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, like whether you’ll work part time, when to take Social Security and what to do about your living situation.

Homeowners closing in on retirement have the extra benefit of their home equity to work with, which could facilitate any number of moves that could benefit their retirement.

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

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Free Up Liquidity

One of the things selling your home does is free up liquidity in retirement. These additional funds can be used for a variety of things, from investing to having simple cash flow to allowing you to purchase a smaller, more affordable home, Mazzarella said. It gives you options, so long as you don’t take on a new mortgage or high rent that’s out of reach.

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Downsize to More Affordable Living

“The ideal scenario is to sell it and downsize to a place that’s less expensive,” Mazzarella said. If you are able to sell your primary home for a significant price, you might even have enough to buy a new home with cash, eschewing a new mortgage.

Reduce Costs and Taxes

Additionally, if you sell your home and can move to a location that has a more affordable cost of living and better state taxes, the cost savings can be significant, Mazzarella said.

“Your housing costs are going to go down, your state taxes are going to go down. Though you need to stay there at least six months and one day to get the favorable tax treatment,” he explained.

Age Better in (a New) Place

There’s also the reality that by selling you have the ability to move into something that is better designed for aging in place, if your health or functionality declines. “You might want to think about whether your doorways will fit a wheelchair, or that sort of thing,” Mazzarella said.

More to the point, he added, “Most people want to stay in their home when they’re at that point in life. If  your home isn’t conducive to that, then that could be an issue.”

Avoid High Renovation Costs

Additionally, Mazzarella said that selling your home and buying something that’s more fit for your needs avoids one of the most common housing expenditures retirees make: renovations.

“One thing that most people don’t realize is that retirees’ spending shifts and outside of healthcare, the most common or highest expense for retirees tends to be their housing. And it’s not paying a mortgage, it’s the upkeep and renovations,” he said.

In this case, it makes sense for folks to downsize to a better-kept and smaller place. “It could be a really big cost saver down the line because a lot of retirees spend a good amount of money on their houses later on in life,” he explained

Selling To Find Freedom

For retirees who are not so attached to the idea of a fixed or stable home but want to have the flexibility to travel, selling a home can also free them from the tether of one location.

“Some retirees will go from owning a house to renting it because they’ll want to live in different places and have different experiences in different areas throughout the country,” he said.

Keep More of Your Money

One other key to consider, Mazzarella said, is that many people work hard to pay off their mortgage as fast as possible, but this also leaves a significant portion of retirees’ wealth tied up in their home equity instead of their retirement or other investment accounts. If you’re able to easily save for retirement and pay off your home early, that’s great, but otherwise, it puts many retirees in the position of having to either take out loans against the home or sell it. You might consider selling before you’ve paid it down.

While there may be other emotional, sentimental and legacy reasons to hold on to a home in retirement, there are many potential financial benefits from selling a home that can contribute to an easier retirement.

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