While the word downsize traditionally has a negative connotation – implying that one has to “cut back” because one has somehow failed to handle their finances correctly – the reality for retirees, or for those approaching retirement age, is that downsizing may actually be the wisest decision they can make to ensure long-term financial freedom and peace of mind. Here are J.G. Wentworth’s five tips for anyone considering downsizing for retirement:
1) Always start by honestly assessing whether staying in your home remains right for you
It’s a question asked by millions of retirees every year: will it be better to grow old in the home I’ve lived in for years, or move to a smaller and more economically viable address?
Unfortunately there really is no easy answer to this question. Financial factors that go into this important decision include your home’s value, size, rental prices either in your area or at a viable alternative location, monthly mortgage payments, cost of upkeep, and taxes. Add to this the many personal considerations one must take into account such as emotional connection to the property, physical health, and proximity to family. The bottom line is that such a decision is an immensely complicated one and should only be taken after careful thought and advice from professional sources. That said, if moving from your home will lead to savings large enough to substantially increase your financial security, it is definitely an option that must be considered.
2) Reassess your investment planning
A second crucial step retirees, or those approaching retirement age, must take to ensure their future financial planning is both in order and in line with their needs. No longer, for instance, can one take the investment risks one may have been willing to take at the age of 30 or even 40. Instead, a careful budget must be made, along with conservative planning that will meet the monthly expenses you anticipate. While JG Wentworth cannot offer specific financial advice, we do certainly recommend that you consult a financial planner to discuss these issues.
3) Rethink your insurance policy needs
Too many people approaching retirement fail to recognize the lifestyle changes that come with this age, and continue paying for things they simply do not need. Among these costs are life insurance, in which the rates one pays for the policy simply are not worth the potential benefits. Carefully reevaluate all your insurance policies to see if they are financially worthwhile.
4) Review your lifestyle needs
That second car payment, cell phone contract, landline cost, cable bill – these and many other monthly expenditures may be doing more damage to your bottom line than you might think. This is the time to consider what your lifestyle needs are, and whether you can fundamentally change your spending habits to match what is truly essential to you.
5) Get rid of the clutter
Another great tip on downsizing is to be honest about the possessions you’ll need in your home (wherever that home may be). There are many positive ways to get rid of clutter, including throwing a garage or yard sale, donating items to charity, or giving your possessions to grateful relatives. Of course, you do not want to give away your most treasured or personal possessions, but taking an honest look at what you actually do need and use every day will only help you clear away the things you do not.
Please note, again, that J.G. Wentworth cannot offer specific financial advice. That said, we do hope these five tips offer you a great opportunity to reflect on your real needs as you face your retirement years. Our deepest wish for you is that financial worries become the farthest thing from your mind, and that if you do decide to downsize, no matter how difficult it may be for you at first, it soon becomes among the smartest financial and personal decisions of your life. Finally, if you are currently receiving payments from an annuity or structured settlement, and looking to get cash out of these future payments sooner, we do encourage you to call JG Wentworth anytime at 877-227-4713 to discuss your options.
Nothing above is meant to provide financial, legal or tax advice. You should meet with appropriate professionals for such services.