The Downsizing Trap Nobody Warns You About

Hey, if you're planning to retire in the next year or two and you're thinking that downsizing is finally going to simplify your life and then free up some extra cash, you might be walking straight into one of the biggest traps that nobody talks about. Because what looks smart on paper may quietly cost you tens of thousands of dollars and drain you completely emotionally and leave you with a smaller space that actually feels a lot more stressful than your current home. The good news? Once you know these hidden downsizing traps, you can avoid regret and create a retirement that is truly simpler, happier, and a lot more financially smart. And you know what? They almost always say afterwards, "I wish somebody had told me these things before I sold my house." Now, look, this is not a one-size-fits-all situation. I know there's people out there and they always want that quick answer. But smart people will stick with me through this entire video. You know why? Because there's a lot of moving parts here and you'll get the exact knowledge that most retirees only discover the hard way. And I want you to avoid the costly mistakes so you can actually enjoy a smoother and happier retirement. So, give me a thumbs up if you're good with that. So, I wrote my notes because there's seven sections to this video and I want you to know what you're getting into, okay? And some people just can't wait, so here it is. There's only seven sections, but it is going to be long and I'm going to get into the details that you really need to know. So, number one is the financial reality check. You need to know this because it's going to hit you a wall at first. Number two is the practical and logistical nightmares that you won't realize what you're getting into until you're too far in. Number three is the emotional and psychological traps. Number four is the space, the lifestyle, and the daily living mistakes. Now, this is how actually life looks when you're retired. Number five is the social and family dynamics and relationships change. Number six is future-proofing health realities. Look, aging sneaks up. We all know this. And number seven is the location, the housing, and the timing mistakes. This is a big picture decision that you need to know. And then I'm going to give you some bonuses on combo traps and some action steps that you can actually take so you leave empowered and you're not scared about all this because it is a big move. So, let's dive in. Number one is the financial reality check. Now, the transaction costs when you're selling your home can quickly erase 5 to 7% of your home equity. You think about it. Realtor commissions, closing costs, staging, repairs, whatever else needs to be done. Can be more than that, too. So, overestimating what your current home's value is and then how much you're actually going to get out of it is a trap that you want to really make sure that you're not falling into, "Oh my gosh, I'm losing 30 to 60,000 dollars less than I expected, right?" And then underestimating the true cost of a cheaper new home. Now, a lot of times you got to factor in there's fees, there's insurance, and there's other costs. There's moving costs and we're going to get into that in a second. And then talking about capital gains surprises. Look, if you get made money on your house, you might be hit with a tax or think about this, Medicare premiums can hike because nothing stays the same. I'm going to get into that because there's always something that's changing. You need to think ahead. And then moving expenses. Guys, moving is not like it used to be. It's expensive. So, a lot of people sell their things before they actually get moving. The other thing is rebuying items that you donated or you sold it today's prices and then you move and then you got to buy it back. We're going to go through some of that stuff. And then prepayment penalties or lost deductions on your current mortgage. Most people don't realize if you sell something and you paid it off, you're not getting the interest deduction on your following year's taxes. So, depending on your scenario, think ahead on that. And then the new home requiring almost immediate renovations or some kind of an update after an inspection or you move into it and you find out about it. These are pitfalls that you need to watch out for. And then storage. You move into a smaller house, but you still have your stuff and then you got to get in storage. You put it in storage and then your storage fees become one of those permanent expenses. That's a big mistake. Downsizing is downsizing. And then the last thing on this financial reality check is the inflation and rising health care. Nothing is going down in price, guys. Everything keeps on increasing. We see this year after year. And they're eating up what you had as equity or your income in retirement much quicker than you thought. So, let's go to number two on this list. It's the practical and logistical nightmares that I see that happen over and over again. Again, these are the pitfalls you want to avoid them. A lot of people say, "Well, this is a lot harder than I thought it was going to be." Well, it's moving. Think about your age and if you're in your 60s, you're going to be able to do things or 50s for that matter that you won't be doing in your 70s or 80s for that matter. It gets a lot harder the older you get. So, if you're procrastinating and kicking the can down the road and say, "Well, I'll do it when I need to." Here's what you need to watch out for these next ones. The sheer physical and the time cost of actually sorting out decades worth of stuff that you've saved up and you may end up with 5 or 10,000 dollars in your pocket for moving cash if you're not rushing through and you're getting through and you're making yard sales and you're doing all kinds of things to get rid of it. But here's the thing. Staging and pre-sale fixes on your current home are another thing that are going to really it's a logistical nightmare. A lot of people don't realize that they need things to be done on their house. And who you going to get to fix that and what are you going to do about it? And then like I mentioned is the packing, the lifting, the coordinating. All this is exhausting. It's In your 50s, it's exhausting. 60s, 70s, 80s. You see what's going on? So, the longer you wait on this, the harder it's going to become. And then overlapping bills. Look, you could have a house that's for sale. You could have moved to a new house. You're going to have double the utilities, double the taxes, double the insurance, uh and and the transfer time. Even if it's within a month, you got to plan for that because there's going to be money on both sides. And then the home inspection misses in a new home. Even brand new spanking homes. These are things that are surprise and you only find them after you've moved in. And some of these things may or may not be covered under warranty even if you're buying a brand new home, but buying the right brand new home is super important and that's something that we do and I'm going to get to you a little bit later. And inflation on new home systems, the HOA fees. Will they be re-increasing in the future? The garbage quirks. Is it included? Is it not included? Is this something I need to hire somebody to do? And the smart tech. You know, all this you got to get to adjusted. You hadn't set up at your house, but you might need internet and you might need cable and you might need all the other whatever else you need in your new house and it's taking time and money to set all that stuff up. Which leads us to number three. It's a very exciting time to be in retirement, but trust me on this, there's an emotional and psychological trap that you don't want to fall into. Now, selling during your early honeymoon retirement high is what I call it and chasing the fantasy that most real retired people don't live that lifestyle. They get into a a normal lifestyle. And then losing your sense of identity because you're not doing those same things that you were doing on your job. You moved. Uh the family, the friends, all these things will be changing when you do move. And then regret over decluttering the sentimental items or the heirlooms. I got rid of everything right away. Sometimes you'll end up with regret if you didn't have the fill in the blank. Does any of this make sense so far? Give me a thumbs up. Let me know. And then the post-move, "I'm cramped. I'm feeling a loss of my personal space or my privacy." Now, again, if you moved and it's too small, that can be a mistake. And this is a big one I see all the time is decision fatigue. I can't make a decision on where I want to move. I can't make a decision on which community, which home, which realtor. I keep looking online. I've been doing this for years. I don't know where I'm going to go. Decision fatigue. It's procrastination because you won't don't want to make the wrong decision, but yet it's actually hurting you because time is ticking. The other one is big as seller's remorse, okay? Once that house is gone and it's gone and you watch strangers in your home, it feels different because it's not your home anymore. You sold it. But moving forward with a plan is the key to this. Number four on the list is the space, the lifestyle, and the daily living oversights. A lot of people don't think about this is how I'm actually going to live. How is this going to look? Not the glossy brochures, not the junk you see online, but how are you actually going to live day-to-day? Because you may be underestimating the space for hobbies. If you have a hobby and you downsize is too small, your projects or even grandkids or people visiting your house, right? Where are they going to stay? This is a big one for a lot of people is losing the outdoor. I'm outdoors today, but losing the outdoor garden space or the stuff that you used to actually do outside and you actually loved and you've given that up because you moved on to something else and maybe you're not doing that anymore. And giving up the personal space. If you have a spouse uh and your significant other is driving you nuts, everybody needs their personal space and they've got to get away every once in a while. So, having my space is very important. And the new home, if it doesn't lack the flexibility for that stuff or the hobbies or your travel gear or all that stuff, just think forward, right? Think forward. And then realizing the just-in-case stuff. You know, the the holiday hosting and the kids returning and stuff like that. If you're in a small place and you don't have room for that, you know, think about that. And then the pets, okay? If you have a pet, what does the HOA, if you're in one, a lot of new homes are in HOAs, whether it's condo or a community, what do they allow? Is your pet allowed? Is it um a problem in there? How about that smaller yard or the space of where you're going to walk your dog or where your dog can go? Things to think about, right? Which leads us to the number five thing on my list here is the social and family dynamics. Now, relationships always change. It's like grass, right? We think that we're staying still by cutting the grass, but yet there's weeds growing and there's parts of the grass that are dying off and you know, stuff changes all the time. We're trying to keep that constant medium, but here's the thing. Moving away from your built-in support system of what you remember, and maybe you didn't have one, but you're going to grow one in your new place, you know, that could be your doctors, your handyman, your your uh neighbors or friends. These are things that you're going to have to think about when you move because later in life, it does get harder to meet new friends, but if you have like-minded people and you're moving around like-minded people, it is super easy. Now, if you're in the wrong place and you're stuck there, the social isolation of living where you live and not moving to a place that's more conducive to where you want to be, you get stuck in the loop. You're looking at all these people around you and maybe they're just not that great, right? That is regret if you don't move as well. And then it's the expectations from your family or your children expecting you to keep the big house and not have a good time and want their retirement and it's your life, guys. You worked hard for this. You should be spending your money. You should be using your money. It's what you've invested for. It's what you worked for. So, make sure your time is put to use. Which leads us to number six. And number six is future-proofing and health traps. Every single day, I get calls into my office from something that happened to somebody, whether they've moved or haven't moved or were planning to move. Here's the deal. What you do or not do could affect you for the rest of your life. It is fact. We don't have control over everything, but buying a home that works for you and does not fail you later in your life when you can't do it, like the stairs, the bathroom, the no main floor living, or I moved to Florida and it's hot all the time and I can't even go outside anymore because I used to enjoy it, but it's ridiculous now. That's the stuff you need to think ahead on because ignoring proximity to the health care specialists, like are you close to doctors? Some people want to be in a rural area, I get it. But at some point, you might need help. So, you got to think these things through so that you're not having to move again and again and again. And then ignoring the plan or or no plan, I should say, for mobility changes. Look, I'm not as mobile as I used to be. Nobody is. And you know, we're not running and doing the things that we used to do. So, planning ahead for when things do slow down a little bit is super important. And that could be from home modifications or health changes. If your house is not conducive to that, tell me if your house is conducive to that. Let me know because I want to get a poll here. Anybody have a house that they're in that they need to move out of? Let me know. And then the climate or the location risks uh you didn't fully think about in an aging body. Like I'm not shoveling snow anymore. I get it, but are you paying somebody or is somebody taking care of that? And what if you can't get outside and get your groceries and all those things. So, if you live in a community that's centric to that, like we have communities here that are centric to that, you know, where you can go through stages of life and later [clears throat] on if you need help, somebody can help you and bring things to you. How about this one? Number seven, the location, the actual housing choice and the timing of the blind spots. Now, big decisions, this ties everything that I just said together. Okay, the the big decisions are the HOA fees. I don't want an HOA. Well, I'm not maintaining my yard either. So, just make sure you're in the right balance for your situation. The HOA fees. How about the rules? Do you have a Winnebago? Do you have a trailer travel trailer? Where can you park that or do they allow that? How about a boat storage or or these types of things? If you're into the go-go years after you retire and you bought more toys just to have more fun, where you put them? So, you know, all these types of things, you might be a new landlord for your toys. Think that out where you're going to put them and what you're going to do. Because there's a point in time when you're going to turn all that off and you're going to get tired of that and you're not going to have the ultimate cruising car to go to all the car shows. You know, you're going to be a ti- it's a time, it's a window, but there's a window when you'll also get rid of these things. So, make sure it's not costing you too much as well. The neighbors and community dynamics have changed. How about where you live now? Have they changed? Uh are you as happy as you once were? People do move and it's mainly because of this. They're looking for a better option. Things change. As I said, the grass doesn't stay cut all the time. There's weeds growing and all kinds of stuff happening every single day. So, you're not a tree. You can move. And the idea is to use your head and any resources you have to make smart decisions. How about picking the dream retirement spot that cuts you off from your services. I'm going to go to a remote island, but there's nothing there, nothing to do. Right? It's beautiful. Think things through. If you go to the mountains, it's great. But what if you get snowed in? And then season realities and visiting just doesn't reveal. People love to do this. They'll go to Arizona cuz they love the desert or they love, you know, California. They like, you know, traveling different places and they travel there and they think, "Oh my gosh, I'm going to love it there." When in fact, it's completely different. It's not vacation time. It's your living there time. A lot of people have this vision about Florida that they're going to be on vacation year-round and it's not true. You won't be in the pool every day. Okay, so this is a big one, guys. Waiting for a health crisis that forces a move. And usually when this happens, it's not you making the decisions. You want to be in control of your life, make the decision before you have to make the decision. If you're in limbo and you can't figure out what to do or where to do and something happens to you and and you didn't make the decisions that was the best decision for you, somebody else is going to make that decision. And it may not be what you want to be. I'm telling you, a lot of people end up in places they don't want to be because they couldn't make a decision. Another one is rushing the process. Oh my gosh, I am so excited. I just retired this week and I am out of here and I'm gone. And I'm in the wrong place and I decide to move to wrong place. It's a slow process. If you're one or two years away, this is a process, guys. Figure it out. And not testing that new lifestyle first. A lot of people, they come to Myrtle Beach and they say it's too crowded for me. It's ridiculous. People don't live at the beach, guys. They live further in or, you know, it's only 2% of the entire county is is right at the beach. The rest of the county is the size of Rhode Island. You heard me say this in other states. And if you didn't see that, you completely missed it because that's not where people who live here, they don't live there. They don't live at the beach. They're not in those vacations in the crowded downtown areas. There are other places and there's a lots of hidden gems. So, make sure that you know where all the hidden gems are. And if you're working with a real estate expert, that they're showing you those because if you're online looking on Zillow, you will never see all this stuff. You know, AI is never going to answer all these questions. And Google is not going to be truthful about everything. If you watch my other videos, you know about that already. And then here's the other fault that it happens a lot is focusing only on the dollar saved while ignoring the rest of the lifestyle for fitness and happiness of taking walks, walks on the beach, walks around the neighborhood on your bike, whatever you're doing, seeing different sites, travel. If you didn't plan for all this, it's not a light bulb switch where you turn this light switch on and off and I'm retired and now I'm on party time. You're not going to be on party time all the time. You need to balance your life out. You need to find things that are fun to do because it's a sudden shift and if you don't have all of your ducks in a row, it can be a problem. And here's the bonus section that I promised you and I always promise you more than what the average guy does cuz look, I'm giving this information for free. I hope you're enjoying it. Here's the bonus section is the overlooked retirement downsizing. A lot of people think this is a combination platter, right? I'm going to the buffet and I'm going to eat all this. No, you're not. If you did that every day, you're going to be sad. It's what to do instead. A lot of people have a loss of a hobby or a loss of a routine and they don't have a daily structure. Well, you know, at first, you might do all the fun things to do and then you get bored. Okay? So, you got to have a structure on what you like to do. And if you think back to your kid when you were a child and try to relive some of those, I'm not talking about you're going to go do all the things that you did as a kid, but if you try to relive some of that, anything you can do to bring you back to that time period is going to be super helpful and I'm going to tell you something, you're going to enjoy it more than any money can buy. The travel dreams that also clash with new home realities. I'm running out of money. I only got so much. Jerry, help me because I know you helped me in all these other videos. Find me a place that I can actually afford. And then you got to make sure you're balancing out the rest of your life because you don't want to be locked in a house. That's not the purpose of this. The purpose is to be happy and to be healthy and to make sure that you have a balanced life and a healthy life. The next one is estate planning gaps after the sale. Look, nothing's ever going to happen to you. You're going to live forever, so don't worry about this. Wrong. This happens so often that I had to write a book about this, and it's on Amazon. I'm going to put it on this picture here, but you can get a copy for free if you call our office. Look, here's the deal. A lot of people do not plan after their retirement. They think it's over. That's it. They didn't do and I'm not talking about estate planning per se. I'm talking about all the other things that you need to plan. What happens to your dog if where's the keys to the It's all these things. We had a checklist that we made that has been super helpful not only to our clients, but thousands of people all around the United States. And the reason for this that I made this, it has a worksheet in there is because we can't possibly think of all the things, but these are the things that have come up over the last 20 years that I had to put down on paper and make sure it was helpful to everyone. So, again, you can get it on Amazon or you can pick up the phone, give us a call, we'll get you a digital copy of it or whatever. But anyway, I know it's going to be super helpful to you. Not doing it to make any money cuz you don't make any money at books, believe me. It's just to be helpful. And that's what these videos are about, right? Just being helpful. Here's the last one. The overall is the trap of simplifying everything on a checklist on paper. I wrote my notes on here and I talked them through, but it's complicated in actual life practice. Okay? So, if you find yourself in a trap and you don't know what to do and you can't figure out where to go and how to do it. Now look, some people, I get it. They don't have the money and they're not able to do it. Some people call our office and they're stuck because they made a move somewhere that they can't get out of. And a lot of times they've run out of money or they've got other issues going on. I can't fix everything. What I can do is give you helpful guidance and that's what these videos do. If we can't do that, pick up the phone, give my team a call. I mean, we help people out of situations that have literally been crying because of something bad that has happened to them and we're trying to make sure that people are making smart decisions, not just jumping into something and making sure that they understand every part of it. You know, the thing of it is is yes, it's Jerry Pinkas Real Estate Experts and it's not just real estate. It's honestly pervading information because it's not about the real estate all the time. It's about the what else. It's all the other moving parts. This stuff is moving constantly. I went through this list and if you can't find a thing on there that it didn't help you, and I know people will comment. You've seen them on my my comments. Some of them are ridiculous. This guy rambles on la la la. These are the same people who have the problems and something happened to them. And I can't trust somebody and whatever. They didn't listen. The information is there. They just didn't listen. They listened to AI. They listened to Zillow. They listened to Google. They didn't listen to the local expert. They didn't listen to themselves internally. They made a jump decision. I don't want that to happen to you. Is any of this helpful? Let me know. I really do want to know. So, wherever you are and whatever you're doing, share this with somebody you know who could use it. Share it with with somebody who you know could stick around for this long. And if you didn't do it, you might want to watch this again because there's a lot of good stuff in here. And wherever you are again, hope you're having a fantastic day. Sun's out. Shiny bald head. Hope it's not too disturbing for you. Take care, guys.