When most people retire, they often think about living on less. In fact, this is the telltale sign that you’re about to leave and retire from work: you transition to a fixed income.
But, how do you do this, exactly? If you’re like most people, you’re scared. You don’t want to live on less, have less, and potentially run out of money. Here’s how to downsize without feeling the pinch.
Make Plans To Travel
You don’t have to sit at home all day. In fact, this is probably not healthy – especially after you retire. You should make plans to get out and travel. Travelling can help you feel like you’re not downsizing at all. In fact, in many ways, you’re not actually downsizing. You’re upsizing your entire life.
Of course, if you spend a lot of time travelling, the one thing you can downsize is your home because you don’t need the space. You can either put things in storage that don’t fit in the new home or flat or you can sell them or give them to family.
But, having yearly travel plans is a great way to expand your horizons and see a world you may never have seen during your working years.
Move To A New Area
Moving to a new area can allow you to keep the same size home without paying the high cost you are right now.
You know what they say, right? Location, location, location. Except, this time around, you’re not looking for something with good appreciation potential. You’re looking for something that didn’t appreciate. That could mean living in an economically depressed area, but it could just as well mean living in a slow-growth area that’s not in the slums.
In some cities and towns, you can travel just a few streets down and end up getting the same sized home for £100,000 less.
How To Stick To Essentials Without Making Sacrifices
You’ve probably been told that, when you retire, you need to make sacrifices. What you really need to do is prioritize what you want out of life. Since you can’t afford to have it all, you need to think carefully about what you want and what you don’t want.
Make decisions based on what’s really important to you. So, if you really want to stay in the house you’re in now, what would you have to get rid of? IF the house isn’t as important as other things you own, then you have your answer – sell the home.
Of course, you have to be realistic about things. You can’t have your cake and eat it, too. So, if you’re faced with the dilemma of affording a new car, a home, and all the creature comforts you’re had for years, versus a declining income, you have to really think about what matters most and then get rid of the things that you can’t afford and don’t want (as much).
It can be a difficult decision to make, but it’s necessary. And, at the end of the day, you’ll be happy because you’re not struggling financially to have things that you can’t afford.
Give Furniture To Family First
Don’t forget to ask your children or grandchildren what furniture they might want. You’ve had it for years, but it might be time to give it up. At the same time, you don’t want to just hand it over to a stranger.
Of course, if none of your family wants your furniture, you can put it on consignment and sell it. Just make sure you’re not disinheriting your family first.
Live With Family
A good way to handle this is to use funds for your home and have an annexe, or a granny flat, built as an extension of your son or daughter’s home. That way, you can live independently, and not interfere with the family but you won’t be far away, either.
You’ll have your own rooms, and the extension doesn’t even have to have a shared entrance or an entrance into the other home. The idea is to have a home that is really close to your children’s so that you can call on them when needed and they can help you if necessary. Otherwise, you live alone.
And, the best part is that it will increase the value of your children’s home – something you may not care about for yourself but it will certainly be much appreciated by your children.
Ben Bailey is a financial consultant who has carved out a niche working with baby-boomers. From pensions to downsizing he often writes on these topics for over fifties and personal finance sites.