When to downsize the house?

[NJDoc]

So, I'm on call all weekend, hence too much time on line and posts such as these. My family has been at the beach and some were in Gotham for the weekend, while I deal with on call crap.

Anyways, I was wondering if anyone has faced the housing downsize situation yet? I know this forum is predominantly younger Docs, but maybe someone out there can chime in.

I'm early 50's, have 5 yrs left on this mortgage, which we could get rid of easily in 3 yrs without affecting  yearly planned savings and investment amounts. I plan to work till I'm 60 or 62, really for mental stimulation, friends, etc.. We plan to stay in this area, it's beautiful, even though the taxes are terrible, but it's built into my long term financial plan.

I can't decide whether to pull the plug and sell this place and move somewhere nearby to a slightly smaller place in 3 yrs or wait till I'm 60? It will likely be a lateral move from a monetary perspective. But we would love to change the house layout, have small barn/workshop, killer kitchen, smaller pool, lower landscaping costs, etc..in other words total custom new construction or massive renovation on an existing home. I go back and forth on this almost weekly and worry that my perseveration may be driving my wife nuts. Moving in 3 years gives us the flexibility of a continued paycheck to make the home into what we want. Moving in our 60's may make more sense as to what we actually want when I retire, but could limit the amount of actual home renovation and fixing up we do. Should I pay off the mortgage in 3yrs, or sell with a small balance left and stockpile some cash to help with renovation/construction costs?

 

Thanks

 

[jfoxcpacfp]

Crixus wrote:

See how many government employees are slated to retire after a measly twenty years of being a useless piece of garbage. How may police chiefs, fire chiefs, school district administrators, etc. Watch how they pad payroll with OT the last couple years to turbo boost their pensions. Is it any wonder Illinois is depopulating?

 

Click to expand...

You actually want to categorize all police chiefs, fire chiefs, school district administrators, and other government employees as a "useless piece of garbage" who pad their payroll to boost their pensions? What is your agenda on this forum?

[q-school]

my wife would never let me sell her dream home.

i'm not one who favors early mortgage payoff, but with only five years left, meh.  whatever.  pay it off and see how you feel with no mortgage payment.   maybe you can retire sooner.  unless you blow all the money on your fancy new pad.  

 

life is short.  i say if you have a house that fits your needs better, you should get into that place asap.  renovate or build.  it's always more expensive than budgeted.  

 

 

[jhwkr542]

NJDoc, you may want to make a new thread since crixus is hijacking this one in his continued attempt to get banned from this forum.

To answer your questions, it sounds like you're interested I'm down sizing now. I think you'll want to figure out what your plans for staying busy in retirement are and how much maintenance you want to be on the hook for. Obviously, this will depend a lot on your health but that could change any time, pre or post retirement.

I wouldn't pay the house early just for two years' interest. Might as well keep it liquid, especially when you wouldn't be saving that much likely (depending on amount left and interest rate, but I'm assuming both values are relatively low at this point).

[Arkad]

NJDoc

Feel free to have your wife commiserate with mine. She too is probably exhausted by hearing me talk about this too. I am a year or so away from pulling the plug and would love to be out of our house.  Slightly different situation here as we are not sure if we want to stay in the area and I want to seriously downsize to something that is really just a base home from which we can travel or spend time near our children if they remain in the area. Not knowing which it will be is what is keeping us in our current home. I agree with the previous post that life is short, make the move that will make you happiest now if the finances are not a big issue and enjoy it.

[Kamban]

NJDoc wrote:

I can’t decide whether to pull the plug and sell this place and move somewhere nearby to a slightly smaller place in 3 yrs or wait till I’m 60? It will likely be a lateral move from a monetary perspective. But we would love to change the house layout, have small barn/workshop, killer kitchen, smaller pool, lower landscaping costs, etc..in other words total custom new construction or massive renovation on an existing home. I go back and forth on this almost weekly and worry that my perseveration may be driving my wife nuts. Moving in 3 years gives us the flexibility of a continued paycheck to make the home into what we want. Moving in our 60’s may make more sense as to what we actually want when I retire, but could limit the amount of actual home renovation and fixing up we do. Should I pay off the mortgage in 3yrs, or sell with a small balance left and stockpile some cash to help with renovation/construction costs?

Click to expand...

Important questions to ask yourself

1. Do you want to live in NJ after you retire. Is there something there that would want you stay there. NJ is not that great for retirees.

2. If you want to stay I would suggest waiting till close to or at retirement. You might want to move into a home with more bedrooms in the 1st floor. A smaller house with smaller yard. Maybe in a place that will be more secure if you want to travel.

3. You might find that even after downsizing you might get a smaller home for the same amount of money. So don't rush into it.

[StarTrekDoc]

@NJDoc,

Definitely the spouse equation comes into play here.  Have to balance that with your financial and post retirement plans then figure out the base of operations post retirement to get there.

That said, my parents relocated twice more after their 'retirement move' due to their children (more so their grandchildren) proximity, so take that into consideration.  I don't think that they anticipated those moves.

We live in sunny san diego, so love plans for move down maybe a little different with the property tax laws here (prop 13) and appreciation (taxes only rise 1% a year  vs the cost are 5-10% annual) -- so after 10 years in a home, the tax burden step up is pretty significant -- even if a downsizer may incur HIGHER taxes!   Blah.

[Dr. Mom]

Be slow to downsize until you have really thought about how small to go.  My mom used to be in real estate and often saw people downsize too much only to turn around and end up in a house close to the original size.  Great for her business though. If you just want to move to a better/different home until you retire and the cost won't impact your ability to retire, go for it.

[The White Coat Investor]

Definitely try to minimize the number of moves.

I doubt we'll downsize until physical limitations force us to. It'll be nice to have the space when kids and their families come home to visit, but mostly it means moving away from neighbors and friends. Ours is already the smallest house on the street (at 4400 sq ft!) There is very little we could downsize to within even a mile.

[StarTrekDoc]

When with that, it's usually downstairs size, then the upstairs becomes the visitors' quarters.  That's our current post retirement plan for us until we uproot to condo living.  Of course, that's if my powerball ticket doesn't match from last night.

 

[VagabondMD]

This is a subject my wife and I (early 50's) discuss frequently. We have lived in our house for 18 years (paid it off 7 years ago) and plan to stay through my daughter's graduation from high school, in three years. At that point, we plan to combine a downsizing with a dual retirement (unless one or both drops out first) and a likely move to our retirement destination. So a lot of things going on at once.

[hightower]

NJDoc wrote:

So, I’m on call all weekend, hence too much time on line and posts such as these. My family has been at the beach and some were in Gotham for the weekend, while I deal with on call crap.

Anyways, I was wondering if anyone has faced the housing downsize situation yet? I know this forum is predominantly younger Docs, but maybe someone out there can chime in.

I’m early 50’s, have 5 yrs left on this mortgage, which we could get rid of easily in 3 yrs without affecting  yearly planned savings and investment amounts. I plan to work till I’m 60 or 62, really for mental stimulation, friends, etc.. We plan to stay in this area, it’s beautiful, even though the taxes are terrible, but it’s built into my long term financial plan.

I can’t decide whether to pull the plug and sell this place and move somewhere nearby to a slightly smaller place in 3 yrs or wait till I’m 60? It will likely be a lateral move from a monetary perspective. But we would love to change the house layout, have small barn/workshop, killer kitchen, smaller pool, lower landscaping costs, etc..in other words total custom new construction or massive renovation on an existing home. I go back and forth on this almost weekly and worry that my perseveration may be driving my wife nuts. Moving in 3 years gives us the flexibility of a continued paycheck to make the home into what we want. Moving in our 60’s may make more sense as to what we actually want when I retire, but could limit the amount of actual home renovation and fixing up we do. Should I pay off the mortgage in 3yrs, or sell with a small balance left and stockpile some cash to help with renovation/construction costs?

 

Thanks

 

Click to expand...

I say go for the downsize.  I'm 35 years old and have no kids (yet) and I'm already considering downsizing in the next 3-5 years.  Especially if it ends up being just my wife and I or maybe 1 child.  I think homes are a major burden that most Americans are completely unconscious of at a younger age.  The more stuff you have the less free you are to just do what you want.  Houses strangle us with debt and constant repairs/upkeep/maintenance.  It's a subject I think about often.  Right now the only reason we're staying in our current home is because it's generating it's own income through the airbnb room we run.  Otherwise it's too big.  I could live in a house less than 1/2 this size and be perfectly happy and have a lot more cash on hand each year.

Crazy stuff below.  Don't read if you can't handle it.  I'm sure I'm going to get a lot of "good luck with that...moron" kind of replies.  It's all good.  I've heard it all before.
We've actually considered downsizing to an airstream trailer and living on my in-law's farm.  We even went so far as to visit some airstream dealers and figure out floor plans, etc.  We'd have a big solar array there and have virtually no utilities (other than paying for water).  With that set up we'd be able to avoid property taxes, have zero mortgage, no bills to pay each month.  We'd also be able to grow most of our own food.  Then we could afford to work part of the year and travel whenever we want and save even more aggressively than we do now.  The ONLY thing that has stopped us so far is the bathroom situation.  We would want a real bathroom, which would mean building a small building for it.  I'm just not ready for a new project when I just finished restoring this old house we live in.  We'll see though.  Told you it was crazy time.

 

[hightower]

jfoxcpacfp wrote:

Crixus wrote:

See how many government employees are slated to retire after a measly twenty years of being a useless piece of garbage. How may police chiefs, fire chiefs, school district administrators, etc. Watch how they pad payroll with OT the last couple years to turbo boost their pensions. Is it any wonder Illinois is depopulating?

 

Click to expand…

You actually want to categorize all police chiefs, fire chiefs, school district administrators, and other government employees as a “useless piece of garbage” who pad their payroll to boost their pensions? What is your agenda on this forum?

Click to expand...

To quote one of my favorite movies of all time...Crixus lives on the planet bulls*t, in the galaxy of this sucks camel di**s.

[VagabondMD]

@hightower: I think homes are a major burden that most Americans are completely unconscious of at a younger age.  The more stuff you have the less free you are to just do whI think homes are a major burden that most Americans are completely unconscious of at a younger age.  The more stuff you have the less free you are to just do what you want.  Houses strangle us with debt and constant repairs/upkeep/maintenance.  It’s a subject I think about often.at you want.  Houses strangle us with debt and constant repairs/upkeep/maintenance.  It’s a subject I think about often.

I totally agree with this. I cannot think about my house without thinking of the list of things that need to be done and the whack-a-mole game we constantly play to deal with said list, the contractors and service people who never come when promised, the knick-knacks, books, children's projects, souvenirs, etc. that fills every nook and cranny, and how overwhelming and stressful that all of this makes me feel.

[Hank]

Never.  If you don't oversize your house, you won't need to downsize it in the future.

First, evaluate whether you should buy a house in the first place.  This primarily is a function of the rent to mortgage service ratio in your town.  In some places like San Francisco you can do far better renting than buying.  In other places like San Antonio, you get far more house for less money (all expenses in) buying a house than renting a house / apartment.

WCI is a pretty big fan of not buying as a resident.  My wife and I aren't quite as doctrinaire against buying in residency as some are on this forum.  The wife bought a house in San Antonio during a three year surgical residency and was paying $700 per month for a 3 bedroom 2 bath house when other residents were paying $1000+ to rent a mediocre 2 bed, 2 bath apartment.  Obviously trying to sell a house around 2008 could bite you in the hinter parts, but San Antonio still is a decent city to be a landlord.

Don't buy too much house.  Make sure you have at least one full bath and one bedroom on the ground floor, especially if you might live in the house in your golden years.  Hell, just roll an ankle once and get a soft cast and you'll be happy you have few stairs and a bed & bath on the first floor even during your 30's.

If you do buy, buy near good schools.  Even if you don't have kids, many potential homebuyers do.  Try to avoid HOAs.  They're a constant expense and you often run into inane rules and petty dictators on the HOA board.  Perhaps some on this forum have found HOAs to add value beyond their monthly expense; I haven't found that to be the case.

Try to buy into a well established neighborhood relatively close to downtown and things to do.  Walkability and access to good public transit can be a real plus.  I like to buy a house that's around the 20th to 25th percentile in a well off neighborhood.  It's harder to sell a house that's in the top or bottom 10% of a given neighborhood.  It's better to have a modest house in a nice part of town than to have the nicest house in the ghetto.  You'll have to work harder to teach your kids not to "keep up with the Joneses" and be okay with more modest cars, clothes, and vacations.  At least your house won't be an inviting target for burglary.

California, New York, New Jersey, Massachusetts will kick your ****************** for taxes, but if that's where you insist on living due to family, weather, etc. then at least know that you're paying for the privilege.

Anyway, plenty of opinion above, but I like to buy a house with an eye to living there post-kids.