Downsizing To Save Your Retirement? 5 Ways A Financial Planner Helps

Posted on: 10 February 2022

Are you thinking of downsizing your home in order to help your retirement nest egg last longer? This is a big decision, and it's one that shouldn't be taken lightly. To help you make the right call, it's important to call on skilled and trained financial professionals to provide further guidance. A financial planner can assist you. How? Here are a few things they will help you determine. 

1. Will Downsizing Actually Help? 

Most people assume that downsizing will automatically improve their finances. However, this isn't always the case. If you move from a paid-off home to a rental, for instance, you gain a monthly payment. If you move farther away from your kids or interests, you'll have increased commuting costs. And if you sell in a low market, you may not make as much money as you expect. 

2. Is There Another Option?

If you don't really want to downsize, consider all the options before taking this step. A financial professional can help leave no stone unturned. Could you make other changes, such as budgeting better or boosting retirement contributions? Perhaps you can increase your income instead of lowering expenses. Some of these suggestions will be things you've already tried, but some will be new ideas. 

3. How Much Will It Help?

A big, bold step can save your retirement. And it may be that this is the move that will do so. But how do you know? Running forecasts on how much money you'd make from downsizing and how long it will last is key to making a smart choice. Financial planners have tools to let them run scenarios not only for the longevity of this money but also in conjunction with your entire portfolio. 

4. What's the Right Time?

Are you emotionally ready to pull the trigger on downsizing? Then the next step is figuring out when to do so. This decision must take into account things like the real estate market, how long you have until retirement, contribution limits for tax-advantaged plans, and the investment cycle. Your financial planner is a key resource to learn more about these factors. 

5. How Should You Use the Money?

Once you do downsize, finding the right use for that extra (or saved) money is vital. Don't risk squandering this opportunity. A good financial planner will help you plan in advance where to deploy your new resources to bolster your retirement plan in the best way possible. 

Where to Start

Begin your journey by sitting down with a financial planner to discuss your goals, resources, and questions. With their help, you'll make a great decision that will benefit you for the rest of your life.