Stan Hinden and his wife have downsized their home twice during retirement. Though he concedes the process can be "traumatic" and "expensive," he doesn't discount its benefits.
"The first time was when we moved from a five-bedroom house to a two-bedroom condo in a retirement community. We were in our 60s, working long hours at demanding jobs," he says, writing for the AARP Bulletin. "Sara was tired of all the work a big house required. I no longer wanted to mow grass, rake leaves and shovel snow."
They currently lease a one-bedroom residence in an independent-living complex. Their rent includes meals, so the hassles associated with grocery shopping and cooking are now nonexistent.
Everyone experiences retirement differently. Some lament the years of their youth, while others rejoice at the prospect of being able to devote more time to themselves. Regardless of the category to which you belong, retirement is a time for new adventures, new hobbies and new experiences. But in order to open the door to these new opportunities and truly enjoy the fruits of your labor, you must close the door on your old way of life by downsizing.
"The decision to keep an asset or leave it unchanged should be based upon its importance as a comfort, psychologically or financially, or a necessity for the rest of your life -- not its importance to your past," notes Mike Lewis, a retired business executive, on the Forbes website.
*Moving Around Financial Assets
The first major adjustment you will have to make during retirement has to do with your finances. You no longer have your chief source of income -- employment -- so you will be depending on earnings from investments, as well as liquidation of the assets you've amassed.
Lewis recommends skewing your portfolio toward "less volatility and greater safety" and spending money from your taxable accounts first.
"Distributions from those retirement accounts which provided income tax deductions during your working years are taxed as they are distributed," says Lewis. "Other accounts may allow distributions equal to the contributed principal without tax, but any growth within the accounts is taxed as it's distributed."
When planning your retirement, don't overlook health care expenses. Also, keep in mind that America's entitlement programs affecting retirees most -- Social Security and Medicare -- are not sustainable in their present condition. "Retirees should expect a combination of higher premiums, deductibles and co-payments as these costs are shifted from the federal government to beneficiaries," Lewis writes.
*Downsizing Your Home
Your children now have their own jobs, homes and families. There is really no need to keep the large house you bought because it was located in a reputable school district. Lewis suggests looking into one of the many low-cost retirement communities across the country.
But Hinden emphasizes the importance of not making any rash decisions. "If you own your current home, you may have to sell or rent it before moving," he says. "But the depressed real estate market can make that tough. Think hard about the danger of being caught paying for two homes at once if you just go ahead and move."
Moving expenses can be steep, especially if you don't have family and friends to help you. You may have to hire professional movers and spend money to make your new home more comfortable. Hinden and his wife only moved 10 miles away and took most of their furniture and belongings themselves, but the company they hired to unpack and arrange their things in their new home charged them $4,500.
If you, unlike the Hindens, are unwilling or incapable of parting with your home of so many years, Lewis recommends looking into a reverse mortgage, which could free up capital and allow you to reinvest in assets from which you could earn an income.
*Get Rid of Unnecessary Stuff
Lewis says to first take stock of your family heirlooms and mementos.
"While some are valuable and some have sentimental value, most just gather dust until they are again bequeathed to our progeny," he says. "Why wait until your estate is settled to transfer these objects to your heirs? Enjoy the pleasure of giving now, and free yourself of the responsibilities associated with them."
But when it comes to just stuff, things no longer needed but never disposed of -- clothes, electronics, appliances, furniture, books -- donate them to charity for a tax deduction or sell them, Lewis urges. Doing this will give you more freedom in the long term, and you will reduce the burden on your loved ones when you're gone.
Hinden had a hard time letting go. "I still wince recalling how in the first move I trashed dozens of scrapbooks containing political articles that I had written for my newspaper over a 15-year period," he says. "Once again, in this move, we had to choose between the things that we wanted to keep and the things that were expendable. The obvious 'keepers' were items associated with significant events in our lives: the birth of children, graduations, weddings and memorable vacation trips."
Remember that retirement is not the end of the road, but a new beginning. So don't let your past life weigh you down. Free yourself up to enjoy the new and exciting opportunities ahead.