At Voorhees Law Group, we meet with plenty of retirees who are thinking about downsizing. Sometimes it’s about saving money, sometimes it’s about simplifying life, and sometimes it’s about moving closer to family. Whatever your reason, downsizing isn’t just about picking a smaller home. It’s about making sure your finances, taxes, and estate plan all line up with the lifestyle you want.
Here are seven important financial factors to weigh before you pack the boxes:
- Housing costs are more than the listing price
The price tag on Zillow is only the beginning. Think location, safety, HOA fees, upkeep, and even how it feels to live in that community. Spend some time in your new neighborhood before making a commitment. - State estate and inheritance taxes
Some states skip these taxes altogether, while others double down with both. Crossing one state line could mean a huge difference in what your loved ones inherit. - State income taxes
Nine states don’t impose a state income tax, which sounds dreamy. But here’s the catch: they often make it up in other ways, like higher property taxes or fees. It pays to look at the full picture. - Property taxes
These vary dramatically and can impact your monthly budget more than you think. Some states offer senior discounts or exemptions, so do your homework before choosing your next address. - Retirement account and pension taxes
Not all states treat retirement distributions the same. Some tax IRAs and 401(k) withdrawals while others don’t. Military and other pensions also get different treatment depending on where you live. - Social Security taxation
Most states leave your Social Security benefits alone, but a handful still tax them, sometimes based on income. Better to know now than get hit with an unpleasant surprise later. - Sales taxes aren’t the whole story
No sales tax can sound like a dream, but it often makes less difference than property or income taxes. Focus on the big picture instead of just one tempting number.
Downsizing for retirement isn’t just a real estate decision. It’s a financial and legal one, too. At Voorhees Law Group, we help you think through how moving might affect your taxes, estate plan, and long-term goals. Done right, downsizing can bring peace of mind instead of unexpected costs.
If you’re considering downsizing or relocating, now is the perfect time to review your estate plan and make sure it’s aligned with your next chapter. Let’s make sure you’re moving forward with confidence. Request a Consultation