Hi, my name is Jacquie Frye. You may know my husband's name, Marc Frye. He writes the Financial Tip of the month. I've been a realtor in Las Vegas for close to 20 years. I have earned the designation Senior Real Estate Specialist® (SRES®). We thought that as an SRES, I may be able to bring valuable information to your attention. My goal is to inform retirees on a variety of real estate topics that may be important to your financial wellbeing.
As you approach retirement, downsizing your home can be an excellent way to save money and simplify your life. Not only can you reduce your monthly expenses, but you can also free up some money to invest for the future. Here are some tips for retirees looking to downsize and invest their money:
Assessing Your Options
Start by assessing your current financial situation: Before making any major financial decisions, it's important to have a clear understanding of your current financial situation. This means reviewing your assets, debts, and monthly expenses. This information will help you determine how much money you can afford to invest after downsizing.
There are a variety of downsizing options available, from selling your home and moving to a smaller property to renting an apartment or retirement community. Consider which option is right for you based on your lifestyle, budget, and future goals.
Working with Professionals and Planning Ahead
If you're not sure where to start when it comes to investing your downsizing proceeds, consider working with a financial advisor. They can help you create a customized investment plan based on your goals and risk tolerance. I'm sure that your American Retirement Advisor can assist with this.
It's important to diversify your investments to minimize risk and maximize returns. This means investing in a variety of assets, rather than putting all your money in one place. Depending on your downsizing proceeds and investments, you may be subject to taxes. It's important to understand the tax implications of your investment decisions and work with a tax professional if necessary.
Downsizing and investing your money can provide financial stability in retirement, but it's also important to plan for unexpected expenses and future healthcare needs. Make sure you have a plan in place for these potential expenses.
In conclusion, downsizing and investing can be an excellent way for seniors to save money and simplify their lives. By assessing your financial situation, working with a financial advisor, diversifying your investments, and planning for the future, you can make the most of your downsizing proceeds and enjoy a comfortable retirement.
By Marc Frye
Marc Frye provides financial analysis and market commentary for the ARA newsletter, translating complex economic trends into actionable insights for retirees.
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Easy Eddie's Take
Jacquie's advice about downsizing is something I see working well for many retirees in 2026. Let's take a look at some specific numbers that might help you plan. If you've owned your home for many years, you'll want to understand the capital gains tax rules. For 2026, married couples can exclude up to $500,000 in capital gains from the sale of their primary residence ($250,000 for singles), as long as you've lived there for at least two of the last five years.
When it comes to investing those downsizing proceeds, most people are surprised to learn about the contribution limits for retirement accounts. If you're 50 or older in 2026, you can contribute up to $8,000 annually to an IRA or $9,000 to a Roth IRA (that's the regular limit plus the catch-up contribution). For those still working, 401k contributions can go up to $31,000 with catch-up contributions included. A lot of people ask me, "What's the best way to spread out my home sale proceeds across different investments?" That's exactly where working with your financial advisor makes the biggest difference.
The key is balancing your immediate needs with long-term growth. Think of it this way: your downsizing money can work in different buckets - some for safety and liquidity, some for growth, and some for income. A little planning today can make a big difference in how comfortable your retirement feels tomorrow.