The answer to whether retirees should sell their home is “it depends,” and the factors that go into the decision are not only financial ones.

Retirees may want to sell their home for a wide variety of reasons, including:

• Downsizing to a more manageably sized house now that the kids have lives of their own
• Moving to a new location that may be a more favorable climate, or to be closer to the grandchildren
• It’s become too expensive to live in their current home now that their working income has disappeared
• A wish to tap home equity in order to supplement a desired retirement lifestyle
• Eliminating the maintenance and care required of homeowners by becoming renters or moving to a condo lifestyle

There are, of course, good reasons retirees may not want to move, such as:

• A desire to remain close to family, friends and community
• Wanting to live amid the memories that formed over the years in the home in which the children were raised
• If the home is owned without a mortgage, living expenses are much lower than the renting alternative, especially given that rent payments may rise in an unpredictable fashion and require them to deal with an unreliable landlord

For many retirees, the decision may be clear, while others may be forced to sell due to financial reasons. For others still, the decision is a difficult one since they see benefits and disadvantages to the options in front of them.

If the decision to sell is not so clear-cut, retirees may want to consider:

• Updating their financial plan to get a clearer understanding of the financial impact of options
• Researching the current housing market, the costs of selling and buying (or renting), and visiting the preferred retirement location (preferably with an extended stay during the most unattractive season)
• Ascertaining the cost of living wherever they are considering living
• Determining if they will owe any taxes on the sale of their home since that will reduce the amount they can plan on adding to savings (retirees should talk to their tax advisor to help calculate the tax impact of selling the home)
• Evaluating the decision within the context of estate planning objectives (i.e., do you wish to leave your home to your heirs at a favorable step-up tax basis?)
• Calculating whether a reverse mortgage may be an appropriate strategy to balance the need for income and the desire to stay in the home

It’s a big decision for retirees that can be made easier by involving a team of experts—a financial professional, realtor and tax advisor.

Please reference disclosures at: https://blog.americanportfolios.com/disclosures/