Moving before retirement can help finances in retirement

Of all the moves you can make heading into retirement to shore up your finances, actually moving might be the biggest win.

An analysis of housing costs and property taxes in the 20 largest metro areas estimates the average savings from downsizing is nearly $200,000 over 10 years.

If the kids are finally launched into adulthood, parents looking to boost their finances should give some serious thought to what they might be able to achieve by moving to a smaller home.

StorageCafe analyzed the price difference between two-bedroom and four-bedroom homes, factored in the costs of buying and selling (commissions, moving, etc.) if someone made that move, and what the differential would be in property tax owed on a less expensive home.

In the 20 largest metro areas, the average savings was $194,000.

No surprise, the biggest net savings are in the priciest markets. San Franciscans willing to go a bit smaller could save an estimated $407,000 over the 10 years. Most of it is from the price differential in a bigger vs. smaller home — nearly $1.6 million on average for a four-bedroom home, and around $1 million for a two-bedroom. The tax savings would be an additional $28,500. After closing costs of nearly $157,000, that nets to an estimated downsizing win of $407,000.

In the San Diego metro area, the net savings is nearly $265,000. In the L.A. metro areas, the 10-year savings is $240,00.

The New York City metro area, Detroit and the Washington, D.C., metro area all could deliver estimated downsizing net gains of more than $200,000.

The most modest gain from downsizing is in the metro Phoenix area. The estimated average 10-year savings is around $93,000.

The remaining 10 biggest metro areas (Philadelphia; St. Louis; Dallas; Riverside-San Bernardino, Calif.; Chicago; Denver; Tampa-St. Petersburg, Fla.; Houston; Minneapolis and Atlanta) have estimated downsizing gains of between $107,000 and $194,000.

The analysis is likely on the conservative side, as it didn't factor in potential savings from lower utility bills. Nor does it consider the potential gains from taking any savings from the actual move and investing it. Or earmarking the savings to help you pull off another valuable retirement move: having the high income earner in a household delay starting Social Security until he or she reaches age 70.