Downsizing for retirement

(The Money Pros) - When it comes time to retire, downsizing is often an important part of the planning.  It can be either a lifestyle shift or for financial reasons. 

The single biggest area to consider downsizing is your home.  If you move to a smaller home you could reduce utility expenses, household maintenance expenses and property taxes, not to mention monthly mortgage payments. 

This might help free up some cash on a monthly basis.  If you have significant equity in your current home, a move to a less expensive place could mean adding a lump sum to your retirement nest egg.

Other ways you can downsize in retirement:

1. Selling your car: if you had a family you may have driven a large vehicle and may no longer need it.  You may opt for a smaller more economical vehicle with lower taxes and maintenance costs and better gas mileage.  You may also have had two or more cars.  Maybe now you can get by on one.
2. Selling or donating your possessions: by selling possessions you no longer need (toys, clothing, furniture, etc.) you are simplifying your life and putting more dollars in your pocket.  You can also choose to donate these items and in most cases receive a tax deduction.
3. Reduce Life Insurance: the younger you are the more likely you are to have a larger life insurance need to replace possible lost income.  Once you’re retired, replacing income is not loner necessary.  Reevaluate your need and reduce your coverage if possible.

Retirement downsizing should be looked at in a positive light.  It could put more dollars at your disposal and simplify your lifestyle.   Remember it is never too early to start downsizing.