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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Michele Clark in the News: US News and World Report about Mistakes Grandparents Make When Helping Pay for College

I was honored to help US News and World Report recently in their article “6 Mistakes Grandparents Make When Helping Pay for College”   we had a nice long conversation which was used for a couple of articles.   Discussed in this article are making sure that you do not miss tax breaks, that if you choose to use savings bonds that you title them correctly, and that you are careful about the timing of your gift to the grandchild so that you do not harm their financial aid chances.

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Coffee with Michele Clark, CFP® June 2017

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

Financial 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
Kaldi’s Coffee Chesterfield, MO
Wednesday, June, 14th, 2017
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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