Downsizing In Retirement: Any Regrets?
Five years ago this month we downsized for early retirement. With a series of yard sales, charity pickups, and gifts to friends, we reduced the volume of our possessions by about one-half. We then carefully staged our 4-bedroom family home where we’d lived for 17 years and put it on the market with a trusted realtor.
The house sold within 24 hours. Before we knew it, and long before expected, we had placed our remaining possessions in storage and launched on a 6-month road trip in our small RV. That trip concluded with settling in our ideal retirement location, a medium-sized mountain town in the American southwest, where we still find ourselves today.
So how is it going for us now, five years later? Do we have any regrets about downsizing our life and moving to a place half the size in another region of the country? Is there anything we’d do differently? Has our downsizing “stuck” or have we re-inflated our lifestyle?
For starters, let’s define “downsizing” as it relates to retirement. Generally speaking, that term means selling a large family home and moving into a smaller space for the empty nest stage. That implies less and smaller furniture, appliances, tools, gear, and so on.
In our case, downsizing also applied to vehicles — both number and size. In some cases downsizing could even apply to discretionary expenses like dining out, travel, or recreation. But, given the opportunities you finally have for your free time in retirement, you might not want to short-change yourself in those departments.
In Tennessee we owned a 2,200 square foot, 4-bedroom house with 2-car garage, sunroom, and decks on a spacious treed lot. At the end of 2013, once we had settled in Santa Fe, we were renting a 1,200 square foot, 2-bedroom townhome with 1-car garage, essentially no front yard, and tiny back yard.
We still live in that 2-bedroom townhome today. In general, we like the convenience and the maintenance-free lifestyle of renting in an urban area. We love our neighbors and we’ve grown accustomed to the ease of small-city living.
We are within a 10-minute drive of just about any service we need on a regular basis. That includes grocery stores, drugstores, restaurants, and doctors.
When something goes wrong with the house, we pick up the phone and call the management company. They take care of it.
Adjusting to a Smaller Space
We’ve had to make modest adjustments to living in a smaller place. Though, it hasn’t been that big a change.
Our previous home was not large by many standards. It held a family of three people plus pets, whereas now there are just two of us.
We’ve moved furniture and adjusted rooms to live here more comfortably and efficiently. Overall, though Caroline would appreciate more space, functioning with several fewer rooms hasn’t been a big deal.
Psychological Benefits and Challenges of Renting
We’ve also had to make a small psychological adjustment to not owning real estate. On the personal side, there is a cost to feeling you aren’t in complete control of your environment. Maintenance on our place, while we don’t have to pay for it, has been of variable quality.
We hold our breath each year when the time comes around to renew our lease, knowing we might have to move on short notice, or watch the rent go up. On the investment side, we have to make sure we are exposed somehow to real estate asset classes, or accept not having that diversifier in our portfolio.
We are open to the possibility of owning a home again, down the road. But, much as we love Santa Fe, and despite having spent a number of days house shopping, we haven’t seen a compelling reason to own here yet.
The area presents a number of issues including water shortages, bureaucratic government, unreliable contractors, competing land interests, and inflated prices. These issues make owning here less than desirable for us.
Becoming a One Vehicle Household
Like most modern couples, for all of our married life, we owned and maintained two vehicles. At the start, each of us commuted to jobs in different directions. When, at times, one or the other of us was working from home — me starting a business or Caroline raising our son — we kept the two cars out of habit and convenience.
In the lead up to my retirement in 2011, we sold my wife’s Volvo station wagon and started “sharing” my Toyota Prius. I considered that a down payment and trial run for the frugal, downsized early retirement lifestyle that I was targeting.
I say “sharing” because at the time Caroline was still commuting to her job. In later years, she has done the lion’s share of the shopping and errands for us. So, for the nearly eight years that we were a one-car couple, she put most of the miles on our vehicle.
That was fine with me. She tolerates shopping; I don’t. For my minimal errands, I was happy enough to bicycle around town. And that was facilitated after our move by our convenient downtown location. Even when she would travel and leave the car at the airport for a week, there was little inconvenience to my lifestyle.
Downsizing Doesn’t Have To Be a Permanent Decision
Then, last year, we added another vehicle. Caroline got a late-model used Subaru Forester. I inherited the older Forester we had swapped the Prius for.
The second vehicle was purely a splurge based on our financial stability and the growth of our retirement assets. Living frugally in our early retirement years, running a small blogging business on the side, receiving a small inheritance, and lucking into a long bull market have all given us a financial cushion.
And so Caroline got a “new” car and I got my own vehicle again. The additional expense, after the initial purchase, has been negligible: probably less than $1K/annually for insurance and maintenance. The costs per mile driven look about the same to me whether you’re operating one or two vehicles.
The second vehicle has been a nice luxury for us, though not a necessity. I generally use “my” car just once or twice in a normal week, usually for outdoor activities. And, I still get a kick out of being able to go out on my own, without having to ask for the keys!
During our child-rearing years, I had always fancied us a relatively frugal and modest family. Had you been a dinner guest in those days, you would likely have found our house relatively spacious and uncluttered.
But I can vividly recall the yard sales we held out of our garage and driveway on sultry Tennessee days five years ago. The quantity of stuff staged in our two-car garage for those sales was unbelievable and overwhelming.
Used toys, old furniture, tools, clothing, books, kitchenware, camping gear, you name it. The garage was packed full from side-to-side and front-to-back. It took us two full days of yard sales, plus several trips from friends outfitting other homes, and finally a call from a Goodwill truck to liquidate the dregs.
Rebuilding in Retirement
Now, in retirement, it feels sometimes like we might be rebuilding our “estate.” Truth is, we have added back a non-trivial amount of stuff.
Not a week goes by without several Amazon boxes appearing at our doorstep. But much of it is consumables, and the rest — gear, clothing, tools, small appliances — doesn’t take much space.
Our 2-bedroom townhome has about the same amount of living space as it did when we arrived nearly five years ago. We aren’t adding bulk. About the only large items we’ve added since moving in are some patio furniture, an Ikea chair, and bicycles.
Importantly, we haven’t significantly re-inflated the cost of our lifestyle. The items we’ve added are “one-off” — they don’t increase our monthly living expenses by requiring more space or maintenance.
We still make do without an external storage unit. And, when I got my own vehicle last year, we were even able to consolidate storage space in our small garage to make room for it.
Lessons Learned From Downsizing
Downsizing five years ago closed out one major chapter in our life, and opened another one. It was not an easy process. There were tears — sadness at saying goodbye to our family years and many of the accompanying possessions.
There was a lot of hard work and many difficult decisions. But the process was inevitable. Only the timing was open to choice.
Take Your Time if Possible
In our case, we downsized immediately after my wife retired. And we did it quickly. It was all over in about two months. That was largely because our house sold so quickly.
Based on what we saw and heard about the real estate market at that time, we had every reason to believe that our home could take 6-12 months to sell. We didn’t necessarily want to remain in Tennessee that long if not required. So we jump-started the process. But when our house sold overnight, we were caught by surprise.
In retrospect, having little more than a month to complete our downsizing and move out of our family home added trauma and time pressure to the start of our early retirement. The emotional toll was high.
We don’t regret the decisions we made, and are happy where we wound up. Still, if we had it to do over again, we wouldn’t want to feel so rushed about leaving our family home for new pastures. Ultimately, though we left too fast, we don’t regret leaving.
Reassess What Matters
Thinking back, do we miss anything particular about our family home? It was a functional house in a nice location in one of the better neighborhoods near the city. It had all the room we needed, and a green space with trails across the street. But, in the end, we just weren’t attached to that house.
Caroline would like more space in our current rental — separate offices, and a guest room. Sometimes she feels “cooped up.” I’d always appreciate a little more front yard privacy than urban living affords.
But it’s hard to think of anything specific that we miss — other than maybe the gas fireplace, and the remodeled kitchen. And those are luxuries that we could find or recreate, if they were truly important to us.
How about the stuff inside the house? Did we sell or give away anything during our epic yard sales that we later regretted?
With that many items changing hands, there was bound to be a misjudgment or two. But, truth is, only once or twice in the intervening years have I ever thought of something I might be missing — usually a functional item, like a tool.
Stuff like that is easily replaced when you need it. The psychological benefits of not having it, and a host of other junk, in your life are immense.
Benefits of Downsizing in Retirement
Downsizing earlier rather than later in retirement has tangible financial benefits. It also frees you of possessions that, while they may have been valuable in an earlier stage in life, can weigh you down as you enter this new phase.
Financial Benefits of Downsizing
The initial and most tangible benefit of our downsizing was financial. I wanted no chance of damaging our nest egg at the start of our early retirement.
Selling our family home add about a quarter-million liquid dollars to our investable assets. It also eliminated many of our largest ongoing obligations. (Note that downsizing your home also downsizes your insurance, maintenance, taxes, and utility expenses.)
Yes, in theory, those expenses are included in the monthly rent we eventually paid in our new location. Though, depending on the area, the rental analysis can work in your favor. When I ran the numbers, it did for us.
Also, for us, the financial freedom, especially in the first six months while we were on the road living out of our RV, was tangible. We’d cut our monthly expenses to the bone and we could go anywhere and do anything we wanted for as long as we wanted. It was a great feeling!
Shedding Unnecessary Weight
At this point we have settled into a new and very different life in Santa Fe. Yes, the transition involved some pain, perhaps more pain than necessary due to the speed with which we sold our family home. But some discomfort is unavoidable when going through life’s major changes.
The underlying reality is that there is no point in hanging on to the past. That just delays your ability to enjoy what’s next. Our child-rearing years were done and over.
Downsizing was simply a necessary companion to that fact. We kept the things that really mattered and got rid of the rest.
Not infrequently I hear heartbreaking stories about older people living in huge houses surrounded by the clutter of their earlier years. Whatever we face going forward, we won’t be counted among those sad cases.
We’re grateful to have worked through our family stuff five years ago. We aren’t bogged down by it now, and our descendants never will be.
Downsizing early has allowed us to focus not on “stuff,” but on experiences, which are the main source of happiness in most of life, including retirement….
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This post was originally published June 4, 2018 and was most recently updated on October 21, 2021.
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[The founder of CanIRetireYet.com, Darrow Kirkpatrick relied on a modest lifestyle, high savings rate, and simple passive index investing to retire at age 50 from a career as a civil and software engineer. He has been quoted or published in The Wall Street Journal, MarketWatch, Kiplinger, The Huffington Post, Consumer Reports, and Money Magazine among others. His books include Retiring Sooner: How to Accelerate Your Financial Independence and Can I Retire Yet? How to Make the Biggest Financial Decision of the Rest of Your Life.]
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