When saving for retirement, downsizing may help - AmericaNowNews.com

Downsizing for retirement

Deciding to downsize can be a very tough thing for aging baby boomers. They have probably paid off the house, they're still working, and they're trying to put off retirement for as long as possible so they can take that extra money and build up their retirement savings.

Sounds like a good strategy, if it weren't for the real world! Any number of things could derail that. You could become ill, or your spouse could, or you could lose your job.

Unfortunately, a recent TransAmerica study found fewer than one in five workers had any backup plan to postponing retirement.

Now one alternative is downsizing. Even if your mortgage is paid off, you need to think about all of the costs that come with a larger house. They're called the "carrying costs" and include things like property taxes and maintenance.

According to Freddie Mac, those maintenance bills average from 1 to 3% of the home's value. So on a $500,000 house, you're looking at $15,000 a year just for upkeep.  Downsize to a $300,000 home and that drops to $9,000 - a savings of $6,000.

And if your new, smaller place is within walking distance of what you need, you're going to save on transportation, as well.

Many seniors are reluctant to sell their homes because they've lost value over the past few years and they want to wait in order to re-coup some of that loss. The problem, of course, is that it could take years.

And remember - the house that you buy is also going to cost less than it would have three years ago, and you should see some immediate savings in the areas of insurance, maintenance and taxes.

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