Trading Down   One day you suddenly come to the realization that you've got more space than you really need. If you're like most near or actual retirees, these feelings may also accompany the realization that you don't have as much money to live on during your retirement as you'd like. Don't despair! Now may be the time for you to trade down -- sell your current house and either buy a less expensive home or become a renter. Thanks to the Taxpayer Relief Act of 1997, house sellers can more easily shield from tax a big portion of their house sales profits. Single taxpayers can avoid capital gains taxation on up to $250,000 and couples filing jointly up to $500,000 of profit. As long as you lived in the house as your primary residence for at least two of the previous five years, this tax exclusion is available to you. Presuming you're willing to sell your primary residence, the new house sales tax law makes it easier to convert your home equity directly into liquid investments you can live off during retirement. Of course, such a strategy requires you to either trade down or become a renter; trading to an equal cost or more expensive home won't free up more of your money. Retiring is a major life change. Take your time in assessing your options and don't be rushed into making decisions you're not ready to make. Be sure that you understand the financial ramifications of a move. At the same time, don't make the mistake of basing your retirement housing decision entirely on a calculator, while ignoring your personal needs and emotions. Sometimes, you just get buried beneath an avalanche of financial questions in your life -- including whether or not to sell your home -- and you may need someone to help you dig yourself out. Hiring an objective, competent, and affordable advisor may be your ticket to better decision-making. If your experience is like that of many who have come before you, finding such a good advisor will be a challenge. Most financial planners work in a way that creates conflicts of interest -- either because they sell financial products that pay them a commission or because they manage money for ongoing fees. Most financial advisors spend the bulk of their time making investment recommendations and analyzing retirement plans, not helping people like you decide whether to sell their homes. If you do end up hiring someone to help analyze your situation, the more educated you are, the better able you'll be to evaluate that person's competence and to make efficient use of your advisor's time and, hence, your money. Always clarify what expertise you're seeking -- be it tax, legal, retirement planning, investment advice, or whatever. And remember that a good advisor's job is to lay out the facts, discuss the options, and recommend what's in your best interests.