Many Americans live in big homes because they can; but does it makes sense. Married couples often buy their first home in their 20's. They continue to move up buying bigger homes as the family grows and more space is needed. But then around 50 years old, once the kids leave for college, it is not uncommon to become empty nesters. It is true that some will have their kids come home after college for a while; but now that the economy is getting better, that trend should start to diminish. So, why sit on a big four bedroom home any more once it is no longer needed. Property Taxes, Maintenance and utility expenses are high on a per square foot basis.
By the time we are empty nesters, it is time to start planning for retirement from a financial standpoint. It could be that we just don't need that big home anymore. Sometimes, downsizing occurs when we retire as people often move from cold places to warm places. But maybe it should happen sooner while we are still working. Why not buy something smaller while we are working to invest the money from the sale of a home in other rental real estate, or safe investments in the stock market. Many qualify for Roth IRA's that allow income to grow tax free.
Everybody knows the living the good life on Social Security is unlikely. So, we all need enough money in savings and or various investments to allow us to live a great life in retirement. And, as we get older, we will probably have additional medical expenses, or need to buy home care. So wasting money on utilities, taxes, maintenance that come with a bigger home that we no longer need; just may not make any sense once we don't need the larger square footage anymore. Inertia often prevents downsizing. It is work to get it done. And, very often people get stuck on their belongings because it often means getting rid of furniture that just will not fit in a smaller home. Fortunately, there are consignment stores that will take better furniture and sell it for you. Once we are empty nesters, downsizing should be a smart option.
