Showing results for the tag: #benefits Show All Articles

Big Benefits of Downsizing

Big Benefits of Downsizing

The old sayingless is moremay also hold true when it comes to the size of your home. It may be tempting to think that the best home is cavernous, with lots of extra square footage you can fill with possessions over time but thats not always the case. There are many potential short- and long-term benefits to downsizing. Here are just a few ways going small can help ensure your home remains a haven and not a hindrance to your financial goals. 

Lower PITI 

Downsizing has the potential to reduce your mortgage payments as well as many other costs associated with your home including taxes. For example, if you pay $6,100 a year in property taxes, moving to a home that costs 25% less could save you $127 a month. Your insurance premium may be lower for a smaller home as well due to reduced costs of labor and materials needed to affect repairs in the event of a claim.  

Small Space Efficiency 

A cozier home can reduce your environmental footprint and also help save on resources, particularly if youre downsizing your lawn as well. Youll have less area to maintain, making it easier to handle yard maintenance or other chores yourself instead of hiring someone to do it for you. Heating and cooling less square footage is typically less expensive, leading to lower utility bills and a potentially less costly HVAC system. Moreover, a smaller home can promote a more minimalist lifestyle, encouraging you to prioritize quality over quantity and cultivate a greater sense of contentment with fewer material possessions. 

Fortify Your Financial Future 

The economic benefits of downsizing are long lasting. A more affordable home can lead to valuable home equity, which could help fund retirement savings or other financial goals. A smaller home may also help you pay off your mortgage sooner, freeing up extra money each month to fund a dream vacation or an earlier or more comfortable retirement. And the savings youll accrue by downsizing mean youll be better equipped for a financial emergency. 

Good Things Can Come in Small Packages 

While many homebuyers may automatically aim for a bigger place each time they move, bigger isnt always better when it comes to your bottom line. If you assess your lifestyle honestly, you may find that your square footage exceeds your needs and is creating an unnecessary strain on your budget. Think carefully about your actual requirements, calculate what that unused space is really costing you and consider the many potential benefits of downsizing.  


Understanding Your Social Security Benefits

Understanding Your Social Security Benefits

Have you looked into your Social Security benefits and decided it was just too confusing to deal with right now? You wouldn’t be alone. It involves a lot of numbers and calculations, and not surprisingly there are some pretty detailed rules. But Social Security plays an important part in most people’s retirement plan, so we’ve done a little simplifying to help you understand your options and how it all works.

Accessing your account information online. The amount of the benefit you get each month is determined by a formula based on your work history and how much you’ve contributed to the fund (spousal benefits may be calculated differently). So how do you know what the amount will be? To find your personal benefits, you need to create an account on the Social Security Administration (SSA) website. The SSA has access to your records and can calculate your exact benefit.

What is your full retirement age? While we tend to think of retirement age as 65, what is known as your “full retirement age” according to the U.S. government is different and depends on the year you were born. The SSA website has an informative chart that enables you to easily determine your full retirement age. But as an example, for those born before 1955, full benefits begin when they turn 66 (which would have occurred by 2020). For those born in 1955, that changes to 66 and 2 months, then 66 and 4 months if you were born in 1956 and so on. If you were born in or after 1960, your full retirement age is 67. Keep in mind that, although changes in the full retirement age don’t happen often and are generally phased in gradually, they can occur.

The impact of accelerating vs. delaying benefits. The earliest most people can begin receiving benefits is age 62, but your benefits will be lower if you begin receiving them before your full retirement age (there are different rules for other Social Security benefits, such as those for disability or survivors). Monthly benefits are reduced by a percentage for each month between your actual retirement date and your full retirement date.

If you start receiving benefits at your full retirement age, your monthly benefit will be larger than if you elect to receive benefits earlier. And if you wait beyond full retirement age, the monthly benefits are even higher. Once you reach 70, however, your monthly benefit stays the same, and there are no more increases except for the annual cost of living increases that all recipients get.

To find out how much your payments will be depending on when you elect to start receiving benefits, go to the SSA’s online calculation tool. The calculator will use your date of birth and desired retirement age to show the effect of your retirement choice on the benefit you receive.

A very personal choice. The decision of whether to begin receiving your benefits before or after full retirement age rests on your own individual circumstances. There are some who advocate taking benefits somewhat earlier than full retirement, arguing that — depending on your health history and life expectancy — you could receive more in total benefits by filing for them earlier.

If you expect to live into your late 80s, or 90s, then delaying the payments may make sense. Or, perhaps you have a spouse or other family member who requires special care. What is the value of being able to “throttle back” and devote more time to them as opposed to working to full retirement age or beyond? There is no right answer for everyone when it comes to making this important decision. 

For help with Social Security retirement planning, talk with a financial professional who knows the system and the rules. Then do what’s best for you and your family.


Page 1 of 1
  • 1