Empty Nesters Who Downsize Their Homes Probably Aren't Saving Money, According to Go Banking Rates Report

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Many older homeowners, particularly empty nesters and retirees, believe that reducing their mortgage loans and living costs by downsizing their homes will help them save money. A recent report from the Web's leading personal finance resource, http://www.GoBankingRates.com, explains that often times “downsizing” can cost a homeowner even more money than staying put.

Empty Nesters

Empty Nesters

Saving money in retirement or after adult children have left the family home is definitely possible, but downsizing in the traditional sense may not always be the answer.

According to a recent survey by the Demand Institute, more than 40 percent of Americans ages 50 to 64 plan to move within the next five years. Many of these older Americans will opt for a smaller place with the goal of saving money, but as Go Banking Rates finds, the act of downsizing a home in order to reduce mortgage loan and living costs often ends up costing more money.

In fact, CPA Sally Herigstad told Go Banking Rates that unless a homeowner can cut total expenses by 25 percent or more, they shouldn't bother.

Herigstad explains, “By the time you factor in selling costs, including commissions, moving expenses, and the costs of buying or renting a new home and buying furniture to go with it, you won’t be ahead. If you realize less from the sale of your old home, you might even be farther behind.”

Go Banking Rates also discovers that in addition to expenses associated with selling a home and buying a new one, common additional costs can include new fees, which are detailed in the report.

The good news is there are still options for giving up a home that is too big or costly to keep, without costing older homeowners in other ways. "Saving money in retirement or after adult children have left the family home is definitely possible, but downsizing in the traditional sense may not always be the answer," says Go Banking Rates managing editor, Casey Bond. "Empty nesters and retirees who want to cut their cost of living should consider alternatives as well, like renting."

To read the full report, please click here.

Ms. Bond adds, the most important step when deciding the best course of action is to "do the math."

About Go Banking Rates

Go Banking Rates is a national website dedicated to connecting readers with the best interest rates on financial services nationwide, as well as informative personal finance content, news and tools. Go Banking Rates collects interest rate information from more than 4,000 U.S. banks and credit unions, making it the only online rates aggregator with the ability to provide the most comprehensive and authentic local interest rate information.

Additionally, Go Banking Rates partners with a number of major media outlets such as Business Insider and US News & World Report to provide compelling and edifying personal finance content, and its expert editors have been featured and quoted on several premier finance websites like Yahoo! Finance, Forbes, The Street, Huffington Post and more.

GoBankingRates.com belongs to a network of more than 1,500 finance websites, including GoInsuranceRates.com and GoFreeCredit.com. These sites receive more than 2 million visits each month.

For questions or comments, or to schedule an interview with a Go Banking Rates editor, please contact Jaime Catmull, GoBankingRates.com Director of Public Relations, at JaimeC(@)GoBankingRates(dot)com, or 310.297.9233 x261.

Source: Demand Institute, “The Shifting Nature of U.S. Housing Demand,” May 2012.

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