Many of us are rethinking how and where we live. What does that mean for you or your living arrangements?
Today, many people are rethinking how they live and work. Downsizing, or rightsizing, is not limited to just retirees or those nearing retirement.
“We’re seeing adults of all ages and situations reexamining their work and home life,” says John Knowles, market growth and development consultant with Wells Fargo Advisors. “It’s a trend that could be here to stay for the foreseeable future. How many people do you know who will continue working remotely? Will they continue to live where they live if they can improve their quality of life in a different location at a lower cost of living?”
Rightsizing can be attractive to a wide variety of people, such as empty nesters, singles, newly divorced people, or those in a second marriage. Many times, the driving force is simply the desire to be closer to those important to them. The rewards can be emotional as well as financial, regardless of the reasons that triggered the decision. Rightsizing could mean moving to smaller, more practical quarters or relocating into more spacious digs, depending on a person’s needs.
Are you thinking about rightsizing? Below, we explore work and life situations that can have people thinking about rightsizing now, as well as how the change could impact their financial future.
Making dreams a reality
You may be considering leaving a stable job to explore something new, launching a business and moving elsewhere, or just working at your current job — but from the place of your dreams. Though the trend has been spurred in part by the ability to work remotely from anywhere, the movement to take risks to follow your dreams has been known for years as YOLO (you only live once).
But before changing a well-established situation, you might want to consider discussing it with a financial advisor to make sure you have a solid long-term plan. “A financial advisor can help you make sure your long-term goals for your family or retirement years remain on track,” Knowles says.
Wanting to be closer to family
Many adults are reevaluating their living arrangements with the idea that their baby boomer parents or grandparents can move in with them or move nearby. Though that trend was initially spawned by feelings of isolation during the pandemic, it’s expected to continue.
Multigenerational living has nearly quadrupled in the past decade: 26% of Americans lived in a household with at least three generations in 2021, compared with 7% in 2011, according to a survey of more than 2,000 adults by Harris Poll on behalf of Generations United.1
Having multiple generations under one roof can help reduce expenses, giving you the freedom to travel or enjoy quality time with loved ones more often. It can mean no longer having larger, separate homes with separate maintenance costs.
And there are benefits that go beyond finances. In a 2022 report on multigenerational living from the Pew Research Center, more than half (58%) of adults said their multigenerational living was convenient and rewarding, as elder care, child care, and household chores were shared among the generations. This could explain why the majority (56%) described their arrangement as a positive experience.2
New world, new moves
The motivators for moving have changed, resulting in the trend toward rightsizing. Once people realized they could work remotely, they had more freedom to live wherever and however they wanted. Studies show people are leaving larger, more expensive cities for more suburban and rural areas where the cost of living is generally more affordable.3
No matter your reason for rightsizing, Knowles says, make sure you do your homework. That includes understanding the tax levels in the state you’re looking at for relocation. Remember to get the whole picture: Although some locales have low or no state income tax, for instance, they may levy higher sales or property taxes.
Consider seeking input from trusted advisors
Rightsizing could have implications for your current finances, estate plans, retirement goals, and other priorities. That’s why Knowles suggests you consult first with your family, then with an attorney and a financial advisor. They can help you make sure you have the information you need to make the right decision for your situation.
1. “Family Matters: Multigenerational Living Is on the Rise and Here to Stay,” Generations United, January 2021
2. “The Experiences of Adults in Multigenerational Households,” Pew Research Center, March 24, 2022
3. “How the Pandemic Did, and Didn’t, Change Where Americans Move,” The New York Times, April 19, 2021
Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.