For your favorite financial advisor (I’m assuming that’s me), the life lessons keep on coming. First, it was parenting. “How hard can it be to keep your kids out of trouble/drugs/therapy?” thought I. “HA hahaahaha,” replied the universe.
The latest has been my experience downsizing. I knew I needed to get out of my big family property for both sanity and financial reasons. But what I didn’t count on was the utter HELL it was to get there.
I touched every item in my house, down to the toenail clippers, to decide what to keep, throw away, pay to store, move into temporary digs, sell, or donate.
I had tons of help, and I’m a person who doesn’t get attached to material possessions. Still, it was HARD. Decision fatigue is real. And somehow, I still have 6 sets of toenail clippers in my new apartment.
So now I will no longer casually suggest to clients that they downsize their homes to save money in retirement.
Add to the personal lesson of logistical misery, there is evidence that downsizing doesn’t always have a positive financial outcome.
Everyone says downsizing your house is the magic trick to saving money. Smaller home, smaller bills, right? Not always. Sometimes, shrinking your living space doesn’t shrink your bills.
First, there’s selling your home. Sure, you might make some profit, but you’ll also pay closing costs, moving expenses, and maybe a few “urgent” updates your realtor insists on (because apparently, avocado-green bathrooms went out of style sometime around 1978). By the time you’ve fixed, staged, and sold, your big payday might look more like a polite tip.
Then there’s the new house. You’d think smaller means cheaper, but not so fast. Many “downsizers” go for something newer with fancy finishes, a granite kitchen, or even a view. That smaller space can come with a surprisingly big price tag—especially if you’re moving to a popular area where everyone else wants to downsize too.
And who can forget moving costs? Between the movers, the boxes, and replacing the furniture that “doesn’t fit anymore,” it’s easy to spend thousands before you even hang your first picture frame.
Property taxes and HOA fees play their tricks, too. Newer neighborhoods sometimes mean higher taxes or monthly dues that can nibble away at those savings you hoped for. Even utilities might not drop as much as you imagined—especially if your new “smaller” home is loaded with smart tech and fancy lighting that makes your electric meter spin like a carnival ride.
Downsizing can still make sense for some people, especially if you’re ready for less maintenance and clutter. Or if your home is full of stairs, that makes aging in place difficult.
But before you sell the family nest, talk to a real estate expert. Make sure “less house” doesn’t accidentally mean “more expenses.”
