs becomes part of your daily routine.  I'd be interested to find out if the health benefits of climbing stairs outweighs the disadvantage of having to climb stairs as you age.  My grandmother lived in a house with a couple large flights of stairs and managed just fine into her mid eighties . . . And then only moved out because my grandfather died and the house was far too big for one.

CCEddy54

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Re: Why we chose not to downsize in retirement.
« Reply #22 on: March 25, 2016, 07:31:50 AM »
I was also in the thought that we should down size to save money and so on. We own a house with an in law and thought next year we should get a condo or something. Well after figuring the cost of selling, moving and new place I think we are ok here. We are going to continue to make fixes to the house (paint, stain, windows) as we go along instead of rushing so we can sell. We will be moving into the main part of the house once the renters move out next July and renting the in law out. Reasons are: we know the what the real shape of the house is in since it is ours for the last 23 years. The biggest repairs have been done in the last 4 years (roof, heating, water). We have room for the grandsons and family to come with a fenced in yard for them. We looked for a cheaper area and would have to be farther from work (NE winters) and family. We would have to move to NH with property taxes OMG, been there not doing it again. So why move if we are happy. Thanks for this conversation, it verifies our discision.

RedmondStash

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Re: Why we chose not to downsize in retirement.
« Reply #23 on: March 25, 2016, 07:36:14 AM »
So why move if we are happy. Thanks for this conversation, it verifies our discision.

Yeah, this thread has clarified things for us too. We're not opposed to moving; we just don't have a pressing reason at the moment. If and when that changes, we'll take action.

Sibley

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Re: Why we chose not to downsize in retirement.
« Reply #24 on: March 25, 2016, 08:16:33 AM »
One-story works better for "aging in place."

I've often wondered about the wisdom of this commonly given advice.  If you live in a place with stairs, the exercise from climbing those stairs becomes part of your daily routine.  I'd be interested to find out if the health benefits of climbing stairs outweighs the disadvantage of having to climb stairs as you age.  My grandmother lived in a house with a couple large flights of stairs and managed just fine into her mid eighties . . . And then only moved out because my grandfather died and the house was far too big for one.

It depends. My parent's aren't that old - mom just turned 60. She injured her ankle about 8 years ago, and has had trouble with stairs ever since. The damage to her ankle isn't fixable, and it's only going to get worse as she's starting to develop arthritis. Stairs are dangerous for her, as the problem with her ankle is that the muscles and tendons that you use to bend the foot up and down don't work very well. Carrying things up/down stairs is not a good idea for her at all.

Capsu78

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Re: Why we chose not to downsize in retirement.
« Reply #25 on: March 25, 2016, 08:36:22 AM »
Our house is over 3000 sq ft and its just me and my wife now. 
Taxes are bleeding so we will downsize soon. We pay almost $12K a year.
Live in NH

Mirror you exactly here in Chicagoland.

Gone Fishing

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Re: Why we chose not to downsize in retirement.
« Reply #26 on: March 25, 2016, 09:49:22 AM »
A few of the responses to this thread disappoint me.  Without any real, somewhat thorough, mathematical analysis, deciding not to downsize base on other's decisions not to is just a big stinking load (not my initial words) of self justification.  As I said earlier, it's fine if you decide not to downsize, just make an honest attempt to understand what you are really giving up by not doing it, otherwise it is no different than any other form of inertia/habit driven spending.  Housing is one of the top spending categories, and as such, deserves to be looked at in fine detail.

For example, you may want to keep your large house to host family gatherings a few times a year, but once you do your analysis, you might find out the savings of downsizing are sufficient to treat the family to a nice vacation destination one or more times a year.  Is it worth it?  I can't say, but you can't either unless you do the math.

I don't know what it is, but the larger the expense, the deeper some seem to put their head into the sand.  I don't throw facepunches very often, but denial (refusing to do the math) is one of the most destructive financial mistakes one can make.

I do get that moving is a hassle (beyond the cost) and sentiment plays a big role, especially if you raised your children in the home and/or have close friends near by.  I also think quantifying every aspect of your life can be unhealthy and requires balance, so please don't get the idea that I am advocating some sort of hard core, absolute, "by the numbers" management of your life.   

kendallf

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Re: Why we chose not to downsize in retirement.
« Reply #27 on: March 25, 2016, 11:26:50 AM »
A few of the responses to this thread disappoint me. 
>SNIP
I don't know what it is, but the larger the expense, the deeper some seem to put their head into the sand. 

This.  I say it as one who was guilty of putting my head in the sand for many years.  I bought acreage with the vague notion that I wanted to live in the countryside and that I'd find a way to finance the construction of my dream home later with proceeds from the sale of my existing house, because of course, all of this real estate will go up in value, right?   <--this was in 2006.  Oops. 

Then I sat in my original house, paid that mortgage (higher now because of the cash I'd taken out to put down on the property..), paid the property mortgage, watched the paper value of both tank.  Inaction was keeping my nose pressed to the grindstone.  All of these decisions could be rationalized.  My house was a relatively small 3br/2ba place.  My neighbors all had similar debt loads. 

Who cares; I didn't want to live like my neighbors and retire in place at age 65!  Now, a decade later, I am finally coming out of my self imposed hole.  I cut my non-housing expenses tremendously.  I bought and renovated a very cheap house and moved into it.  I'm finishing the renovation of my original house and hope to sell it this year.

I may still build on that property eventually; I like the location and love doing my own work.  If I do, though, I'll analyze just what the opportunity cost is, what I'll give up in flexibility (can I still plan to travel for 6 months of the year?), etc.

Cassie

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Re: Why we chose not to downsize in retirement.
« Reply #28 on: March 25, 2016, 01:01:34 PM »
Also you don't need a big house to host family gatherings. My parents had a 1200 sq ft cape cod and had lots of family come frequently & spend the night, etc. The 2 bedrooms upstairs had more then 1 bed in them and people shared a room.  They eventually took half the basement to make another room for the kids to play, etc.  They once had a party with 30 people.  It was lots of fun.

soccerluvof4

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Re: Why we chose not to downsize in retirement.
« Reply #29 on: March 25, 2016, 01:54:02 PM »
When we retired (will be a year in April) we still have 4 kids at home and it was tough and we did alot of searching. We basically went from a 4200 squ foot home with a pool etc... with 9k + a year taxes to a 2700squ foot home about a mile away but closer to our small town in a HCOL area outside a major midwest city. But what this got us was still 3 full baths and 4 bedrooms but saves us 6k a year in taxes. We have two that will be moving out 1 in a year and half and the other in 2 years and half but that still leaves us two with the oldest being ready to enter HS. The area is a highly preferred school area and great great place to live if you want to be in this state so what we decided to do was cut costs as much as we could and in a couple years if we can then  get the heck out of the State. I want to move to NC. If we end up staying hear the way the house is laid out about a 25% upstairs done which the two younger share a big bedroom , full bath and tv area and the basement fully finished with a walkout and full bedroom and full bathroom where the oldest stays everything we would ever need is on the main floor. We can shut off everything in the lower level to reduce expenses further or rent it out if we wanted by adding one single door. Our attitude since an older home compared to where we lived is to fix things as needed be and redo that room so hopefully no more than one a year. We banked over 200k in the downsize and the house were in is in a great price point for a down time basically going from a 450k house to a 250k house. Everything is cheaper from as I said Taxes to utilities and the kids love it as we too have found it more comfy and makes a big difference in cost for retirement. Guess my point to all this is for everyone its different and for us this bought us time till we can figure out what we are going to do be it stay here for 10 more years or leave in 2.5. I think with 4 we could live in alot less space and be happy and in NC where I wanta live get even more savings but the place were currently in does give us space for if the kids come home etc.. So for now a good move.

mm1970

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Re: Why we chose not to downsize in retirement.
« Reply #30 on: March 25, 2016, 02:10:38 PM »
A few of the responses to this thread disappoint me.  Without any real, somewhat thorough, mathematical analysis, deciding not to downsize base on other's decisions not to is just a big stinking load (not my initial words) of self justification.  As I said earlier, it's fine if you decide not to downsize, just make an honest attempt to understand what you are really giving up by not doing it, otherwise it is no different than any other form of inertia/habit driven spending.  Housing is one of the top spending categories, and as such, deserves to be looked at in fine detail.

For example, you may want to keep your large house to host family gatherings a few times a year, but once you do your analysis, you might find out the savings of downsizing are sufficient to treat the family to a nice vacation destination one or more times a year.  Is it worth it?  I can't say, but you can't either unless you do the math.

I don't know what it is, but the larger the expense, the deeper some seem to put their head into the sand.  I don't throw facepunches very often, but denial (refusing to do the math) is one of the most destructive financial mistakes one can make.

I do get that moving is a hassle (beyond the cost) and sentiment plays a big role, especially if you raised your children in the home and/or have close friends near by.  I also think quantifying every aspect of your life can be unhealthy and requires balance, so please don't get the idea that I am advocating some sort of hard core, absolute, "by the numbers" management of your life.
It also depends on where you live and if the house is paid for.

I live in So Cal, so the cost to heat and cool the homes here are minimal. I  can imagine that if you are 70 and have lived in your home for 40 years, you probably really like your neighbors. 

I've been in my home for 12 years.  I've thought about moving to the town where work is.  10 miles from where I live.  Bigger homes, about the same price as the one I'm in, better school districts, ability to walk to work.  Here's the thing - I LOVE my neighbors and neighborhood. I need friends.  When I first moved to CA, my husband up and went to Europe for a 3 month internship. I was SO LONELY.  The guys at work weren't very friendly. Most of the people I met here were not very friendly - they grew up  here, had their HS or college friends.  As time went on we got friends from grad school (who up and moved away, over and over again), but slowly over the years we made friends with people who stayed.

We lived in our house 2 years before we really made close friends with any neighbors.  Within the last 3-4 years, our "tribe" has grown.  My neighbors are nice.  They don't park a million broken down cars in the street.  They don't make crazy loud noise except for yelling kids and barking dogs.  They take care of their homes.  They feed my fish when we are on vacation. We feed their dogs when they are on theirs.  We carpool to school.  We have potlucks on Sundays.  We celebrate graduations and births and weddings.  We stayed with their kids when mom had to go into the hospital.  They had our son overnight when our younger kid had surgery.  (Multiple families I'm talking about here.)

Man, can you put a price on that?

In any event, CA is a sticky point in that we have Prop 13.  I've got a friend with a 4BR, 2BA house, and they are empty nesters.  They paid under $100k when they bought their house.  The one just across the street just sold for $1.3M.  That's an annual tax difference of $1k vs.  $13k.

Cassie

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Re: Why we chose not to downsize in retirement.
« Reply #31 on: March 25, 2016, 03:24:00 PM »
The Prop 13 tax thing is huge and can have a big financial impact. What you have with your neighbors is priceless.  While I have no problem moving within our community I would never leave this town.  I have lived in places where I didn't really fit in that well and it sucks. Or places where you have friends but not real close.  Maybe you sometimes pay a financial price for not moving but sometimes it is worth it. There are much cheaper places in the country we could live but not worth it to us.

flyingaway

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Re: Why we chose not to downsize in retirement.
« Reply #32 on: March 25, 2016, 04:51:47 PM »
My big house costs about $10K in taxes and insurance. I may reduce that by a half with downsizing. So I justify that by saying that I can do a ONE-MORE-YEAR to put an additional $100K in my portfolio to pay for that difference.

RedmondStash

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Re: Why we chose not to downsize in retirement.
« Reply #33 on: March 25, 2016, 04:59:40 PM »
A few of the responses to this thread disappoint me.  Without any real, somewhat thorough, mathematical analysis, deciding not to downsize base on other's decisions not to is just a big stinking load (not my initial words) of self justification.  As I said earlier, it's fine if you decide not to downsize, just make an honest attempt to understand what you are really giving up by not doing it, otherwise it is no different than any other form of inertia/habit driven spending.  Housing is one of the top spending categories, and as such, deserves to be looked at in fine detail.

You're assuming we haven't done the math just because we didn't put detailed mathematical analyses in our responses, but that isn't necessarily true. I've done the math, and it actually favors staying in our larger house, at least until we have a concrete reason to leave and a specific destination in mind.

MrsPete

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Re: Why we chose not to downsize in retirement.
« Reply #34 on: March 26, 2016, 07:43:31 PM »
With retirement just a couple years away, I'm definitely thinking about retirement housing, and I agree with some of your points -- but not all of them: 

1. The house is paid off and it would cost a lot to move.


Yeah, I can see that if you bought your house years ago, buying something at today's prices might not make sense -- even without the costs associated with moving, which could include not only the actual moving but also new furniture, curtains, etc. to fit into your new place.

2. I could find a less expensive place, but not  better climate (coastal SoCal).


I suspect this has a lot to do with the fact that you're used to this climate.  People in icy cold locations, for example, are just as sold on their locations. 

3. I don't mind home maintenance and I have plenty of time to do it. I like having room for all my tools.


Fair enough, but what if the day comes when you're not able to do these things?  Paying for them in a smaller place would cost less. 

6. I have the option to use the extra bedrooms for rental income if I choose to.


Now I think that one's a rationalization.  Even if you wanted to rent your extra bedrooms, this kind of "isn't done" any more, and I don't think it'd be all that easy to find a renter.  However, if you ever need one of your children to move in with you, or if you ever need a paid caretaker to move in with you, you'd be set.

I won't downsize until I am physically or financially unable to maintain my places.
Might actually up-size and add a new barn.
What you might not have considered:  If you wait until you CAN'T manage your current home, you may find yourself in a crisis and it may not be so easy to move. 

For example, let's say you can no longer manage the stairs in your apartment.  At that point you probably also can't manage all your packing and moving on your own, so you have to pay someone to do it for you.  If you wait 'til you can't financially manage your current house, you may not be able to pay for the little things you ought to do to make it sellable (like repaint the bedroom and replace the nasty carpet in the living room). 
You know how people buy a starter home, then trade up when they have kids, then trade down in retirement?  We are just going to skip that middle part.
Yeah, we're doing just what you recommend against, but it has worked well for us.  We first bought a small, affordable house ... but when we had kids, we needed more space AND we wanted to be in a different school district ... now what we want for retirement is essentially the same main rooms we had "back then", but we want larger closets, a nicer kitchen, and a bathroom that'll be good for aging-in-place. 

Monkey Uncle

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Re: Why we chose not to downsize in retirement.
« Reply #35 on: March 27, 2016, 05:07:09 AM »
4. Taxes are high here, but I can manage them.  Property taxes are low, ($3.6K on $600K house). Sales tax is very high, but I don't consume much now that I'm retired. Ditto for state income tax, it is high, but I can manage my taxable income in retirement, so it is not too bad.

Just want to point out that you've got your Cali/HCOL blinders on here.  In some parts of the country, that $600k house would be a $200k house, and the taxes would be much lower.  For example, I live in a 2,600 sf 5-bed/3-bath house, and I paid less than $900 in property tax last year.  I certainly get that living in a rural backwater is not everyone's cup of tea, but it can be eye-opening to take the blinders off and consider options that are outside the range of your life experience.

Cassie

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Re: Why we chose not to downsize in retirement.
« Reply #36 on: March 28, 2016, 12:10:00 PM »
Spartana: off topic but I saw a lady on the news last night that plays beach volleyball with a senior group and she is 80 and is in awesome shape. It made me think of you.

GuitarStv

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Re: Why we chose not to downsize in retirement.
« Reply #37 on: March 29, 2016, 11:30:06 AM »
Never turn down a competitive advantage.  I'd be more inclined to go with a skimpier bikini at 80.

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Re: Why we chose not to downsize in retirement.
« Reply #38 on: March 29, 2016, 12:12:21 PM »
Hi, so I had a talk with the DH and he said he may want to down size in two years or so because he is tired of all the work he has to do. I did talk to him about moving and did the numbers to see how it would work.
 Around this area the 2 bedrooms with small land are starting at 200,000 and they are being scooped up by cash buyers (not going to be us). The mobile homes that I am interested are 70,000 and up (we have a dog) with fees around 400.00 (includes water,sewer,some taxes, snow removal). If we can sell our house for my amount less fees and taxes we could put 30,000 down on the new place. With less expenses it makes sense to me in that regard and not having to deal with renters night mares is also a reason.
I want to live our lives now, not when I am retired. So I am going to take DH to see a mobile home so he can see how it can be possible to live in one comfortably. I see how some can stay where they are but for us the numbers aren't adding up. Thanks

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Re: Why we chose not to downsize in retirement.
« Reply #39 on: March 29, 2016, 12:36:47 PM »
Hi, so I had a talk with the DH and he said he may want to down size in two years or so because he is tired of all the work he has to do. I did talk to him about moving and did the numbers to see how it would work.
 Around this area the 2 bedrooms with small land are starting at 200,000 and they are being scooped up by cash buyers (not going to be us). The mobile homes that I am interested are 70,000 and up (we have a dog) with fees around 400.00 (includes water,sewer,some taxes, snow removal). If we can sell our house for my amount less fees and taxes we could put 30,000 down on the new place. With less expenses it makes sense to me in that regard and not having to deal with renters night mares is also a reason.
I want to live our lives now, not when I am retired. So I am going to take DH to see a mobile home so he can see how it can be possible to live in one comfortably. I see how some can stay where they are but for us the numbers aren't adding up. Thanks

The problem with living in a mobile home is that you're (probably, unless you're providing your own acreage) living with OTHER people who live in a mobile home.  No thanks. 

Drifterrider

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Re: Why we chose not to downsize in retirement.
« Reply #40 on: March 29, 2016, 12:46:51 PM »
When I retire I plan to right size.  Smaller house, larger garage.


Cassie

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Re: Why we chose not to downsize in retirement.
« Reply #41 on: March 29, 2016, 01:13:43 PM »
You have to pay lot rent when you buy a mobile home if you don't own the land. They often increase it every year. My MIL had one and they had all kinds of rules. When she died we practically had to give it away. Also the person that was buying it had to be approved by the park. WE sold it for 5k, no down and they paid us 100/month for 4 years.  YOu have to find someone poor that it is a bargain for. 

Cassie

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Re: Why we chose not to downsize in retirement.
« Reply #42 on: March 29, 2016, 01:45:00 PM »
I saw that on TV about people being forced to move. It is not happening here yet. Often it is too expensive to move a mobile especially for seniors.  The cost is often more then the worth of the home.

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Re: Why we chose not to downsize in retirement.
« Reply #43 on: April 02, 2016, 12:46:59 PM »
With retirement just a couple years away, I'm definitely thinking about retirement housing, and I agree with some of your points -- but not all of them: 

1. The house is paid off and it would cost a lot to move.


Yeah, I can see that if you bought your house years ago, buying something at today's prices might not make sense -- even without the costs associated with moving, which could include not only the actual moving but also new furniture, curtains, etc. to fit into your new place.

2. I could find a less expensive place, but not  better climate (coastal SoCal).


I suspect this has a lot to do with the fact that you're used to this climate.  People in icy cold locations, for example, are just as sold on their locations. 

3. I don't mind home maintenance and I have plenty of time to do it. I like having room for all my tools.


Fair enough, but what if the day comes when you're not able to do these things?  Paying for them in a smaller place would cost less. 


6. I have the option to use the extra bedrooms for rental income if I choose to.


Now I think that one's a rationalization.  Even if you wanted to rent your extra bedrooms, this kind of "isn't done" any more, and I don't think it'd be all that easy to find a renter.  However, if you ever need one of your children to move in with you, or if you ever need a paid caretaker to move in with you, you'd be set.

I won't downsize until I am physically or financially unable to maintain my places.
Might actually up-size and add a new barn.
What you might not have considered:  If you wait until you CAN'T manage your current home, you may find yourself in a crisis and it may not be so easy to move. 

For example, let's say you can no longer manage the stairs in your apartment.  At that point you probably also can't manage all your packing and moving on your own, so you have to pay someone to do it for you.  If you wait 'til you can't financially manage your current house, you may not be able to pay for the little things you ought to do to make it sellable (like repaint the bedroom and replace the nasty carpet in the living room).   


I mean, these are all good questions to think critically about, but I feel like the "you must downsize when you retire" drumbeat is somewhat based on fears that also lead people to say they'll never retire because they need a 3% or 2% withdrawal rate or something. Like, you might stay healthy or you might get killed in a car accident or you might get dementia or something else that has nothing to do with physical deterioration or you might physically deteriorate but after, like, thirty years of enjoying your current living situation. And you can always set aside money to deal with extra costs of moving if you anticipate them. Like, I get that people don't want to pop happy pills and just assume they'll be springing gazelle-like around their three-story house until they're 98, but it seems like, rather than evaluating one's personal feelings about risk, the popular consensus is that you must make major life changes based on the assumption that no one over sixty can handle stairs or raking or flexibly adjusting to changing circumstances, which seems overly pessimistic.

matchewed

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Re: Why we chose not to downsize in retirement.
« Reply #44 on: April 02, 2016, 12:51:22 PM »
I'm pretty sure the "downsize in retirement" advice is geared towards traditional retirement as a method of controlling spending for spendypants people who didn't learn how to save well to begin with regardless of their particular family size.

Not very applicable advice for this crowd necessarily.

 

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