As a retiree, I’m always looking for ways to cut expenses without degrading my lifestyle. I illustrated this in my Retirement Spending Plan essay a while ago. It’s a good plan, and it’s working. But it wasn’t feasible until two years ago, when Tricia and I downsized.

We moved out of the house where we’d spent the past 25 years. When we moved in, it seemed so big. We had lots of rooms with no furniture. We never thought we would fill it up.

But we did. And then some. This was the house where our children grew up.

Now we were empty nesters. We wanted to do a lot of the things we had put on hold while we raised our children. Like traveling. And getting out of Florida during the summer.

How to pay for it was the question. The answer appeared when I looked at how much we were spending on the house. It was by far our biggest expense. Many Americans are in the same boat.

According to the most recent Bureau of Labor Statistics survey, Americans spend twice as much on housing than they do on anything else. Housing expenditures average 34% of take-home pay. And if you live in a major metro area, such as New York or San Francisco, your percentage may be even more.

Mark’s take on housing is that it is the No. 1 determinant of your lifestyle burn rate (LBR). He discusses calculating your LBR here.

A bigger house, of course, costs more money to buy. But that’s just the beginning. You’ll pay more in property tax. It also costs more to maintain, heat, cool, and furnish.

On top of that, a bigger house will likely be in a richer neighborhood. You’ll feel some pressure to buy nicer furniture and drive more expensive cars. And when the carpenter or plumber comes to fix a problem, I can tell you from my own experience that they will charge you more. Mark explores this idea of “the cost of possession” here.

If you’re looking to reduce your living expenses, it only makes sense to look at the biggest nut. But downsizing isn’t for everybody. In this essay, we’ll walk through the pros and cons. I’ll also give you a brief checklist to help you with your decision.

The Cons of Downsizing

It’s emotional

Most of us develop some sort of an emotional attachment to our homes. For some, that attachment runs quite deep. I’m not particularly sentimental. So the emotional part of downsizing was not a big issue for me. But it was for Tricia. It took her several years after the children were gone to even entertain the notion of moving.

But I don’t think it’s gender specific. My son was devastated when we sold the house. He even flew back from Colorado to have one last look at his room. My daughter, on the other hand, said simply, “Where are you gonna move to?”

Naturally, any change produces anxiety. Dismantling a home is a significant source of worry. In fact, on the Holmes and Rahe stress scale, changing your residence is No. 30 on the list of 43 stress-producing life events. Trepidation is perfectly normal.


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