Consider Amenities Versus Cost When Downsizing

Most retirees now downsize homes for a lifestyle change—not to tap equity. Which is good, because a smaller house doesn’t necessarily mean a more affordable house.

You could pay more for a smaller, well-built, energy-efficient house with new appliances and no maintenance issues on the horizon—especially if it’s in a desirable location.

Here are some considerations to keep in mind when downsizing.

* Know what you prize. Is it affordability, a smaller household, or more amenities to maximize the comfort of your retirement years? Decide what you can’t live without and go from there.

* Move before life forces you to. Don’t wait until an accident or a spouse’s death forces you to move. You’ll make a better decision if you’re not dealing with a crisis at the same time.

* Don’t go too small or too big. Less maintenance generally means more happiness, but don’t go so small you have to give up possessions you want to keep or there isn’t room for family to visit.

* Account for tax implications. If you pocket more than $250,000 (or $500,000 for couples filing jointly) selling your home, you’ll have to pay capital-gains taxes.

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