Downsizing – A Retirement Strategy by Fritz Gilbert4 min read

The estimated reading time for this post is 3 minutes. This post may contain affiliate links.

Today’s guest post comes from someone who is quite a bit further in his financial plan than we are. Today, I have the pleasure of introducing Fritz Gilbert from The Retirement Manifesto. I’ve had the pleasure of chatting back in forth with him and many other personal finance bloggers in the Rockstar Finance Forums.

Downsizing - A Retirement Strategy by Fritz Gilbert

“Downsizing” is often cited as a retirement strategy to both reduce expenses and access the equity in a current “pre-retirement” home. This article will examine the concept of downsizing, and share the author’s personal strategy to downsize as part of his retirement plan.

Why do you live in a castle, when all you need is a cave?

When we launched our 5 year retirement plan, my wife and I decided to downsize in retirement. We went a step further, and bought our downsizing home several years ago. Our choice; a modest and comfortable 2,000 square foot log cabin about 10 miles South of the Tennessee border, in the town of Blue Ridge, GA.  It’s a picturesque place in the mountains of North Georgia, an area we love for it’s wide variety of outdoor activities (hiking, mountain biking, kayaking, camping, white water rafting, fly fishing, etc.).  We think it will be a perfect place from which to start our retirement.


Turns out we did something right. According to numerous articles I’ve read recently, it’s wise to get your mortgage on your retirement home while you’re still working. This is true especially given the tighter mortgage requirements implemented after the 2008 meltdown.

When we bought our cabin, we calculated our price range by evaluating our equity in our existing “pre-retirement” home. Then, we bought a house of lower value than our current home’s equity. For example, if our existing home were worth an estimated $300k, and we had a $120k remaining mortgage, our top price for our retirement home would be $180k ($300k market price – $120k mortgate = $180k equity). This decision would give us the flexibility to fully pay off our retirement home when we sell our primary residence, if we chose to do so.

Renting it out

The second thing we did, more by chance than strategy, was buy our second home in a hot vacation rental market. Blue Ridge is just 100 miles North of the 4.5 million people who call the Atlanta metropolitan area home. Turns out, a fair amount of those folks also like Blue Ridge. Often spending their vacations staying in rental cabins in the mountains.

We entered the rental market through various trial and error processes, and finally settled on using the online service of

FlipKey cabin rental

We initially considered using a “full service” rental company. However, after doing some homework we realized there was no need to pay the rental company ~15% of revenue. Not when we could easily handle the process ourselves via FlipKey for a modest 3% charge.

The results have exceeded our expectations. Our rental income now essentially offsets 100% of our second home’s expense. All while allowing us the freedom to spend time there whenever our schedules allow. We’ve also been very fortunate with our renters, with no damage in over 3 years of rentals.

The Future

Next summer, we plan on putting our primary pre-retirement home on the market. If it sells quickly, we’ll move to the cabin next summer. I’ll get a small apartment to avoid the 100 mile commute during my last year of work. I’ll drive down Monday morning and back home Thursday night.

We’ve intentionally chosen to sell the house a year prior to our earliest possible retirement date. Our logic: if we wait until a few months before retirement and the home takes longer than planned to sell, we run the risk of having to work longer than we’d prefer due to the mortgage obligation. If it sells quickly, we can implement the “downtown apartment” plan. We’ll take comfort in knowing exactly how much equity we’ve realized from the home sale as we finalize our retirement cash flow plan.

The Bottom Line

We were intentional in designing a detailed downsizing strategy as part of our 5 Year Retirement Plan. We’re currently at the 50% implementation level. We know the path forward, and will be patient in implementing the remaining 50% over the next few years.

If your retirement plans include a downsizing move, take the time now to think through the process in detail. Determine where you’d like to live in retirement, and then start taking the steps to put yourself there.

This post originally appeared on The Retirement Manifesto here and is republished here with the author’s permission.

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Fritz Gilbert

I’m a 53 year old corporate commodity trading hamster by day, aspiring philosopher by night, and a lifelong financial “hobbyist” working toward an early retirement (by ~55 years of age, God willing). I’ve had the same great wife for 29 years and a wonderful 22 year old daughter starting her fourth year of college in Fall 2016. I’ve learned a bit along the way, and hope you can benefit from some of my experiences.

Latest posts by Fritz Gilbert (see all)

Posted in Finances, Guest Post, Home Ownership, Retirement and tagged , , , .


  1. Steve, thanks so much for the honor of guest posting on your site! I’m enjoying watching as you progress on your journey with your family, and the way you’re being intentional with your priorities! Thanks again, a real privilege!
    Fritz @ TheRetirementManifesto recently posted…Stealth WealthMy Profile

    • The honor is all mine Fritz! I appreciate your experience and your knowledge through your story and your website! Thanks for sharing your tip and story here with the audience! I’m sure they will benefit greatly!

  2. Nothing better than having a plan! Wouldn’t it be great if the house sold within a month or two of your retirement!? Thanks for sharing. Can’t wait to hear more as you get closer to retirement.

    • Ryan, we were very fortunate, and have actually sold the house since I initially wrote our downsizing strategy. As planned, we used the net equity from our “big house” to PAY OFF IN FULL our “retirement cabin”, and are well on our way toward FIRE in 2018!!
      Fritz @ TheRetirementManifesto recently posted…Stealth WealthMy Profile

  3. Love this strategy! Things are a bit up in the air for us since our kids are just starting to leave the nest starting in 2018 (last one graduates high school in 2021). Once I know better what the kids will be doing, we will look into downsizing.

    • Amanda, no doubt “the kids” are a major factor in the strategy. We didn’t implement the strategy until we were “empty nesters” (and, told our daughter she wouldn’t be allowed to “Boomerang” after college!!

  4. Random note before I comment but I like how you state how long it will take to read the post. Moving on, it is nice that you gave someone the opportunity to guest post and I like the retirement strategy, good luck!
    Ana De- Jesus recently posted…Why Its Ok To Be Single On Valentines DayMy Profile

  5. Nice practical approach to retirement! Also helps put material goods in perspective.
    Daniel Palmer recently posted…Beyond Saving for a Rainy DayMy Profile

    • Thanks for the kind words, Daniel. It’s working for us, and I hope others can learn from the strategy we’re applying!
      Fritz @ TheRetirementManifesto recently posted…Stealth WealthMy Profile

  6. It has to start with a willingness to downsize their possessions first
    Andrea recently posted…Two Great Magazines You Can Get For Free Today!My Profile

    • Andrea, ironic you mention that. I also wrote a post about how to downsize 30 years of possessions in 24 hours! We Did It!

      Couldn’t agree more – possessions must be de-emphasized first. Thx for your comment.
      Fritz @ The Retirement Manifesto recently posted…Stealth WealthMy Profile

    • Kimberly, I can’t stress enough the importance of having a plan!! It’s worked wonders for us, and we’re now only 18 months from FIRE!!

  7. This is what we should all be doing. Planning for retirement will ensure we can still enjoy the things we are enjoying now. My husband and I have decided to downsize too. Pretty soon we’ll be in the empty nest stage of life, which means we don’t need as much stuff as we have now. We’re looking at a small bungalow in the suburbs, away from all the city noise.

    • Good for you, Annemarie!! EXACTLY the right approach, and absolutely aligned with the macro plan we’re implementing. Enjoy less now, enjoy more later. What’s the balance? I agree with waiting until you’re Empty Nesters. We did the same, and it really worked out well.

      Good luck!! Keep us posted! Hope to see you on my site at The Retirement Manifesto!

  8. Thats what we have been talking about too lately. Even though we are only in our twenties we are trying to plan out what to do with our home and still live minimalistic lives and plan ahead.

    • “We’re only in our 20’s”. Can I please give you four words of wisdom? (Thank you!)


      The very fact that you’re AWARE of this stuff (and commenting on a PF blog!) puts you in the top 1% OF YOUR GENERATION! I’d encourage you to worry a little less, and seek the balance of enjoying life now, while saving for life later. It is possible to worry too much about this stuff, don’t let yourself fall into that trap. Life’s about so much more…..

  9. We always try to think ahead. We are setting money aside for retirement. Our home isn’t overly large, so we should be okay there.
    Amber Myers recently posted…Being An Autism Mom Can Be LonelyMy Profile

    • Thinking ahead is 75% of the battle! Save as much as you can (15% minimum, I hope?), and focus on getting yourself debt-free before retirement. You have time, just focus on maximizing your income (it’s more effective than simply reducing your expenses), and enjoy life as you live it!
      Fritz @ The Retirement Manifesto recently posted…Stealth WealthMy Profile

  10. Really a great post. I will share this post with my relatives and family who are close to retirement.. Thanks for sharing.

  11. This post got me curious about what you plan to do – and how you plan to budget – through your retirement. Once you aren’t working anymore, I mean, and your income will see a drastic change. I imagine you will have some sort of pension or something, but I’d love to see a post on how you’ll budget those years, considering that at 55 (your goal retirement age) there’s still quite a lot of living left for you to do.
    Author Brandi Kennedy recently posted…Man Crush Monday: Jamie FraserMy Profile

    • Brandi,

      I will, indeed, have “lots of living left to do” when I FIRE at 55! For budgeting, we tracked all of our spending to the penny for 10 months last year, then made adjustments for what would change post retirement (e.g., no “City Apartment” rent, more camping!). I’ve written about our plans in detail on my site, and have a detailed Retirement Cash Flow model I’ve built to insure we don’t retire until we’re able. 55 will do it!
      Fritz @ TheRetirementManifesto recently posted…Stealth WealthMy Profile

  12. This is such an inspiration. It’s amazing what good planning and dedication can accomplish. This also makes me want to visit the blue ridge mountains for some hiking and kayaking. Ahh the good life.
    The Travel Ninjas recently posted…Dalat Travel Guide – Intro to Da Lat, VietnamMy Profile

    • The Blue Ridge mountain area really is fabulous! I can’t wait to be retired there!!

  13. My husband and I decided to buy our retirement home before we retire as well. I have been trying to talk him into downsizing, but right he isn’t convinced.
    Stacey recently posted…Young Living Bon Voyage KitMy Profile

    • Stacey, retirement planning is most definately something that both spouses have to align on (you’ll be spending a lot of time together!). I’m blessed to have a wife who believes as I do, and our retiremnet visions are almost perfectly aligned! Good luck with “Mr. Stacey”, I’m sure he’ll come around!

  14. A lot of this has never really occurred to me about retirement. This is interesting and no wonder people down size.

  15. One of Dave Ramsey’s famous quotes is: “Live like no one else so you can live like no one else.” He has retirement in view too. The idea is you live frugally and within your means now so you can live better in the future.

    I understand there are some differences from the post in that Fritz is promoting downsizing to live within your means; however, the principle is still the same. Make financially wise decisions to be better prepared for the future. Since many people have children, downsizing in house size is one of the easiest approaches.
    Scott LaPierre recently posted…Generational curses: are children punished for their parents’ sins?My Profile

    • Scott, my wife and I took Ramsey’s Financial Peace Univ course about 10 years ago, and I’ve always liked that quote of his. Find a way to apply it in your own life, it’s great advice!

  16. You’re so smart to get this all figured out now. It sounds like you have a great plan for the future.

  17. This is really practical and sensible. Post retirement, is the time to relax and indulge in your interests, without too much worrying about financial issues. Downsizing take care of a lot of these issues.

  18. very good post, I recently had a discussion with my colleagues about the retirement and I will differently share this with them , thanks

  19. Very good post. Homeownership and all the various trials, tribulations, and opportunities it affords can make or break the difference between reaching those financial goals. At the end of the day we all need somewhere to live, but there’s always that tension with viewing a home as an investment. Really enjoyed that thanks for sharing!

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