Retirees often consider moving to a new residence once they retire. Some look to downsize to a more manageably sized home, while others opt to relocate to a whole new community altogether. Making renovations to an existing home is also a growing option that many seniors consider, as their need for more accessibility within their home continues to grow.

In making these types of decisions, however, recent retirees can often make big mistakes. A person’s home is typically their biggest asset and it can hold strong emotional ties for the owner. These types of attachment can, therefore, cause a senior to hold back when it would be more beneficial to sell and move forward to a simpler lifestyle. (For more, see: Downsize Your Home to Downsize Expenses.)

A question many retirees often face is: When is the right time to downsize? Moving at the right time can potentially save a retired homeowner a lot of money, depending on home prices and mortgage rates at the time of the sale or the purchase of a home. Typically, larger homes come with higher energy bills and require expensive maintenance. Bigger homes can also be saddled with high real estate taxes and expensive homeowner’s insurance premiums. So reducing these costs earlier rather than later may save a retiree a lot of money. That’s money that can then be better used enjoying retirement, putting it into savings or investing it.

Many retirees also make the mistake of waiting until their last child has left the nest before moving forward with downsizing their homes. But moving back to mom and dad’s place after college is becoming more common for young adults. Some advisors say that, today, many college graduates will opt for the choice of moving back home, if given the opportunity. This could add many more years to the time period that parents spend in their bigger homes.

For those retirees who do decide to downsize, it’s important to do it in a beneficial way. That means walking away with some cash in hand at the end of the sale and purchase. A smaller home that is more expensive than the original one won’t solve anyone’s problems.

All retirees should also look into the tax implications of any home purchase they are considering. In particular, those retirees looking to move to a different state should be sure to check out the tax laws in those areas. They should also research the cost of living, and the availability of healthcare providers and healthcare facilities in the area. Not all doctors accept new Medicare patients or all insurance plans, and as retirees age, having access to specialists and hospitals that are located close by will become more and more important.

Save, Spend or Invest?

Retirees also need to think about what is the best use of any profits they may make from the sale of a home. Investing that money, rather than spending it would be wise. Alternatively, some retirees may want to live off of the equity acquired from the sale, while keeping more of their savings invested in their retirement portfolio. This tactic may also allow a retiree to delay claiming Social Security benefits, allowing for an increased claim amount later on. Delaying taking Social Security distributions until age 70 will result in a higher monthly distribution rate

Two Homes Means Double the Bills

Those retirees owning two homes, a summer and winter residence, should also reassess how much having two homes is actually costing them. Paying off two mortgages, two electricity bills and having to pay for the upkeep of two homes can be costly and may quickly deplete one’s savings. And while interest on a mortgage can be a tax deduction, it may not offer enough of a savings to off set all the costs that come with a owning a second home. Retirees should also consider whether purchasing a new home in cash and not having to pay interest on a mortgage is more beneficial than taking out another 15- or 30-year loan.

The Bottom Line

Retirees looking to sell their homes should consider downsizing the size of their residence, moving to neighborhoods that offer health care options, and living off of their savings for a longer period of time, in order to take advantage of larger Social Security payments later in life.