More seniors today are embracing the trend of downsizing. For some, their home is no longer safe or accessible, while for others, financial reasons drive this decision. Whatever the reason may be, one of the big questions you’re left with is what to do with the home you’re moving out of. The three main options you have are to either sell it, rent it to someone else, and or keep it to pass along to family members.
Where are you downsizing to?
Knowing the type of home you plan on moving into, and the costs involved, is an important factor that goes into making a decision about your family home. Do you plan on buying or renting a smaller house or condo? Or are you moving into assisted living? If you’re downsizing because mobility or safety is a concern, seniors and their family members should consider whether assisted living is best.
Retirees who are ready to make a change often confuse assisted living with the traditional idea of a nursing home. The goal of assisted living is for seniors to be able to live in an environment that feels like an apartment home, not an institution. Assisted living communities allow you to continue living on your own terms, while maintaining a good deal of independence. At the same time, they provide help with everyday needs like meal preparation, basic personal care, and managing medications. If you or your loved one decides to move to assisted living, look for a community that delivers this balance between care and the ability to stay as self-sufficient as possible.
The best way to find the facility that meets these requirements and feels right for you is to visit several different communities. Of course, cost is a factor that plays a role in this decision, too. Costs can vary depending on the type of amenities a place provides; the average cost for assisted living in Minneapolis is $3,946 per month.
How will you cover the costs of your new home?
Covering the costs of assisted living can be challenging for someone on a fixed income, but remember that your current home is an asset that you can use to help. One option is to turn your home into a rental property. Doing this provides income that you can put toward assisted living costs, and meanwhile, you can continue building equity in your home.
Another option is to sell your house. The Penny Hoarder explains how selling your home when you downsize frees up money for whatever else you need it for (in this case, assisted living). Especially if you own your home free and clear, selling gives you a lump sum of money, rather than the steady, but smaller, flow of income you would get from renting it. There isn’t a right or wrong answer to which option is better. The answer depends in large part on which option has a better impact on your bottom line, and which one best protects your finances for the future.
If you’re moving to another home, such as a condo or townhome, rather than assisted living, selling a larger (and more expensive home) may be the best choice if doing so allows you to buy your new home outright. Doing this lowers your cost of living, but you’re also maintaining ownership of a property that you can eventually pass on to family. Even when this is your plan, Realtor.com cautions against deeding the property to your children now because doing so could end up being costly for them.
For many retirees, your home is your biggest asset. In the best-case scenario, you hope this asset can stay in your family. However, this asset can also be a huge help in maintaining financial security as you move forward. Finding the best solution isn’t always easy. The most important thing is to explore all your options, and how they each fit with the bigger picture, before making a decision.
Jim Vogel is a guest contributor who writes about downsizing for senior citizens at elderaction.org.