NEW YORK – Jan. 5, 2014 – For many retirees, it makes better financial sense to downsize sooner rather than later. Over time, the financial benefits can make a big difference in extending the life of a nest egg.
Some of the hesitancy stems from a belief that selling a home with a paid-off mortgage for an apartment or condo will cost more each month thanks to maintenance or association fees – buy experts say that’s not necessarily true.
“In a home, the expenses are hidden. It’s maintenance, a roof, a boiler, heating and landscaping,” says Lawrence Glazer, a financial planner at Mayflower Advisors.
Others are concerned that family – specifically adult children and the grandkids – will not have a place to stay when visiting. Glazer says that, depending on the frequency of the visits, it is more economical in the long run to put family and extended family up in hotel rooms. In addition, he adds, most adults do not really want to go back to their parents’ house “and stay in the room with their old posters on the wall.”
Switching to a rental or condo can help with money planning, too, Glazer says, because seniors will know their fixed costs.
Downsizing can have a major impact on a retiree’s financial plan. Even with a mortgage 100 percent paid off, housing often accounts for as much as 30 percent of retirement expenses, according to Steven Sass of the Boston College Center for Retirement Research.
Topics: Wall Street Journal (01/25/14) Lauricella, Tom
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