When people see the word “downsizing,” many are quick to jump to the conclusion that it’s a synonym for “sell your house.” But nothing can be further from the truth.
In fact, we prefer the word “rightsizing” for retirement, which is the process of taking steps to prepare for the next phase of your life. Rightsizing can include taking a look at your home, but it’s a far more wide-ranging talk than what some people expect.
“A wise man thinks ahead; a fool doesn’t, and even brags about it!” Proverbs 13:16
When discussing the concept of rightsizing, one of the first areas we address is helping people identify their overall goals. Specifically, is rightsizing a financial goal? Is it a lifestyle goal? What’s driving the decision? Is it family considerations, access to healthcare and hospitals, or a milder climate? Once we’re able to answer some questions, we can help provide some insights on potential next steps.
“We must determine the sources available to you to provide income, like Social Security,” wrote Mick Owens in his popular book, Diamond of Life: The Five P’s of Success and Significance.
Rightsizing Goals1
What are the most (and least) important criteria when retirees determine where to live?
Most Important Factors | Percentage of Importance |
|---|---|
Want to be closer to family and friends | 64% |
More affordable cost of living | 58% |
Access to better healthcare and hospitals | 47% |
Better weather | 43% |
Crime Rate | 40% |
Recreational activities | 32% |
Least Important Factors | Percentage of Importance |
|---|---|
Walkable community | 22% |
Cultural activities | 16% |
Volunteer opportunities/community engagement | 15% |
Evaluating your home: About 80% of Americans aged 60 and older are homeowners, according to a 2023 Vanguard study. The group reports that housing wealth accounts for about 50% of their median net worth, so you can see why many believe it’s a critical first step when starting the rightsizing discussion.2
As we’ve worked with people over the years, we’ve found there are a few factors to consider when looking at your home.3
- You might overestimate its worth.
- You could underestimate what a new home will cost.
- Taxes are often overlooked.
- Many people forget about closing costs.
We’re not real estate professionals, but we work with people who have background and training in evaluating homes. We’re also not tax experts, but we are associated with companies that are. The general ideas we’re discussing are for informational purposes only. We encourage you to consult real estate and tax professionals for guidance on your specific situation. Alternatively, our tax planning department can help get you started by doing a tax analysis!
What about healthcare? It’s important to remember that healthcare resources are not evenly distributed across the US. If you live in South Dakota and have a severe bone fracture, the closest specialists may be in Illinois. As part of your rightsizing, take some time to review what healthcare resources are available.
Family matters: Living close to your family—or perhaps even with family members—is a trend that’s been gathering momentum in the past decade. A 2024 report found that multigenerational living nearly quadrupled to 26% in 2021, compared with 7% 10-years earlier. Some explain that living under one roof allows families to manage expenses, have more freedom to travel, and enjoy quality time with family members.4
Rightsizing for retirement requires a full 360 degree look at your finances, family, and future. If you’re curious what it would look like, we can help you begin the process.
- TransAmericaInstitute.org, September 2023
- Corporate.Vanguard.com, February 2023
- Investopedia.com, March 25, 2024
- Lifescapes.WellsFargoAdvisors.com, May 6, 2024
