5 Things to Consider When Downsizing For Retirement

5 Things to Consider When Downsizing For Retirement

May 30, 2024

After working hard and providing for your family for all of these years, you are likely counting down the days until retirement and beginning, as The Beach Boys once said, that “endless summer.” Or maybe you are already retired and looking to make some financial adjustments because you realize that life doesn’t stop when you reach retirement. Unlike a Hallmark romantic comedy, it continues moving around us, the good, the bad, and sometimes, the ugly.

According to a recent Bankrate study, 45 percent of the working population don’t believe they will have enough to retire comfortably and maintain their current lifestyle throughout their retirement years. To add to the pressure, retirees must take into account that the market will continue to be unpredictable with periods of volatility, potential cost of living increases, and important life transitions such as births, marriages, and divorces within your family. Additionally, unforeseen emergencies could arise, and every one of these events could impact you financially.

Sliding into retirement is not reaching the finish line but beginning a new chapter of your life. Like all of the different chapters you have faced, this new one will require you to review your current financial situation, goals, systems already in place, and how you will manage financially moving forward. Being able to retire means not only being mentally prepared but also financially prepared to endure for the long haul despite life throwing everything it has at you. Optimism is a wonderful characteristic, but so is realism and understanding that without preparation and good decision-making, problems can arise.

Money is the number one topic on people’s minds when it comes to retirement. Will there be enough? What can we do to preserve our money? It’s probable that the largest cause of money being depleted is the Diderot Effect. In a nutshell, the Diderot Effect, based on the spending habits of French philosopher Denis Diderot in 1765, states the acquisition of new material possessions tends to create an avalanche of consumption that encourages additional purchases. Excessive frivolous spending can create problems for retirees, especially for those no longer generating any income or one as high as they did while working. One way to change your spending habits and cut back on non-necessities is by modifying (or downsizing) the necessities you have. Here are five things to consider when downsizing for retirement:

1. Downsize to a Smaller More Affordable Home

The idea of downsizing is moving from a larger home with more expensive bills to something smaller to save money. When you think about all of the expenses required to maintain a nice house and property, it can be significant. You have gas, water, air-conditioning, and heating bills. Home maintenance, lawn care and landscaping, and property and other local taxes can all be mitigated if you are willing to downsize. Do your research and meet with your financial professional to decide what is most appropriate for you.

2. Trade in Your More Expensive Car for a Cheaper Option

Your kids are out of the house, and you and your spouse are empty nesters and preparing for retirement. For years, driving a larger, expensive car made sense, but not anymore. Consider trading your more expensive car in for a cheaper option. You can save on service fees but may also have a lower payment if you decide to finance.

3. Modify Your Cell Phone, Cable/Streaming Apps, and Internet Plan

For years, many of us have been tied to specific cell phones, cable/streaming apps, and internet plans. Over time, these companies tend to raise our bills to the point where we pay much more than when we started. Consider researching and seeking less pricey options.

4. Downsize on Your Dining: Cook More Meals at Home, Eat Out Less

Altering your dining habits can save you money in several ways. Eating at a restaurant is incredibly expensive. Not only can it save you money, but regularly eating out may also contribute to long-term health issues, which may subject you or your family to high long-term care costs.

5. Consult a Financial Professional

Downsizing involves making decisions that can significantly impact your finances throughout retirement. Consulting a financial professional can help you address concerns, provide tips on ways to preserve wealth, modifying spending habits, and mitigate potential risk from future market uncertainty or unexpected events.


Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.


Clear, James. Atomic Habits. Avery Press, 2018, pg. 72-73

Trade in Your Car with a Loan for Cheaper Car (caranddriver.com)

Downsizing a Home? 13 Tips to Get You Started | LendingTree 


This article was prepared by LPL Marketing Solutions

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