With our nation's present financial crisis, now, more than ever, many of us are looking for new ways to downsize. But for many retirees, downsizing isn't merely an option -- it's a necessary survival strategy that could stretch savings and prevent a critical money crunch later on. All it takes is one or two unfortunate life events to throw one's retirement plans into a tailspin.
Downsizing isn't always easy and can have emotional consequences. But there are ways to lessen the load and make smart decisions that can help make your retirement years more enjoyable, less stressful and less financially burdensome.
Consider these tips to trim the fat from your budget and boost your bottom line in your retirement years.
Downsizing your life
There are many ways to cut back on expenses without feeling overly deprived
Shrink your domicileLess can easily be more when it comes to your home.
"Housing is the biggest area to save money," says Certified Financial Planner Connie Stone. The Ohio-based financial planner says downsizing your home also brings the added benefit of reducing maintenance requirements -- especially if you own a lot of property. Plus, you'll save on taxes and insurance. "That can have a big impact on cash flow," says Bill Howell, a Certified Financial Planner who heads Howell Financial Advisors in Noblesville, Ind.
Howell says he recently advised a newly widowed client to move from the large house she shared with her husband into a smaller one to lighten the mortgage and tax load. “She'll still have a mortgage, but the monthly payment will be reduced by about 25 percent and the taxes in her new community are significantly less," he says.
Despite the general savings that come along with downsizing a home, many people are still reluctant to do it.
"Most retirees have an emotional attachment to their house and may want space for their kids to visit," says Stephen Horan, a Chartered Financial Analyst from Virginia. "But if you can downsize and free up capital to reinvest into your retirement portfolio, it can be a very sensible thing to do."
Moving to a retirement community can also be a cost-saving option and at the same time offer the retiree more social interaction and services. Stone says one of her clients recently moved into an apartment at a retirement community because she felt lonely and didn't want the upkeep associated with a larger condominium.
"She absolutely loves it because now she has a smaller home and she has fixed costs for her meals," she says. "Her grocery bill has been cut by two-thirds because she only has to make breakfast and lunch."