This is a classic “empty nester” dilemma, and there’s no single right answer. The best choice depends entirely on your financial goals and desired lifestyle for the next chapter of your lives.
Here’s a breakdown of the pros and cons for your situation.
Option 1: Downsize to a Condo 🏢
Downsizing is primarily a decision to trade space and maintenance for simplicity and financial flexibility. The core idea is to unlock the equity in your home to supercharge your retirement savings.
Pros:
- Financial Liberation 💰: Selling a larger home in Mississauga and buying a smaller condo could potentially eliminate your mortgage entirely. The remaining profit can be invested, drastically accelerating your retirement nest egg. Your monthly cash flow would increase significantly due to lower (or no) mortgage payments, lower property taxes, and reduced utility bills.
- Maintenance-Free Living: This is a huge lifestyle benefit. Condo fees cover exterior maintenance, so there’s no more worrying about roofing, windows, lawn care, or snow removal. This frees up both time and money for other pursuits.
- “Lock and Leave” Lifestyle ✈️: For a couple that wants to travel, a condo is ideal. You can simply lock the door and leave for weeks or months without worrying about the upkeep of a house.
- Amenities and Community: Many condo buildings offer amenities you wouldn’t have at home, like a gym, pool, party room, or security/concierge services. This can also provide a built-in social community.
Cons:
- Condo Fees: While you eliminate many maintenance costs, you gain a significant monthly condo fee. These fees can, and often do, increase over time. You also face the risk of “special assessments” for major unexpected repairs, which can cost thousands of dollars.
- Less Space and Privacy: You will have significantly less living and storage space. You’ll also be living in close proximity to your neighbors, which means less privacy and the potential for noise issues.
- Rules and Restrictions: Condo boards have rules that can govern everything from the color of your window coverings to pet ownership and when you can have visitors. You give up a lot of personal autonomy.
- Emotional Toll: Leaving the home where you raised your family can be emotionally difficult. It’s a place filled with memories, and downsizing can feel like a step down for some.
Option 2: Stay in the House 🏡
Staying put is often the emotionally comfortable choice, prioritizing stability and familiarity over financial optimization.
Pros:
- Emotional Anchor: The comfort and stability of the family home are invaluable. You have your space, your privacy, your garden, and the memories you’ve built.
- Space for Family: You’ll have plenty of room for when your kids—and future grandkids—come to visit and stay over.
- Greater Financial Appreciation: Historically, detached homes in areas like Mississauga have appreciated in value more than condos. Your house remains a powerful asset.
- No Transaction Costs: You avoid the significant costs of selling and buying, which include realtor commissions, land transfer tax, and legal fees. These costs can easily eat up $50,000-$100,000+ of your equity.
Cons:
- Ongoing Maintenance Costs: A house is a money pit. As the home ages, you face large, unpredictable expenses like replacing the roof, furnace, or major appliances. These costs only increase over time.
- Physical Upkeep: The physical labor of maintaining a house and yard can become more challenging as you age.
- “House Poor” Risk: The money tied up in your home is illiquid equity. It’s not growing in the market or generating income for your retirement. You could be living in a valuable asset but have limited cash flow for travel and hobbies.
- Inefficient Space: You’ll be paying to heat, cool, and pay taxes on rooms you no longer use, which is an inefficient use of your money.
Key Questions to Ask Yourselves
How Does This Home Fit Your 80-Year-Old Selves?: Think about future mobility. Are stairs going to become a problem? Is the physical upkeep of a house realistic in the long term?
Run the Numbers Honestly: Don’t just estimate. Get a real market valuation for your home. Factor in all transaction costs. Calculate your current monthly home expenses (mortgage, tax, insurance, utilities, average maintenance) and compare them to a condo’s (potential mortgage, tax, insurance, utilities, condo fees). How much money would actually be left over to invest?
What Does Your Ideal Future Look Like?: Do you dream of travelling the world, or do you dream of gardening and hosting big family dinners? Be honest about what you want your day-to-day life to be like in 5, 10, and 20 years.
Are You Emotionally Ready?: Acknowledge the sentimental attachment. Can you see yourselves being happy in a smaller, new space, or would you constantly miss your old home?
Lots to think about.
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Peter Fuller MBA CPA CA
Toronto, Canada
