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Downsizing for Retirement

Join me as I discuss Real Estate Truths- downsizing for retirement with Traci Nelson, financial advisor at Edward Jones.

Traci, can you tell me, what are some of the pros and cons that you discuss with your clients when they're thinking about selling a rental property or a vacation home?

So, great question and first- thank you for having me, Fylicia. Yeah, thank you. When we are looking at a specific client's retirement plan, and possibly liquidating assets; we look at why they might want to sell and why they might want to keep the property. So, as you talked about, those pros and cons.

Some of the cons often have to do with the cost associated with keeping a house. Taxes, maintenance, a property manager, risks involved, what if somebody doesn't pay their rent or we don't have a renter for a little while.  Occupancy, right. We must make sure that we're taking the taxes that we're going to pay, such as capital gains, into an account.


Some of the positives though are we now have an appreciating asset that is often creating a consistent stream of income. This can be great for supplementing social security income. If it's a vacation property it can also provide us with a place to create memories with our friends and family, as well as a gift for future generations. Right and be a great wealth accumulation tool.


When your clients are thinking about future generations, retirement, and estate planning what are some of the key points to consider?

Work with an estate attorney. Everybody needs an estate plan. Everybody needs a will and a power of attorney. And this is putting your wishes into a document that's legally binding, which means it can help to shorten the probate process, which is no fun. It will also ensure your wishes are carried out how you would like after you're gone. There are also some tax efficiencies that can be taken advantage of, but this needs to be put in place ahead of time. Preparation is key.


When talking about selling a retiree's primary residence and downsizing what are some of the pros and cons discussed?

Maybe they've lived there for a while and there's a lot of attachment and emotion involved. The home that was best for us before, is it still the best place for us now? Often retirees want to be closer to hospitals and other amenities; or in a home with only one story. As our lives change sometimes our homes should too, and if we've lived there a long time it can be emotionally draining. Sorting through years’ worth of belongings can be a challenge to overcome. 

Being led through that stressful moving process by a realtor, can make the process easier. Most retired or retiring people want more time for the things they love. They want to spend less time maintaining their home and more time with grandchildren, traveling or enjoying hobbies. 

Well, thank you so much Traci, it was a pleasure to have you. I so appreciate it. Again, this has been Real Estate Truths. The truth about downsizing for retirement. If you've enjoyed this article, please share with someone! 


Tell me-

When do you plan to retire?

Will you keep or sell your properties?