Downsizing don’ts

Avoid these pitfalls when making the tough decision to stay, rent or buy in retirement

Do you have an empty nest? 

If you’re like the majority of Americans, you may be looking for a smaller space after the little ones have flown the coop. In fact, almost 40 percent of retirees will make a move during their retirement years, according to the Demand Institute.

There’s a lot of good advice to follow when it’s time to make a move. On the other hand, there are several mistakes to avoid. Keep in mind these downsizing don’ts:

Don’t move too early

Don’t rush to downsize if you’re not yet certain what the future holds. You wouldn’t want to relocate to Florida only to realize you’re needed back home in Minnesota.

Think about your retirement plans, as well as your family’s situation. Is there an adult child who may want to move back home or an aging parent you’ll need to take care of? If there are some decisions left to be made, it may be too early to move.

Don’t move too late

Take into account your health and your spouse’s health.

Will the stairs make it difficult to get around? How will you keep up with mowing and shoveling as you age?

Also, take into consideration your financial picture. If you’re struggling to make ends meet, you may want to move to a smaller home and a smaller mortgage payment before you retire so you can free up some of your income in retirement.

Don’t overlook hidden costs

  • Closing: A down payment isn’t the only cash you need to buy a home. You’ll also need an additional 2 to 5 percent of the purchase price to cover closing costs, which include your loan origination fee, underwriting fees and title insurance.
  • Moving: Even if your home is paid off, it will still cost you money to sell it. Talk with your Realtor about how much it will cost to sell your current home.
  • Then there’s the cost of packing and moving your stuff, which can cost thousands when you add it all up. You may want to reconsider downsizing if these costs take a significant chunk out of the money you’re expecting to save.
  • Maintenance: You’ve spent years taking care of your current home, but a new home may come with surprise maintenance costs. Homeowners can expect to spend 1 to 4 percent of a home’s value each year on maintenance and repairs, depending on a home’s age. Some years, you may spend a couple hundred dollars on paint. Other years, you could be spending a few thousand on improvements like a new roof or mechanical repairs. Even small maintenance projects can add up if you don’t budget properly.

Don’t ignore renting

Renting has its advantages. You may be able to save money, and you won’t be responsible for maintenance like lawn care and snow removal.

Another benefit is your housing costs will be more predictable because you won’t be responsible for home repairs.

Renting is also a good option if you still aren’t sure where you’ll end up in the long run. However, it isn’t right for everyone. And you could get hit with rising rent or be asked to move.

Don’t make it emotional

Your current home may be the place where your kids took their first steps, said their first words and where their first dates picked them up.

It can be difficult, but I encourage couples to put the emotional components aside and look at downsizing as a financial decision.

Don’t forget, you have an opportunity to create new memories at your new home!

Matt Gulbransen is the president of Callahan Financial Planning in Woodbury and holds an Accredited Wealth Management Advisor designation. For more than a decade, he’s been helping his clients create financial plans that ensure a dependable and comfortable retirement income. Learn more at