Downsizing Your Home

Newfound Money for Retirement

After decades of focusing on building your assets, retirement is the time you are finally able to sit back and enjoy your nest egg.  Perhaps you would like to be in a smaller house close to town, a contemporary town house, or a house on one floor with an open floor plan.  If you dream of traveling more, playing an instrument, hiking, and playing more golf or tennis during retirement, then you may consider downsizing to a smaller home to increase your savings.  Your retirement could potentially be 30 years without working income.  Nevertheless, moving to a smaller space at any point can often seem overwhelming and daunting.

The Upside of downsizing:  significant savings; more time to do the things you enjoy; declutter your life.  Maybe your children have left for college, maybe you really don’t need the extra bedrooms, or what if your house is just too large to maintain?  If eliminating a mortgage payment completely and putting a large chunk of money towards your retirement sounds like a dream come true, then downsizing during retirement could be the right choice.

Think of the financial benefits long term….

Reducing Debt… What if you could reduce or eliminate all debt that you are currently carrying by selling your larger home, paying off the old mortgage and purchasing a smaller home?  Paying off debt is always a wise decision, whether in a lump sum or short-term payment.  Consider if you reduced your mortgage an additional $500 a month and put the cash to work.  Example: You owe $18,000 on a loan with 6% rate, and a $200 monthly minimum payment.  It would take 10 years to pay off that loan; however, if you put an additional $500 toward that same loan each month, you would pay off the loan in less than 2.5 years!

Super charge your retirement fund… Once you are debt free, you can really build wealth for the future by putting large chunks of money to work.  Example:  Suppose you sold your house and you have $250,000 net proceeds; if you invest the funds over 20 years at a 6% rate of return, you would receive $827,550, through the power of compounding.  You can create an even larger nest egg by consistently adding to your retirement accounts in earlier years on a monthly basis!  Remember, the money in your company retirement accounts and individual retirement accounts (IRA’s) grows tax deferred; you would not pay tax on the income or the capital gains.   Imagine how much faster your funds would grow when placing larger sums to work in the market.

Benefits of owning a smaller house…Less time spent maintaining your rightsized house.  You could reduce debt by paying off your mortgage and investing your funds directly, to jump start your retirement fund.  It is important to choose an experienced real estate agent to price your current home correctly. 

Ready to downsize? we can help you properly invest the proceeds from the sale of your larger home, let’s get started!

Schenley Capital Inc.

417 Walnut Street suite 200 Sewickley, PA 15143

Written by: Beth Genter Derek Green and Lauren Porter