After years of hard work, retirement marks an exciting new chapter of freedom in your life. Along with the chance to explore new hobbies, spend time with family and simply enjoy your free time, your golden years bring plenty of lifestyle changes too. As a result, your needs as a homeowner may also differ in retirement.
For many Canadians, retirement means transitioning to a smaller living space. That being said, you don’t always need to wait until then to downsize. Downsizing before you retire can help you hit the ground running when the time comes. Plus, it also has its financial advantages.
If you’re looking ahead to retirement, here’s everything you need to know about downsizing at the right time.
Why Downsize?
In reality, moving into a smaller living space can mean a whole host of new freedoms and opportunities. For instance, a smaller property means less time spent cleaning or doing yard work. If you’re a frequent traveller, looking after a more-compact space also makes it easier to pack up and go whenever you like.
Downsizing also means having more freedom with where you live next. For instance, If you choose to buy a condo, you’ll have access to new, amenity-dense neighbourhoods that are built with compact living in mind. These communities are sprouting up across the GTA and they can make your golden years more fun and exciting. If you’re looking to move away from the city centre during retirement, downsizing gives you the opportunity to explore many of the modern condo and townhome developments in the suburbs.
Preparing to sell your home? Check out these helpful resources from our blog.
- A Seller’s Guide to Bully Offers
- Should You Renovate Before You Sell?
- Moving – Should You Buy or Sell First?
Selling as Part of Your Financial Planning
While downsizing is ultimately a lifestyle decision, it will have a significant impact on your finances. As you enter retirement, managing your money will be an important part of ensuring your comfort and security. For many homeowners approaching retirement, selling their current property plays a big role in their plans for the future.
Given the price differences between larger detached homes and smaller living spaces, scaling down can help you free up funds for retirement. Not to mention, downsizing usually means paying less annual property taxes.
If you’ve owned your home for a while, there’s a good chance it has gone up in value since you moved in. In the right market conditions, selling your home could give your retirement savings a more significant boost than you may have originally thought. As a market expert, your real estate agent can evaluate your property and help you determine when downsizing will be most beneficial for you financially.
Thinking about downsizing? Explore these blog posts to help make the transition a breeze.
- Top West Toronto Neighbourhoods For Downsizers
- What Downsizers Need to Know About the Market in 2022
- How Downsizing at the Right Time Can Help Your Family in the Long Run
Timing Matters
When it comes to buying or selling a home, timing matters. While Ontario’s housing market remains hot, factors are constantly changing. As a result, the final selling price of a home could differ dramatically based on the month or even week. If you plan on buying again when you downsize, entering the market early could help you pay less for your new place.
Of course, buying a new home sooner rather than later doesn’t mean you need to move in right away. If you’re not ready to transition out of your current space just yet, you can utilize your next home as an investment property in the meantime. Not only can renting out your new home bring you passive income, but it can also buy you time and allow you to downsize on your schedule.
Moving into your tenanted investment property may come with restrictions. Check out everything you need to know about becoming a landlord on our blog.
Buying vs Renting As a Downsizer
From an investment perspective, buying as a downsizer is often the most beneficial route. That being said, there are some instances where renting makes sense. For some Canadians, retirement means embracing a snowbird lifestyle. If you plan on spending most of your time away from home, renting may be a good option.
If you’re unsure about whether or not buying next is the best route for you, ask your real estate agent. They can assess your finances and plans for the future to offer personalized advice tailored to your unique needs.
Ready to begin the process of downsizing? Our experienced team is here to help. Contact us.
