Retirement & Financial Planning Report

While taking out a reverse mortgage is a commonly cited way to use a home as a retirement asset, downsizing could be a better option for some–and that doesn’t necessarily moving to a smaller home, just a less expensive one, a report says.

The Center for Retirement Research said that for example moving from a $250,000 home to a $150,000 home would yield about $75,000 in profit, after sale and moving expenses. That amount would then be available for needs such as long-term care or delaying the start of Social Security benefits in order to increase those payments. And if invested at a 4 percent return, that amount would yield about $3,000 annually in income, it says–while expenses for taxes, insurance, utilities and other costs would fall by above $4,000.

Further, a retiree’s current house may be better “suited to an earlier stage in life–with more stairs and rooms than you need, in a neighborhood with schools and playgrounds you no longer use, near where you no longer work.”

It adds, though, that moving “becomes more difficult with age, both physically and socially” and that “if downsizing makes sense, the sooner you move, the better.”