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It's said that money is the "support of old age." But if your bank account is empty by the time you reach 61, it's natural to feel anxious. But wait! If you own a home, you can still enjoy a luxurious and secure retirement. In fact, this is called "downsizing" today. Simply put, selling your large home and moving into a smaller one, and using the remaining funds to achieve financial independence for the rest of your life. So, let's understand how you can plan for a secure future using this "home asset" even without savings.

Question: What is the magic formula for "downsizing"?
Answer: Selling your large home and moving into a smaller home to meet your needs, thus saving money.

Example:

Suppose you live in a large 3BHK flat or an ancestral house in Delhi, Mumbai, or any other major city, which is currently worth around ₹2 crore. Now that your children are settled in their lives, you don't need such a large house.

You sell this large house and buy a nice 2BHK house in a smaller city for ₹80 lakh.
After upsizing, you'll have a hefty sum of around ₹1.20 crore left.
So, this is the amount that will become your 'retirement kit'.

Now, how to use the money saved by 'downsizing'?
Simply downsizing isn't enough; it's important to invest the remaining money in a place that will provide you with a monthly pension.

SCSS (Senior Citizen Savings Scheme): You can deposit up to ₹30 lakh, which earns you around 8.2% interest with a government guarantee.
Mutual Fund SWP: If you invest the remaining ₹90 lakh in a hybrid mutual fund and start an SWP (Systematic Withdrawal Plan) from there, you can easily receive a monthly pension of ₹60,000 to ₹75,000.

Checklist: Never ignore these 5 things before downsizing.

Emotional attachment: Old memories are associated with your big house and neighborhood. So, ask yourself if you are ready to adapt to the new environment.

Amenities: Choose a new home in a location where hospitals, markets, and parks are nearby, as connectivity is crucial in old age.

Maintenance costs: Cleaning and repairing a large house is more expensive, so a smaller house will not only save money but also reduce your effort.

Tax Planning: Any profit you make from selling your home is subject to capital gains tax. To avoid this, you'll need to buy a new home or invest in bonds under Section 54EC.

Children's Opinion: Although the home is yours, discussing it with your family can help avoid future disputes.

Explore Another Reverse Mortgage Option
If you don't want to sell your home, you can take advantage of a bank's reverse mortgage scheme.
In this scheme, the bank pays you a fixed monthly pension based on the value of the home.
You and your partner remain in the home as long as you live there.
The payout may be slightly lower than downsizing.
However, this is best for those who don't want to leave their home.

Some Secret Benefits of Downsizing
Besides financial savings, there are also many psychological benefits of moving to a smaller home.
The worry of loans and bills is eliminated.
You get the opportunity to meet new people and pursue new hobbies.

You don't need to depend on anyone else in the future.

Downsizing Plan: Step-by-Step Guide
Steps: What to do? Impact
Step 1: Find the true market value of your current home. You'll get a clear idea of your total budget and potential cash flow.

Step 2: Find a smaller home on the outskirts of the city or in a lower-priced area. Buying a home will leave more money for investment.

Step 3: Divide the remaining money into three parts: a new home, an emergency fund, and a monthly income scheme.

Better late than never?
It's not a crime to have no savings at 61, but sitting idle could be a mistake. Your home is your biggest strength. So, a decision taken at the right time can transform you from a helpless old man to a strong and independent senior citizen. So remember, retirement does not mean the end of work, but rather starting to live on your own terms. (Note: The news is based on general information only)