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Downsizing Your Home For Retirement

Big, Luxury House

Retirement planning is crucial for ensuring you have sufficient assets to provide the income you desire throughout your retirement years. An important asset that often gets overlooked is the very home you live in. Including your home in your retirement planning can significantly impact your lifestyle choices, available income, late-stage retirement, and even your estate plan.

With the rise in home prices over the last decade, the decision to stay in your home, downsize, or possibly upsize has become more complex. Additionally, higher interest rates are adding to this complexity.

Are You Planning on Downsizing in Retirement?

Downsizing can be an opportunity to reduce living costs and tap into the equity of your home, which might be substantial due to recent increases in home prices. This move could also allow for relocation to a new environment, closer to family, or to a place that better suits your hobbies and lifestyle preferences.

However, high interest rates and a competitive housing market can complicate this process. Despite these challenges, the flexibility often afforded in retirement regarding where and how you live can be advantageous. When considering a move, it's important to factor in not just the purchase price of a new home but also the ongoing costs such as insurance, property taxes, and potential renovations to meet your current and future needs.

Have You Thought About Upsizing?

For some, creating a family home where generations can gather is a cherished dream. Upsizing to a larger home, possibly in a favorite vacation spot or a new locale, can facilitate this. Larger homes, often newer, come with benefits like lower maintenance costs and modern amenities that accommodate contemporary lifestyles.

However, selling a long-term home to upsize can bring significant tax implications, especially given the recent surge in home values. If considering upsizing, it's crucial to weigh the financial aspects, including the potential need for a mortgage and its impact on your retirement income.

How Will Your Home Impact Your Estate Plan?

Your home is not just a financial asset; it's a place filled with memories and personal value. Thoughtful consideration of how your home is handled in your estate plan can prevent potential conflicts and ensure your wishes are honored. Planning ahead for the equitable division of your estate, including your home, can simplify the process for your heirs and reduce emotional and financial strain.

The Bottom Line: The Downsizing Dilemma

Your home plays a significant role in your retirement strategy. Evaluating your options, from staying put to downsizing or upsizing, in the context of your overall retirement plan is essential. Considering various scenarios and consulting with financial advisors can help you make informed decisions that align with your retirement goals and personal values.


About The Author

Alchemist Wealth is led by the expertise of Andrew J. Tudor, CFP®, RICP®, CAP® and Fred Tudor III, AFC®, MBA. Alchemist Wealth serves clients as a fiduciary specializing in providing fee-only financial planning, investment management, and retirement planning services. With over 2 decades of combined experience in financial services, Fred and Andrew bring a wealth of knowledge and personalized solutions to meet your financial goals.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA

Alchemist Wealth, LLC is registered as an Investment Adviser with the State of Ohio and only provides advisory services in states where registered or otherwise exempt from registration. All information provided herein is for educational and informational purposes only and should not be viewed as investment advice. Any links to third party information or data are believed to contain accurate information at the time of publishing.


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