I knew things were bad when I e-mailed Richard Silver, my patient realtor, one Sunday at 9.30 p.m.
“What do you think of this listing?” I asked. “Is it worth looking at?”
The listing in question was a semi out of my beloved Cabbagetown neighborhood and had a basement apartment. Now that I am considering the dreaded D-word (downsizing), maybe it would be a good idea. The basement apartment could provide income in case I am struck by lightning and can’t work for a while. It was still downtown, so moving there wouldn’t be that much of a change. Or would it?
“Do you know people in that neighborhood?” came the patient reply. “It can be traumatic to move to a new area if you don’t know anyone.”
Oh. Well, no, I don’t actually. Would this be a problem? Perhaps there is more to the D-word than I have considered.
“It’s also risky to buy without selling,” the voice of reason continued.
“Yes,” I sighed. “It’s all part of this process. When do I retire? Do I semi-retire? What does this look like? What should I be thinking of?”
“That,” said the soothing voice. “Is the conversation so many people are having today.”
Right. Gulp. OK. What next? What should I do?
Statistics Canada very helpfully tells us that the leading edge of Canada’s baby boom is turning 65 in 2011. That means all us folks in our 50s are not far behind. People – many many people – are starting to think about retirement.
How long should I keep working? Most importantly, how long do I need to keep working? As a self-employed consultant, my pension plan is what I have saved privately, plus my home, which I have been lucky enough to be able to buy.
People are working longer and they are working differently. Many do not fully retire when they leave their workplace. It’s a whole new ball game and much different than the era of the golden handshake at age 65, followed by many pleasant days reclining in a hammock.
I feel like I am standing on the first square of a new and confusing life-sized board game, with no clue how to proceed. Must start somehow, so I roll the dice.
I call my wonderful and perennially cheerful financial consultant. I love him because he is younger than I am and will still be working when I retire. I am thinking of downsizing, I tell him. How much of a difference between the selling price of my house and a smaller house makes a sale worthwhile?
I feel like I need a new way of thinking. All this time, I have had the “trade-up” mentality. Buy a house and trade up when you can. The rules were so simple! Is a profit of, say, $100K worthwhile in making a move?
“Yes!”” he exclaimed. (He really is a cheerful chap.) “Even reducing your debt by $100K is worthwhile. Don’t forget, you have to pay your mortgage with after-tax dollars, so $100K is actually much more and will knock off a substantial chunk.”
“Of course, it is better to realize more of a gain, but any debt reduction is a positive thing.”
He invites me to call him when I have found something I want to buy and he will run some numbers. Another lesson: involve your financial advisor when you are thinking of making a move. I have advanced a few steps on this new board game.
I roll the dice again and find out more.
Don’t forget about selling and moving costs when you factor in the net gain of your new, smaller house, Richard says. Land transfer tax, commission, moving costs and any repairs and renovations to your new home can add up to a hefty sum. Yes, good, I have taken a few more steps.
So what to do next? Keep looking, keep thinking and hope that an answer presents itself?
I am learning that this is a process. It’s a few steps forward, a few steps back, a bit of muddled thinking and the occasional bolt of revelation and clarity.
It seems like talking to your trusted advisors, mixed in with a little divine intervention, should do the trick. I will make it my intention, and it will be so (this feeling may evaporate once I have forgotten what I read in Dr. Wayne Dyer’s latest book.)
It also means reevaluating what you think you need. Do you need all that room for your grandmother’s china, a separate bathroom for your guests and a dining room that doesn’t get used? I highly recommend reading David Chilton’s new book The Wealthy Barber Returns for his straightforward and no-nonsense advice on reducing and simplifying. I found it quite inspirational.
In preparing to write this story, I Googled “downsizing” and was greeted by many colourful sites about how to de-clutter! It’s not downsizing, it’s “right-sizing!” This gave me an instant headache and I quite forcefully hit the close button. That, as they say, is a topic for another day.
How to proceed from here with the D-word will likely boil down to the usual formula I have relied on for so long: sheer dumb luck and intuition mixed in with a bit of fortuitous timing. And a few more late night emails to Richard.
Karin Ivand is a communications consultant who hopes to stay in Cabbagetown after she successfully figures out how to downsize.
I really want to thank Karin for sharing her feelings on the process that she is experiencing. As a Realtor, I see my clients trying to figure out what they want to do and when they want or need to do it.
My guiding rule is to think of it as “right sizing” when you can control your options and timing always with safety in mind. Enjoy and thanks again Karin!