The MapleMoney Show » Retirement

The Benefits of Downsizing at Retirement, with Vivien Sharon

Presented by Wealthsimple

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Are you getting close to retirement age? If not, perhaps you have a parent who has recently retired or is planning to. If either of these situations applies, this week’s episode is for you.

This week, my guest is Vivien Sharon, a Toronto-based realtor specializing in working with boomers, helping them downsize from home to condo living. Having downsized her own home, Vivien has the experience needed to guide clients through the entire process. She’s even written a book on the subject.

When you retire, there are benefits to downsizing from the typical, larger home where you may have raised a family to a smaller townhouse or condo. As Vivien explains, owning a detached home is expensive, including general upkeep, property taxes, and utilities. And many people find that they no longer need the additional space.

Vivien takes us through the many considerations that need to be made when downsizing. For example, she says that while most boomers opt to sell their home and purchase a condo, for some, it’s better to rent an apartment for a year or two as they transition out of their careers.

After you’ve listened to the episode, if you’re interested in finding out more about downsizing at retirement, you can get a free digital download of Vivien’s book, The Boomer’s 7-Step Guide to Downsizing: Overcoming Fear and Discovering Freedom. Or, if you prefer, you can pick up a paperback copy over on Amazon.

Our sponsor, Wealthsimple, believes that financial independence should be available to anyone. That’s why they have no account minimums, meaning that you can get started investing for as little as one dollar. Don’t delay any longer; invest online by visiting Wealthsimple today.

Episode Summary

  • Why do so many people downsize in retirement?
  • A large family home is a major expense.
  • Is a principal residence really an investment?
  • Before downsizing, take a close look at your finances
  • What are the drawbacks to moving to a condo
  • What are the most important amenities in a condo
  • The benefits of renting after downsizing
  • Not everyone wants to downsize; you can retrofit your home instead
Read transcript

Are you getting close to retirement age? If not, perhaps you have a parent who has recently retired or is planning to. If either of these situations apply, this week’s episode is for you. My guest this week is Vivien Sharon, a Toronto based realtor who specializes in working with boomers, helping them downsize from home to condo living. Having downsized her own home, Vivien has the experience needed to guide clients through the entire process. She’s even written a book on the subject.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Our sponsor, Wealthsimple, believes that financial independence should be available to anyone. That’s why they have no account minimums, meaning you can get started investing for as little as one dollar. Don’t delay any longer. Invest online by visiting maplemoney.com/wealthsimple today. Now, let’s chat with Vivien…

Tom: Hi Vivien, welcome to the Maple Money Show.

Vivien: Thank you for having me.

Tom: You recently released a new book. I went through it a bit and one of the things I wanted to discuss with you is this idea of downsizing in retirement. It’s something I’ve seen with my parents. I haven’t had to experience that myself yet but I’m doing some of those same steps so we can discuss that later. But just to really hop into it, why do so many people downsize in retirement?

Vivien: I think when they get older—and I’m talking 55, 60, 65 plus, they want to potentially make some lifestyle changes. So if they can, one would perhaps be simplifying their life. One major way is the family home. And we know from our parents that a large family home is an expensive upkeep in one’s budget that has to do with maintenance of the home, paying the bills, hydro, snow shoveling and all of the landscaping, blah, blah, blah, etc. So what we want to do is consider simplifying and selling the family home because that will leave a lot more money in your pocket later for future lifestyle decisions you might make.

Tom: With my parents, one of the biggest decisions for them was the money side of it. There was this equity they had available. I do believe the idea that having your house is sort of forced savings throughout your life. I know some people debate this—is a house an investment? But I’m leaning in this direction because here in Alberta, there was a time in the earlier 2000s where my house was increasing in value almost at the rate of my annual salary. There were a couple of years there where I could see real numbers. But if you’re going from in your 30s all the way to retirement, you’ve hopefully paid off your mortgage. You’ve made all this extra money but it’s kind of just on paper if you’re still living in that house. Do you see a lot of people doing this to unlock that money?

Vivien: I think that’s very much a motivation. People have lived in their home for 20, 30 or 40 years because they’ve raised their children in that family home. Their kids were young and now they’re off to university or post university or well into their 30s and 40s. Of course, they realize (as well as the upkeep we just talked about) the empty home—the house where you may going to use one bedroom, the kitchen, living dining room and bath, but what about the rest of the house that you absolutely never need? I think one makes a really strong financial decision (as well as a lifestyle decision) if in a position to do so where they know over the years their home has appreciated in value. It is the biggest asset most of us have. And we do know that as a principal residence, when you do sell it, it’s absolutely tax free, in your pocket. That is a huge benefit and a motivation for people as well. I am finding in the “boomer” senior range— the 55 to 75 and older range, may have health reasons that change things. But I’m talking about choice. You’re choosing to sell because you want to net more money in your pocket, which definitely will happen. As a realtor, which is my profession, I’m a real estate professional specialist in the “boomer” senior market, we always sit down with the family and have a conversation about money. We have a conversation about selling the home, what their endgame is, and what they want to achieve. I always recommend that the family get together at the kitchen table and have this conversation, which I do regularly with families. They may say they would like to sell their home for top dollar, which I cover in the book, and where do you want to go? Where do you want to live? Hopefully, they are able bodied and well and will say, “You know what? It’s time to really enjoy life, to buy a condo in the city… To buy a condo in the suburbs… To buy a condo near the kids… To buy a smaller home or a townhome,” which is the downsized from a single family detached home. They’re looking perhaps for an elevator in the town home, which is hard to find. It’s an expensive thing to put in and very hard, mechanically. But I have clients who have been looking to downsize to a townhouse which can have a lot of steps. That’s an issue for the future. One has to really think about their health—knees, hips and all of that which may be an issue later. Hopefully not. But the bottom line is to lock in what you can you possibly sell your home for, minus selling costs. There are selling costs. There’s commission fees. There’s legal fees. There are moving fees. When you minus all of that, you come up with your net figure and that’s what we’re going to talk about. What do you do next?

Tom: I’m glad you mentioned this idea of an elevator, too. It was similar with my parents. When they first decided to move down to a condo, it wasn’t a huge concern. But as the years went on, more and more, they were quite happy they had the elevator because if they came to my house trying to go up the stairs wasn’t easy. So it’s a great thing that you have that conversation with people and that people listening to this podcast at least think about this because you’ve really got to look down the road. You might be downsizing at 60, but you might live to 90. A lot can change in that time. And maybe you don’t want to have to move again because of health related issues.

Vivien: Absolutely. This is a conversation that one really has to have. And sometimes townhomes and semi’s with steps or smaller home is an option, but it’s not the majority. I’ll be honest with you. In my business, after all these years of dealing with people my age and older, they really do want a simplification of their life in every way. And that would be condo living, buying something smaller, netting some money in their pockets. Let’s say they sell. I’m in the Toronto market and in the Toronto market the price points can be quite high. If one would sell a $1.5 million or $2 million suburban, Toronto, house and buy a condo for $750,000 to $1 million… I’m not saying that’s a large condo at that price point in Toronto. It may be in the GTA so it definitely could get a little bit bigger. But I know they’re looking for something larger. There’s no way a boomer or senior, if they’re buying a condo, (which is their first choice in most cases) wants a shoebox of a condo. They want at least 6,200 square feet if they can. Fourteen hundred to 1,600 to 1,800 square feet is really nice. Bigger is more money, obviously. But two bedrooms at least, hopefully a den as well, because of home offices. No matter what age, people are working from home and retiring later. Their goal is to have at least two bedrooms and enough room. So we make the calculation, “where would you like to live when you move? What is the lifestyle you’re looking for and what can you afford?” And the fourth thing is you want to net money in your pocket and then invest it at whatever percent you can invest it with your money manager. People are living 20, 30 years more than they did. They’re 95 plus now. We’re living longer so for the retirement years, you have to do a lot of calculations. That is most important and a very viable conversation we have at the dining room or kitchen table.

Tom: Maybe it’s too soon to find out. I don’t know how long you’ve been focusing on this specifically, but do you find anybody has regrets when they go to a condo? And again, I’m looking at the situation with my parents. There were just some things where they couldn’t be the ones anymore to have the large family gatherings. And my dad didn’t have a workshop area to do woodwork. So there were times where they still kind of had this feeling of missing out on something from that old house.

Vivien: That has happened, but rarely. Most people, by the time they hit whatever age… We’re talking about 60 plus so they’ve had the house for many years. Unless they’re really into gardening, woodworking and outdoor stuff, they realize that they’re going to have to give something up. Nothing is ever perfect. And when you add up all the boxes, I guess you have to realize what is most important. And some things go by the wayside. I will say that condos seem to be very, very much the first choice among able bodied, youthful seniors and boomers. They are today because of the situation with our pandemic right now. It’s very important. It wasn’t before—the importance of a balcony. It was less important before. And having outdoor space in a condo where you can gather and socialize. Amenities were always very important in a condo such as a pool, gym, party rooms. Right now they’re closed. This will not be forever. They’re closed due to Covid. But a condo is a different lifestyle. It’s a socialized lifestyle. You are not living in isolation. People, as they get older chose it for safety. They may be single, alone because they’ve lost a spouse or gone through a divorce so they have to sell. They have to downsize. Their choice is usually a condo because they don’t want to go to another house and live by themselves. Percentage wise, most go to condos. Secondarily, some go to rent to because they’re not sure whether they like the mid-rise or high-rise ambiance. I tell people, if you’re not certain yet, if you like the neighborhood, and living in a mid-rise or high-rise, why not rent for a year? You pocket the money you net from the sale. You pay monthly rent. You have very little responsibility and it’s a viable option for a year or two. Maybe they’ll stay renting if they can.

Tom: That’s a great point, especially for the type of person that doesn’t want to deal with the fact that their washer dryer just broke down and now you’ve got to repair or replace it. Instead, you can just call up the landlord and have that taken care of for you.

Vivien: Yes. So there are two kinds of ways to rent. You could rent a condo from an owner, but the negative to that for older seniors or boomers is, if the owner of this condo wants to sell after the end of the one year lease term, you’re out the door. You have to leave because he’ll sell it. Or if he or moves in—the owners, you’re virtually out. You have to move. Displacement, as you get older or at any stage, actually, is very problematic and not comfortable. So I usually say, find an all-purpose rental building that’s nice. They’re not always that updated as high-end condos or Mid-end condos. There are some older ones, but today, builders throughout Canada have been building some all-purpose rental buildings which are newer. They’re not 35 years old where you have a laundry room in the basement of the rental. When I started out, that’s what happened. But they’re updating more and more. So go to an all-purpose rental building. That’s an option. Again, it’s not the majority, but it is an idea people are thinking about. Another thing people are doing after they cash-out— hopefully, with life coming back in 2021, they will travel again. They will move around to visit family all over the country and internationally. And they’ll go on cruises again. We’ve been told this will all come back with the vaccine. The trends are that people some people want to move outside of a city or outside of the suburbs because the kids have grown and they want to maybe buy a little condo somewhere in the city, but they also want to buy a cottage. Cottages have become huge this year. Again, they could be Covid related, but people are making so many different choices. They’re also going to small heritage towns. In our community, (in Ontario) you’re talking about Stratford, Niagara-on-the-Lake, Coburg, near the water. Whitby is also near the water east and west of Toronto. Hamilton, Burlington, cashing out the Toronto or GTA, which is the suburban area outside Toronto center. They’re going an hour away, either way. And even east or west or north. They’re buying something for around $650,000 and they’re sold for $1.5 million to $2 million. That’s an option if they don’t want to be in the city.

Tom: That all sounds great. When you no longer have a career that you have to be within a commute of and the kids are moved out, if you’re still within that hour and a half kind of range, you can still see the grandkids pretty easily. You don’t have to live right beside them at an expensive rate.

Vivien: Absolutely. Boomers and seniors are mobile. A lot of them are thinking of their options and they want change. Now, I want to underscore the fact that not everybody wants change. Not everybody wants to move. I did, and a lot of my friends are. And even during this year, we’re talking about it. And that’s another conversation which we may have. But it’s been shown statistically, that one third of all boomers will consider moving and two thirds will not. Two thirds are staying in place, aging in place. If they’re a couple, one spouse may want to move and one doesn’t. What ultimately happens is, they’re never going to move. Somebody has to give in. I have seen this with my peer group. It’s not for everybody.

Tom: I’m surprised it’s as high on the aging in place just from the people I’ve seen. It seems to just be part of the process—that you downsize. So I’m surprised it’s not more than half of the people that are downsizing, and that some people are staying where they are.

Vivien: Prior to 2019, Canadian statistics have proven that. If one is well and able bodied and one wants to change, they will make these various moves that we’ve just talked about for many reasons, to free up money and simplify their life. There are others that will retrofit their home. They might add grab bars and things (as they get older) that will help them. Or if they put in those chairlift things. That hasn’t happened too much that I have seen but there are options out there on the marketplace to do that—to retrofit your home. I will underscore one thing though, there are boomers and seniors that need to move for all the reasons that have to do with necessity. There are people going through divorces and separations and need money, are ill, have had surgery, or have to move near children for various reasons so they just have to sell. That group has to sell and they will.

Tom: I assume the biggest real work here is if you decide you want to downsize, you probably have too much stuff to get rid of. Again, looking back at my parents, it was very similar. All of a sudden they were handing stuff off, “Here, have this collection and maybe you’ll want this…” Some of it maybe I didn’t want but there definitely was some sort of purge going on. How do you talk people through that? What steps can take to look at this lifetime of possibly hoarding and decide how to deal with all that?

Vivien: It’s a very real problem, I think. I deal with couples and the main thing is they are so filled with fear and paralysis of what to do with all this stuff. They’ve been living for decades in this house and have thrown everything that they don’t need into the basement. Then they have all these extra bedrooms that are empty. They are so burdened emotionally. It’s an emotional decision to move as well as physical. One of the main roadblocks they have is wondering what they’re going to do with all the china and hockey cards their kid had when he was six. And all the games, toys… The paraphernalia that one puts together and just dumps in a corner somewhere throughout the house—they really need help. And this is where I help and advise through the writing of this book. It’s how to help them overcome their fear and discover their freedom. We all know when you have a lot of stuff, you feel very heavy and burdened. And when you get rid of things, like paring down your closet, you feel so much lighter. Metaphorically, that’s how you feel. This is what happens to people, too. I sit down with them and say, “Let me help you and bring in my team.” As a real estate expert in this boomer’s senior market, I physically do not do the decluttering with them. I bring in experts, transition managers, movers, contractors, electricians and repair people. Anything that needs to be done to get the house ready for sale as long as they are willing to do it. Some people will say sell it after we declutter. Then some people are willing to do a little minor update or make it look fresher for the buyers who are coming in for the photography. That should look good to get them top dollar. There are many steps that I do discuss but the first thing is I would say, “Listen, I have a specialist who is a transition manager on my team. I would recommend we sit down for a one hour consultation. We will go room by room and she will advise you what should be done, what should be taken away. First of all, you have to decide what you are giving your kids. What do your kids want? What the kids don’t want, she makes separate groupings with the family. This goes to the dumpster, and this to charity. This one will go to consignment, and this will go to an appraiser because it’s really valuable. A painting or furniture could be very valuable. We categorize. I’m there for some of it, but certainly my transition manager (they deal with directly) will help. She will bring in her team and take a week or 10 days—whatever is required. Then we sit down and see what is not working in the house. Are the taps dripping? Is the wallpaper so 1980s? The broadloom is so stained and everything… It’s going to bring down the value of your home. I ask them for my team to come in and discuss a budget. And if we put some laminate or engineered hardwood floor down instead of broadloom in the living room, bedrooms—it will cost X amount of dollars. It’ll cost you it but reap you so much more in the sale. We’ve seen that time and time again. For $20,000 to completely update a very, very tired looking home, you can perhaps net $100,000 more. That’s happened, and it’s worth it. They just have to be willing to go through a bit of mess of their house for two weeks or so as an electrician gets rid of some of the really old lights, puts in some new chandeliers, something modern. Do a little painting. Wallpaper removal is expensive. It’s labor intensive. Hopefully, there’s not a lot of that. But certainly try to paint neutral colors, and not pink or yellow walls. Again, I mentioned getting rid of some broadloom if possible. Those are the main things people are looking for in addition to updated bathrooms and kitchens. But that’s big work and big expense.

Tom: I’ve sold a townhouse and a house. I did a lot of these renovations on the way out. And I would suggest to people (other than obviously the neutral paint) if you do this while you live there, you can actually enjoy it a little bit. There are times where we lived in our house for years and renovated it to sell. All I could think of the whole time is, “Gee, this looks a lot nicer. I wish it looked like that when I lived in it,” so I would suggest to people that aren’t looking to move right now, some of this upkeep and renovations can be nice throughout the time you live there. Don’t just save it to the end.

Vivien: Many people wait to the end and say exactly that, “I wish I would have done some of these updates sooner,” but they just live there and don’t want to be bothered. However, it has been proven that staging a home, preparing the home, is really, really important as well. Staging managers are different than declutter managers. A stager is a person who comes in and assesses the furniture and decor. They will come in and say, “I would suggest we remove this very dark, stained, dining room table with very heavy chairs and make it lighter, fresher, more modern. Have some new throw pillows. Get rid of some of the floral. It’s not that popular right now.” They’ll go through the home and if it’s fully furnished, just say, “Let’s remove some of these heavy pieces. There’s just too much stuff here.” They will house it and store it during the duration of the sale process until the house is sold because you pay on a monthly basis for staging. You pay the stager that way because he or she has to rent the furniture from a third party, usually. So staging as well as preparing a home can bring up value 10 to 20 percent upon the sale. Some homes are vacant but most buyers cannot see past a vacant room. They can’t visualize how gorgeous a place could be with some furniture in it. Today we do some virtual staging because if a home is vacant. There are companies online that real estate professionals like me can hire to put in a sofa, virtually. That way you can see in in the vacant room. There are apps I use on my phone where I can take someone to a vacant home and ask whether they like modern or traditional. If they want traditional, I just take my phone and scan the room and the app adds the traditional furnishings, virtually. If you pick a contemporary or country look, it will give you that. So there’s physical staging and virtual staging. It means working with what people have and parsing it down a bit if it’s just too much. Too much stuff takes away from an airy feel of a home and gives it more space.

Tom: The virtual stagging’s a new one to me but sounds very appropriate given this past year. It seems like it would save a lot of hassles. With regular staging, though, is the idea kind of psychological? I’ve heard it sort of lets people visualize this being their house.

Vivien: Part of the decluttering process is getting rid of things for the showing and sale process. When buyers come in, they do not want to see tons of family pictures. They want to imagine they could live there. So rule of thumb, a specialist who does transition management and decluttering will say most things should be off the kitchen counter. Most things should be off coffee tables and bedroom mantelpieces and whatever. Keep it sparse. Put in some really nice focal piece and get rid of all the pictures that are family related. I’m not saying to do that if you’re going to have tons of holes in the wall. That would look bad. Certainly, nice art is great if you have it. Or a few family pictures on the wall. I would prefer that to holes on the wall. But certainly, everything from tabletops has to be removed. Any professional will hire and pay for top photography, top video. Now it’s 3-D video sometimes for special homes where you can sort of walk with your mouse on your computer and go through each room. It’s really an exciting opportunity in addition to a video so you don’t want to see stuff around. You want it really looking clean and fresh.

Tom: I was wondering with the decluttering— they have these collections, these family possessions. Is there ever pushback there where there’s maybe too much stuff they don’t want to get rid of? I don’t mean just hiding it for the sale, but just even in general, they might have too much stuff they don’t want to let go of.

Vivien: It’s so emotional. They are so attached to it. I tell them, if you want to be successful, what is your goal? Your goal is to reap the most money and get the most in your pocket. We just have to work together over the next few months between getting the house ready, getting it staged (if you desire to do that), get it updated in a mild way or a major way (depending on your budget and desire) until we get the house sold. It’s a few months. It could be from A to Z, the whole process. We work together for several months. They have to be open to listening, hopefully. They live there so they don’t see it. They’re subjective. I come in objectively with my team. We look at the home and say this is what we suggest. I don’t find push back at all. I really find that they are actually happy I’ve helped them. They usually do what I suggest and work together with me because the goal is to get the home sold.

Tom: I guess at the point they’ve come to you, they’ve already of made some of these decisions. It’s less work for you. But they know they need to make some changes in order to go from this 3,000 square foot house to less than a 1,000 square foot condo or something like that. Things have to happen.

Vivien: Absolutely. It’s a process of working together, selecting the right realtor. That’s another very important point that I do touch on because starting at the beginning, once they have made the decision, it’s very helpful to select someone who has their heart in their work, such as myself. I work with people of that age group because I am of that age group and understand because I downsized myself from a suburban, large, 3,000 plus square foot home. I had to go through the whole thing that they’re going through. I get it. The anxiety, the fear and the preparation. And then I’m moved to a totally different area. I live and work now in downtown, midtown, Toronto, in the Yorkville area. I had a house in north Toronto in a totally different area. And everything is different. Hopefully, you’re open to that. They work with you on and understand it. So it’s important to work with the realtor who understands and gets it.

Tom: Well, thanks for running through all this with us. On the podcast and blog we talk a lot about the money side of retirement; your fees and all this. But it’s been good to go through this part because this is still part of your retirement planning. You have to visualize what things are going to look like. My friend Jim at Retire Happy talks about when you ask people what they want to do when they retire, the answer is always just travel. But you don’t travel 365 days a year. Where you live those other days, especially this past year, really matters. So thanks for running through all this with us. I think it is something that people should include as part of their retirement planning. Can you let people know where they can find you online and tell them about the book as well?

Vivien: Absolutely. The book can be downloaded for free, digitally. The Boomers – Seven Step Guide to Downsizing, Overcoming Fear and Discovering Freedom. You go to my website, viviensharon.com/book. You download it. You get a lot of free tips, a lot of free bonuses that come with the download. That is a benefit that I want to provide to you about all the details, more or less, based on this book, From A to Z, How to Downsize. And it’s not only for boomers and seniors, but also for anybody moving as a matter of fact. Anybody moving needs to know what has to be done to prepare their home at any level. Even if they’re selling it, upsizing, and they’re much younger. That is important. The book is also available on Amazon. All you do is type in my name, Vivien Sharon or the title, The Boomers Seven Step Guide to Downsizing. It’s available on Kindle through Amazon and Kobo through Indigo. I’m happy to answer anybody’s questions. You can reach me by email which is [email protected] I’m happy to talk to you or anybody who needs any help anywhere in the country because my company has representation with Sotheby’s throughout Canada. I know wonderful people who can help you.

Tom: This has been great. Thanks for being on the show.

Vivien: Thank you so much. It’s been fun.

Thank you, Vivien, for guiding us through what can be a very difficult financial decision for many boomers. It’s an important subject that we don’t talk about often enough. You can find the show notes for this episode at maplemoney.com/135. Do you know you can watch videos from past episodes on a YouTube channel? If you’re interested, you can check them out at maplemoney.com/youtube. Make sure to hit subscribe button while you’re there. As always, thank you for listening and be sure to come back each week as we’re working on some great episodes in the near future. See you next week.

A large family home is an expensive upkeep in one’s budget...what we want to do (at retirement) is consider simplifying, and sell the family home because that will leave a lot more money in your pocket later for future lifestyle decisions you might make, and for retirement.Click to Tweet

Resources