What Is Rightsizing?

Once your kids move out of your house, is downsizing something that you’re considering? Downsizing can be a hot topic prior to and during retirement, but there’s another approach that we want to discuss that isn’t as widely known or considered. We’re talking about rightsizing.

Have you ever heard of the term rightsizing? If not, that’s OK. We’ll explain. According to the American Seniors Housing Association, rightsizing is the process of “asking what’s really important, then aligning the way you live with those values, goals and needs.” We couldn’t agree more with the ASHA, as Modern Wealth’s Guided Retirement System was designed around that same line of thinking.

The Differences Between Rightsizing and Downsizing

As you can see from the ASHA’s definition, the term rightsizing doesn’t just refer to the size of your home. But rightsizing in that context does help with understanding how it’s different from downsizing. There are several reasons why someone might consider downsizing.

Let’s say that your kids have graduated from college and have a place of their own. What are you going to do with the space where their rooms were or with any of their other belongings that they’ve outgrown or no longer use? Your immediate reaction might be to declutter those areas and make use of the space in another way. Or you might want to hang on to some of your children’s stuff if it still has special meaning to you or if you think your grandchildren could one day use it. But if you suddenly have more space than you know what to do with, that’s where downsizing to a smaller home becomes an option.

Obviously if your family is still growing or you have a need for more space, upsizing might be something you’re considering. But this is where we want to drive home one of the key points of rightsizing. It’s understanding that there’s much more meaning to your home than the size of it.

Rightsizing looks different for everyone. For example, once Peggy and Bud Kasper became empty nesters, they decided to buy a new home away from the suburbs that gave them more land. While their home is plenty big enough for them two of them, there’s plenty of space for them to host family gatherings.

“We’re enjoying the dickens out of it. The privacy was really what we were after, and it seems to fit us well.” – Bud Kasper

Factors That Go into Rightsizing

According to Kathy Gottberg’s book, RightSizing: A SMART Living 365 Guide to Reinventing Retirement, “rightsizing is the conscious choice to reinvent a lifestyle that more closely fits you and your family in the best possible manner at every stage of life. Rightsizing provides the freedom to let go of the daily grind of just getting by day-in and day-out.”

That sounds a lot like something that Dean Barber would say when describing financial independence. Read the excerpt below from our Finding Financial Independence webinar with Dean and Bud. It’s easy to see how rightsizing applies in the journey to financial independence.

“Financial independence means that you get to get up every morning and do the things you want to do because it’s what you want to do and not because you think you need to have a paycheck. That’s when you know that you’re truly financially independent.” – Dean Barber

What brings purpose to your life? Is it living close to your friends and family? Is it having the comfort of superb health care for you and/or your spouse, whether it’s in an assisted living facility, long-term care facility, or home health?

“I’ve seen a lot of people who are even in their mid-60s that go into these continuing care communities where everything is paid for, different activities, and so many other things. Rightsizing is an individual type of scenario.” – Dean Barber

Maybe you’re passionate about leaving a legacy and want your loved ones to be in good hands when you’re gone. Are you and your spouse planning to leave your home to the next generation? And do you and your loved ones understand the potential tax implications of that? We could go on and on, but those are just a few important factors that go into rightsizing.

What Do You Want Your Life to Look Like?

Whether you’re still 20-plus years away from retirement or have been retired for 20 years, rightsizing applies to you. How do you want to redefine the way you live so that it brings happiness to you and your family? If you want to travel more, build a spending plan as a part of your comprehensive financial plan so that X-amount of dollars per year is spent on traveling.

If you’ve already done that, kudos! But remember that your life and goals will change over time. Rightsizing looks different for everyone. Eventually, everyone gets to a point where they’re not as mobile and don’t have the energy to travel the world. That spending plan that incorporates your love of traveling is suddenly outdated. You and your spouse might also be at a point where it makes more sense to have one car instead of two or not have a car altogether. How are you going to redefine your lifestyle so that it’s still fulfilling? That’s what rightsizing is all about.

Before we wrap up this article about rightsizing, Dean wants to share an example of what rightsizing has looked like for his mother. She had been in independent living for a while and enjoyed it there, but unfortunately had a mild stroke in January 2022. That stroke caused her to lose some of her vision, which took away her ability to drive. She now needs to be in a scenario where there are activities that she can do and has transportation provided to her. That made a continuing care community the right fit for her.

“There are tons of activities with other people in her same age group. It’s a way for her to still feel like she has her independence even though she can’t drive anymore.” – Dean Barber

Learning About Rightsizing with Our Retirement Plan Checklist

Take note that we mentioned throughout the article that rightsizing involves your spouse and the rest of your family. Including the needs, wants, and wishes of your loved ones is a critical component of financial planning. Regardless of where you and your spouse are in the retirement planning process, you get a gauge of where you’re at by reviewing our Retirement Plan Checklist. Along with a checklist of 30 yes-or-no questions about various financial planning components, it includes an age-based timeline of pre-and post-retirement considerations. Download your copy today!

Retirement Plan Checklist

“To get a head start on rightsizing, our Retirement Plan Checklist does a great job of helping people start to think about things other than money. When you talk about rightsizing, it’s about deciding how you’re going to live your life.” – Dean Barber

When our advisors meet with new clients, they’ll take them through a prioritization exercise. Sometimes it takes an hour; sometimes it takes closer to an hour and a half. The prioritization exercise is a conversation between you and your spouse to define your collective priorities. Each spouse goes through it and then you go through it together. There are so many instances in which couples learn something about each other during the prioritization exercise. That can be the case whether you’re recently married or have been married for a few decades.

“This is the nonfinancial aspect of retirement planning. If you don’t start with the nonfinancial aspect of it, you’ll never get to the answer of what your money needs to do for you to fulfill your life.” – Dean Barber

Let’s Start Planning

If you’re trying to get a better grasp of what rightsizing looks like for you, start a conversation with one of our CFP® Professionals. You can schedule a 20-minute “ask anything” session or complimentary consultation by clicking here. We can meet with you in person, by phone, or virtually depending on what works best for you. We’re ready to see how rightsizing can help make your life more fulfilling.

Rightsizing vs. Downsizing: What Are the Differences? | Watch Guide

00:00 – Introduction
01:36 – Finding the Right Size in Retirement
03:43 – Let’s Talk About Downsizing
06:00 – Dean’s Mom Finding the Right Size for Her
08:00 – TRIVIA: Internet Investing Slang
08:58 – Retirement Plan Checklist
09:38 – Prioritizing Your Life with Your Partner
14:01 – How Do You Spend More Time with Loved Ones
16:32 – TRIVIA: Internet Slang Pt. 2
17:30 – Back to Rightsizing your Retirement
19:04 – Regrets in Retirement
20:18 – Here to Help

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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.