Mistakes empty nesters should avoid when downsizing

There comes a time in a parent's life when they have to let their young go off and build lives of their own. More than often, these empty nesters now choose to downsize their homes. Downsizing can help save a substantial amount of money which can be put towards savings for retirement. However, costly mistakes are common during the downsizing phase. 

If you are an empty nester it would be wise to avoid these common mistakes when downsizing:

Buying a bigger house

By downsizing, you aim to move into a smaller house and not a bigger one. While this phase in your life may bring about different emotions, moving into a larger house with features that you have always wanted, such as a pool, maybe a bit risky. Think about the cost of maintaining a house with features such as the pool or a huge garden. A bigger house can also become lonely as time passes. It can further be a soft target for criminals who may know that you are an empty nester.

Downsizing to a more expensive property

Some areas are more expensive than others. A house in the suburbs can be more affordable than living in a house or apartment on the coastline or city. Even if the property is within the same price range as your old house, the rates and levies in a premium area will be much higher.

Relocating too soon

Perhaps your kids have moved away to another city to complete their education or for an internship. This means that they are still in the starting phase of their careers. They are not bound by any responsibilities to stay in the same city or country for that matter. If you relocate to a new city just to be closer to your children and they plan to move away, you may also have the desire to keep moving with them. Ideally, once your children have settled themselves and are content in a secure job then you should move closer to them.

Going on a shopping spree

Now that the kids have moved out and you are downsizing, you may want to buy new furniture and appliances for your new home. If your old items are still in good condition there is no need to splurge on things that do the same job. For example, do you really need a new blender when the old one is in perfect condition? The same applies to new clothing and homeware. If anything, you should be selling your unwanted items to bring in an extra income. You can also cut down on your grocery bill since you have lesser family members consuming goods. 

Failing to have a realistic financial plan

Another mistake that empty nesters make is not having a realistic financial plan. Downsizing allows you to now have a decrease in expenses. This extra money can be saved for a rainy day or to aid your retirement fund. It would be best to seek the services of a trusted and knowledgeable financial advisor. Evaluate the fees and taxes that you will be liable to pay when entering retirement or requesting your investments to be paid out. 

Property remains to be one of the most lucrative investments. With low prime lending rates, it is even more affordable to own a second investment property. If you plan to downsize in the next five to ten years, securing your investment now will also benefit your financial situation in the long run.

Downsizing your home can be an exciting time in your life. It gives you a chance to reevaluate your living situation and get rid of years of clutter. You can avoid the common mistakes empty nesters tend to make by first finding the perfect home. Contact Knight Frank today and we will help you make the right choice.