Retiring in the Next 10 Years? 7 Reasons to Consider Selling Your Home

If your retirement is a decade or less away, you’re probably starting to think about many factors, such as whether you’ll work part time, when to collect Social Security and what to do about your living situation.

Homeowners nearing retirement have the added benefit of equity in their homes, which could facilitate a number of moves that could benefit their retirement.

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Derek Mazzarella, CFP, financial advisor at Gateway Financial Partners and author of the book “Just Retire Already,” explains the benefits of selling your home in the final stretch before retirement.

Freeing up liquidity

Selling your home is one way to free up cash flow in retirement. That extra cash can be used for a variety of things, such as investing, having a simple cash flow or allowing you to buy a smaller, more affordable home, Mazzarella said. It gives you options, as long as you don’t take on a new mortgage or pay a high rent that’s out of reach.

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Downsize for a more affordable lifestyle

“The ideal would be to sell your home and move somewhere less expensive,” Mazzarella said. If you can sell your primary residence for a high price, you might even have enough money to buy a new home with cash, avoiding taking out a new mortgage.

Reduce costs and taxes

Additionally, if you sell your home and can move to a place where the cost of living is more affordable and local taxes are more favorable, the savings can be significant, Mazzarella said.

“Your housing costs will go down, as will your taxes. But you have to stay at least six months and one day to benefit from the advantageous tax treatment,” he explained.

Aging better in a (new) place

There’s also the fact that by selling, you have the opportunity to move to a place that’s better designed for aging in place, if your health or functional ability declines. “You might want to think about whether you can use a wheelchair or something like that in your doorways,” Mazzarella said.

Specifically, he added, “most people want to stay in their homes at this stage of their lives. If your home doesn’t lend itself to that, that can be a problem.”

Avoid high renovation costs

Additionally, Mazzarella said selling your home and buying something that better suits your needs avoids one of the most common housing expenses retirees make: renovations.

“Most people don’t realize that retirement expenses are changing, and outside of health care, the most common or largest expense for retirees tends to be their housing. And that’s not paying a mortgage, it’s maintenance and renovations,” he said.

In this case, it makes sense for people to choose a smaller, better-maintained home. “This could represent a significant saving in the long run, as many retirees spend a lot of money on their homes later in life,” he explained.

Selling to find freedom

For retirees who aren’t so attached to the idea of ​​a fixed or stable home, but want the flexibility to travel, selling a home can also free them from the ties of a single location.

“Some retirees will move from owning to renting because they will want to live in different places and have different experiences in different parts of the country,” he said.

Keep more money

Another consideration, Mazzarella said, is that many people work hard to pay off their mortgages as quickly as possible, but that also leaves a significant portion of retirees’ wealth tied up in their home equity rather than in retirement or other investment accounts. If you can easily save for retirement and pay off your home early, that’s great, but if not, many retirees find themselves in the position of having to take out a loan on the home or sell it. You might consider selling before you pay it off.

While there may be other emotional, sentimental and wealth-related reasons to keep a home in retirement, there are many potential financial benefits to selling a home that can contribute to an easier retirement.

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This article was originally published on GOBankingRates.com: Retiring in the Next 10 Years? 7 Reasons to Consider Selling Your Home