Is It Time to Downsize? How to Know and What to Do Next

The decision to downsize your home is a big one because of the emotional weight it carries. You may be in the home where you raised your children and you've probably customized it over the years to meet your family's needs. Add to that, your adult children love the home as much as you do and you and your spouse may not see the decision the same way.

Signs it's time to downsize:

1. You're not using your spaces how you used to;

If rooms go unused for months at a time, you've been an empty nester for years or you want to spend more time traveling or going somewhere else to be closer to family and grandkids, these are telltale signs that it may make both practical and financial sense to downsize your home.

2. Maintenance is overtaking your free time;

Yardwork and maintenance can become burdensome over time, especially in larger, older homes. If you're finding yourself spending more time on your house than living the life you want, this is an indicator it might be time to consider a smaller home, potentially one where yard service is included in your Homeowners Association (HOA) fees.

3. Housing costs are eating into your fixed income;

When property taxes, utilities or general upkeep expenses are creeping up and cutting into your monthly fixed income in ways that force you to compromise your lifestyle, moving to a smaller property could be smart.

4. Physical challenge;

If a medical event changes the way you have to live in your house and it doesn't feel practical, finding a single-floor setup with the accessibility features you need might be your next best move.

Of course, these are suggested triggers that might help you decide more clearly that now is the time to move. But there are also some signs you should pay attention to that show now is not the right time.

Signs it's NOT time to move:

Sometimes you may think you should move now to get ahead of any future challenges with your home. Or you may be feeling pressure from family members to downsize. But it's not always the right decision.

Here are some indicators that you may want to think twice:

1. You haven't explored options and solutions for aging in place. 

From single-floor layouts and stepless entries to grab bars, walk-in showers, stair lifts and smart home tools, there are many options that may allow you to stay in your home. 

2. A short-term financial pinch can be solved without selling your home

An unexpected expense or a tighter year doesn't always mean it's time to sell. Options like a home equity line of credit, the Illinois Senior Citizens Real Estate Tax Deferral Program or a conversation with a financial planner can bridge a short-term gap without making a permanent move.

3. You're still using the whole house regularly

If you regularly have family staying overnight, you're hosting every holiday and you're still enjoying your outdoor space, your home is serving your needs right now.

If you decide to downsize

You've evaluated your situation, and you've decided it's time to downsize. A few things to remember:

• Smaller does not always mean cheaper. If you're moving to an attached home, factor in both your monthly mortgage and HOA fees.
• Talk to a tax professional about the federal capital gains exclusion before you list. The basics: a single filer can exclude up to $250,000 of gain on a primary residence, married couples up to $500,000. The details matter, especially for long-time owners whose appreciation pushes past those limits and for surviving spouses, who have only a two-year window to claim the higher exclusion. A short conversation with a tax pro before you sell can save thousands.
• Ask your REALTOR® and tax pro how the Illinois Senior Citizens Homestead Exemption and Senior Citizens Assessment Freeze will change when you move. One of them follows you to a new home. The other resets, which means a smaller home doesn't always come with the smaller property tax bill you'd expect. Running the numbers up front avoids a surprise on your first new tax bill.

A simple checklist you can follow before downsizing:

• Have an honest conversation with your spouse and then your adult children
• Connect with a REALTOR® who is a Senior Real Estate Specialist (SRES) – this person will be equipped with the expertise you need to make downsizing more seamless
• Get a home valuation
• Update estate documents
• Start decluttering now so it doesn't become too overwhelming
• Create a 6-12 month timeline so you can take your time, rather than trying to move quickly
• Connect with your tax professional and financial advisor to learn more about your financial implications
• Explore communities you might consider moving to

Moving from a long-time home can feel daunting but there are so many wonderful options for downsizing that come with more financial and personal freedom, making it worth exploring. Visit our Senior Resources for more information.