May 6, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage. Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for May 6, 2024

Downsizing In Retirement

In this Episode of the Secure Your Retirement Podcast, Radon, Murs, and Nick discuss downsizing in retirement. Scenarios such as lifestyle preferences and financial needs are what make downsizing a consideration for retirees. Listen in to learn how we use practical scenarios to help clients…  

Downsizing In Retirement

Nick Hymanson, CFP® from our office, joined us this week on our latest podcast, where we talked about something many people overlook in their retirement planning: downsizing.  Nick often meets with clients to review their retirement focused financial plan, making sure…

Downsizing In Retirement

Nick Hymanson, CFP® from our office, joined us this week on our latest podcast, where we talked about something many people overlook in their retirement planning: downsizing. 

Nick often meets with clients to review their retirement focused financial plan, making sure everything is up to date and the clients are happy. Sometimes, there are needed adjustments that are identified, and Nick works with clients to address these as well. 

And one of these adjustments relates to downsizing in retirement. 

We’ve noticed a common conversation recently where some folks are interested in discussing: 

  • Downsizing into a smaller home 
  • Downsizing into a home that’s easier for them to get around in 

Let’s dive deeper into this topic and look at a few scenarios. 

Scenario 1: You’ve Been in Your House for 30 or 40 Years 

Let’s say that you have been in your home for 30 or 40 years. Maybe you raised kids in your home, and it was set up for the lifestyle you had 20 – 30 years ago. Unfortunately, the house isn’t set up for where you may be now, or in 10 years. 

Often, retirees are in a much larger house than they need for the lifestyle they have now, and it would be nice for the main bedroom to be on the first floor. 

Pros and Cons 

In addition to wanting your bedroom on the first floor, you may want: 

  • Fewer stairs 
  • A smaller space that is easier to maintain 

Downsizing may mean worrying less (or not at all) about constant tasks like yard work, stairs, and cleaning additional bathrooms. 

In the Raleigh-Durham area, housing prices have been going up for quite some time.  People are concerned about going into a smaller home that may be even more expensive than the home they are in currently. From a financial perspective, moving to a new home may be an even exchange but the person may lose some square footage and land. 

Depending on the community, landscaping, and some outside work that you may not be able to do on your own may be included. 

Scenario 2: Cash Flow Scenario 

You’re in a beautiful home, but you want to reduce the mortgage and the strain it may have on your financial plan. From a cash flow perspective, downsizing may be a better option and provide peace of mind for the next 10 – 20 years. 

If your house has appreciated in value and you don’t have much to pay off on the mortgage, you might find yourself in a scenario where you can sell your home and buy another one in cash. 

A $1,000 – $3,000 mortgage can have a drastic impact on your financials. 

When we look at a retirement plan, we look at a person’s income and expenses to see where they may be having stress in their finances. For some people, downsizing can either: 

  • Reduce the mortgage 
  • Eliminate it 

If you eliminate the mortgage, you may have the additional cash to travel or have less of a strain on your finances in retirement. 

We talk to clients from the beginning about their homes and if it makes sense to downsize. 

Planning from the start to downsize can offer a realistic view of what freedom selling the house may offer. Of course, not everyone will need to sell their home or have a desire to do so. 

If selling does make more sense from a cash flow or mobility standpoint, then it is something that is worth discussing with a financial advisor. 

Moving to a CCRC is a conversation that we have, too. The CCRC allows you to receive community and care throughout the various stages of retirement, which is also a nice perk. 

What Happens in Our Strategy Meeting 

We have software that allows us to plug in the numbers and look at what your financial decisions today will mean in the future. Let’s assume that your target date for retirement is five years from now. 

In five years, we can simulate: 

  • What the sale price of your home is likely to be in five years 
  • Tax consequences of selling the home 
  • What it looks like if you use the funds to buy into a CCRC or another home that’s better for your scenario 

Our goal is to show you how downsizing in retirement may benefit you. We’re able to see how a lower mortgage (or no mortgage) can benefit your overall cash flow and retirement plan. If you don’t have a $1,000 – $3,000 house payment, it can make a world of difference in your expenses. 

Visualizing all the cash flows through the software helps you feel more confident in your decision, which may or may not be to sell your home. 

We can look at this scenario for you if you have two homes and want to sell one in the future or even if you want to make a large purchase in the future. Seeing the figures of your retirement and how the decisions you make today can shape your retirement is empowering. 

If you need help to secure your retirement, are considering downsizing and want to see how it may benefit you or want to know if you can really afford that once-in-a-lifetime trip, we’re here to have that conversation with you. 

Click here to schedule a call with us to learn more.