Michele Clark in the News: CNBC about Downsizing Housing in Retirement

I was happy to be a resource for Sara O’Brien of CNBC for the article “Older Americans planning to downsize should brace for sticker shock” that highlights the surprises that retirees can face when downsizing.  We had a great discussion about the types of expenses people often forget, the types of housing I see clients gravitate toward, and if the cost of the square footage downsized home is dollar downsized as much as people originally had envisioned.

Why retirees might not get as much equity out downsizing as they thought

When thinking of “downsizing” people often assume that if they reduce the size of their home, the purchase price will also be lower.  That isn’t always the case.  Often times people are looking for newer homes that will require less maintenance, and may even be attracted to villa homes that include (for a fee) exterior upkeep such as snow shoveling, yard work etc.  Those types of homes cost more.  You may end up downsizing the square footage but upsize the amenities.

People often forget that they will pay a 6% sales commission to the realtor to sell their home that translates into a smaller check at the closing table than they originally thought.  For a $450,000 house, it is $27,000 less for their retirement than they were thinking. Especially considering they are also using the proceeds to buy another house.

Due to years of watching HGTV reveals people swing open a front door and expect to be wowed. Knowing this a Realtor’s marketing plan will include a list of staging ideas and home repairs designed to maximize the sales price and reduce the number of days on the market. These expenses are often overlooked because they cover more items than they used to, Pre-HGTV.

Moving expenses and the cost of setting up the new home add up as well.

Why it pays to plan in advance when thinking of downsizing

One benefit to downsizing, even if the reduction is not significant, is if you currently have a mortgage, and you move to a less expensive home, you can improve your monthly cash flow by doing away with the monthly principal and interest mortgage payments (you will still pay taxes and insurance each year.)  Or of course, if your current home is paid off, you will walk away from the closing table with equity out of the house, which is what people traditionally think of when they think of downsizing.

Another benefit is in the form of improved monthly cash flows, due to a reduction in housing costs, such as utilities, home owner’s insurance, and potentially real estate taxes.

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Coffee with Michele Clark, CFP® and Jan June 2018

Come to the Community Room at Kaldi’s in Chesterfield, MO with your financial planning and tax questions and enjoy a cup of coffee with Michele Clark CERTIFIED FINANCIAL PLANNERTM professional in St. Louis and Jan Roberg, enrolled agent.

Financial Planning and Tax Planning Questions Answered

There is no prepared presentation, just a casual conversation in a small group environment; your opportunity to pick our brains. Feel free to invite family or friends who could benefit from an hour with us. Open to registered attendees only, due to the size of the room.

Coffee with Michele Clark and Jan
Kaldi’s Coffee Chesterfield, MO
Wednesday, June 20, 2018
10:30 am to 11:30 am

RSVP Information
RSVP online Clark Hourly Financial Planning and Investment Management RSVP or call 636-264-0732. Space is limited. Coffee and pastries are complimentary.

Kaldi’s Coffee Chesterfield address and map
The Community Room is an enclosed room in the back of the coffee shop.

We hope you can join us!

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Overlooked expenses in retirement: Gifts and travel related to gift giving occasions

Many people who come to me for assistance with retirement income planning are on the cusp of retirement and have never tracked their expenses.  If that is the case, no problem, we have methods to estimate spending to get a baseline estimate of your spending needs in retirement.

For those that are trying to get a clearer picture of retirement spending, I often see them list their regular monthly expenses such as utilities, insurance, food, and gasoline.  But overlook the irregular expenses such as home and car maintenance, personal property taxes, gifts, etc.; expenses that happen on an irregular basis.

Gift giving in Retirement

To help you think through what you might spend on gifts in a year consider these items:

Consider your:
Immediate family
Extended family
Friends
Your children’s friends, teachers, coaches, etc.

Consider occasions:
Christmas
Hanukkah
Birthdays
Weddings
Graduations
Baby showers
Hostess gifts
Funeral flowers
Get well flowers

Consider travel related to gift giving:
Christmas
Destination or out of town weddings
Baby showers
Funerals

What does this average you annually, divided by twelve; this gives you an estimated amount that you spend per month.

Retirement planning is setting your self up to be able to afford the lifestyle and activities that are important to you.  Part of that is determining what is important to you and how much it costs.

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Coffee with Michele, Jan and Diana November 2017

Come to the Community Room at Kaldi’s in Chesterfield with your financial planning, tax, and Medicare questions and enjoy a cup of coffee with CERTIFIED FINANCIAL PLANNER™ professional Michele Clark, Jan Roberg, Enrolled Agent, and Diana Wilson, Health Insurance Professional.

There is no prepared presentation, just a casual conversation in a small group environment; your opportunity to pick our brains. Feel free to invite family or friends who could benefit from an hour with us. Open to registered attendees only, due to the size of the room.

It will be Medicare season, bring your questions.

Coffee with Michele, Jan, and Diana
Kaldi’s Coffee Chesterfield
Wednesday, November 8th
10:30 am to 11:30 am

RSVP online Clark Hourly Financial Planning and Investment Management RSVP or call 636-264-0732. Space is limited. Coffee and pastries are complimentary.

Kaldi’s Coffee Chesterfield Missouri address and map. The Community Room is an enclosed room in the back of the coffee shop.

We hope you can join us!

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Wine Tasting with Jan and Michele

Come to the Education Room at Total Wine and More in Manchester, MO with your financial planning and tax questions and enjoy some wine with CERTIFIED FINANCIAL PLANNER™ professional Michele Clark, CFP®, CRPC® and Jan Roberg, Enrolled Agent.

There is no prepared presentation, just a casual conversation in a small group environment; your opportunity to pick our brains. Feel free to invite family or friends who could benefit from some time with us.

Open to registered attendees only, due to the size of the room.

RSVP at Roberg Tax Solutions or call 636-264-0732.

Wine with Michele and Jan
Town and Country in Manchester Meadows
Tuesday, October 24th at 5:30 pm.
13887 Manchester Road
Ballwin, MO 63011

Hope to see you there!

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