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This article was written by Edward Jones for us by your local Edward Jones Financial Advisor, Tyler Simonds. Edward Jones, Member SIPC. You can reach Tyler at 410-398-4214

Should you downsize when you retire?

When you retire, you’ll experience many changes – should one of them involve your home?

The issue with downsizing is one that many retirees will consider. If you’re open to a change you could find that moving to a smaller house, a condo ran apartment may make sense for you.

Let’s Consider Some of the Advantages of Downsizing: 

You could save money.

Moving to a smaller space could lower your utility bills and upkeep cost.

You could save effort.

A smaller home will mean less maintenance and cleaning.

You could de-clutter

Over the years, most of us accumulate more possessions than really need. Downsizing gives you a chance to de-clutter. And you can do some good along the way, too, because many charitable organizations will welcome of your items.

You could make money.

If you’ve had your home for many years, it’s certainly possible that it’s worth more — perhaps a great deal more — than what you paid for it. So, when you sell it, you could pocket a lot of money — possibly without being taxed on the gains. Generally, if you’ve lived in your home for at least two years in the five-year period before you sold it, you can exclude $250,000 of capital gains, if you’re single, or $500,000 if you’re married and file taxes jointly. (You’ll want to consult with your tax advisor, though, before selling your home, to ensure you’re eligible for the exclusion, especially if you do own multiple homes. Issues can arise in connection with determining one’s “primary” residence).

But downsizing can also entail some drawbacks. First of all, it’s possible that your home might not be worth as much as you had hoped, which means you won’t clear as much money from the sale as you anticipated. Also, If you still were paying off a mortgage on your bigger home, you may have been deducting the interest payments on your taxes — a deduction that might be reduced or lost to you if you purchase a less-expensive condo or become a renter. Besides these financial factors, there’s the ordinary hassle of packing and moving. And if you’re going to a much smaller living space, you may not have much room for family members who want to visit or occasionally spend the night.

So, as you can see, you’ll need to weigh a variety of financial, practical and emotional issues when deciding whether to downsize. And you will also want to communicate your thoughts to grown children or other family members who may someday have reason to be involved in your living space. In short, it’s a big decision — so give it the attention it deserves.

Read more articles from VOM Magazine here: https://www.veteransoutreachministries.org/vom-magazine/

This article was written by Edward Jones for us by your local Edward Jones Financial Advisor, Tyler Simonds. Edward Jones, Member SIPC. You can reach Tyler at 410-398-4214

If you’ve ever been involved in building a house — or even if you’ve just heard about it — you know that there’s a well-defined process to be followed. But here’s something to think about: Some of the same steps connected to constructing a home are the same as those needed to build an estate plan.

What are those steps?Here are some to consider:

• Get the right “builder.”
  Unless you are experienced at DIY, you’ll probably have to hire someone to build a house for you. Of course, you’ll make your wishes known about what you want your house to look like, but you’ll be relying on the builder’s expertise. And the same is true with estate planning — you’ll want to share your goals and vision with a legal professional who’s experienced in creating estate plans.
• Build a strong foundation.
  “Every house needs a strong foundation” isn’t just a metaphor — it’s true for every house that’s built. And when you create an estate plan, you also need a foundation that includes whatever basic elements are appropriate for your situation — a will, a living trust, power of attorney, etc.
• Make the necessary additions.
  Even if you’re pleased with your new house, you may eventually decide to make some changes, such as adding on a new bedroom or bathroom. And the structure of your estate plan may need to undergo some modifications, too. For example, if you drew up a will two decades ago, but haven’t looked at it since, it may be out of date — especially if you’ve experienced changes in your life, such as new children or a divorce and remarriage. That’s why it’s a good idea to review your estate plans at least every few years.
• Protect your investment.
  Of course, when you build a new house, you’ll have to insure it properly. And while there’s no actual “insurance policy” for an estate plan, you do have ways to protect it. For one thing, you need to make sure beneficiary designations on retirement plans, investment accounts, insurance policies and other assets are correct. These designations are powerful and can even supersede the instructions in your estate-planning documents. So, as mentioned, if you’ve had significant life changes involving your family, you need to ensure your beneficiary designations are updated if you want to protect how insurance proceeds, investments and other assets are distributed.
• Watch for mistakes.
  It’s unfortunate, but mistakes do happen in home construction. Water stains can indicate that water is seeping through cracks in the foundation. Or cracks in retaining walls and garage floors could be a sign that the concrete structures were installed improperly. Estate plans can also contain errors or bad choices. Some are inadvertent, such as failing to put intended assets into a trust, but others are done with the best of intentions, such as naming adult children as joint owners of your assets. Even if your children are quite responsible, this move could give their creditors access to your money. If you want your children to be able to step in as needed, you could find other methods, such as giving them power of attorney.

Following these “construction” techniques can help you create an estate plan that can last a lifetime.

Read more articles from VOM Magazine here: https://www.veteransoutreachministries.org/vom-magazine/