How Downsizing Your Closet Can Bring You Closer to Retirement
With retirement comes more time to pursue new hobbies and visit loved ones, as well as the convenience of travel. It is also expensive, and requires long-term investments and savings during your working years.
But while contributing to retirement savings accounts and tapping income sources like Social Security are common strategies used to cover expenses in retirement, you may be surprised at the extra cash you can bring in by downsizing your closet. Tearing down your house may not be profitable enough to cover your long-term health care bills or travel dreams, but it can give your budget a little more breathing room.
The benefits of decluttering your closet
Beneath the dust and cobwebs, the things in your closet — like designer clothes, unused sportswear, old electronics and collectibles — can be worth a fortune.
The biggest benefit is obvious: Selling these items means more money. But that’s also money you can put into your investment portfolio to generate long-term returns. The S&P 500 has historically produced an average annual return of approximately 10%. Using that rate of return, a $1,000 investment can grow to about $1,600 within five years. But remember that past market performance does not equate to future returns, and the S&P 500 may not see that high of a return for the next five years.
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Another option is to throw that extra money into a high-yield savings account. It won’t grow as much as the stock market, but it allows you to grow your emergency savings fund and save for short-term goals.
Downsizing offers several benefits that go beyond more space and more money. Selling the clutter can lower the cost of the storage unit, if it works. And a minimalist lifestyle can save time and money that would otherwise be spent on cleaning and maintaining a cluttered home.
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How to make money by decluttering
There are many platforms you can use to sell your items online, such as eBay, Craigslist and Facebook Marketplace. You can also trade in old electronics on Amazon and sell unique items on Etsy. Platforms like ThredUp and Depop allow you to sell clothes online from the comfort of your own home, but you can also visit thrift stores and consignment shops in person to trade or sell items.
Use those resources to check what other people are selling for similar items so you can bid competitively. Clear images and descriptions that highlight what makes your items unique can also help. And consider bundling: Just like in a store, shoppers may jump on a deal.
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