By Harriet Edleson, Next AvenueContributor

As you approach the time of your life when you won’t be bringing home that hefty paycheck, it’s time to start thinking about the kind of life you’ll want to live and how you’ll finance it.

Take the opportunity to dream about yourretirement. Are there things you’ve always wanted to do, places you’ve wanted to visit, even something you’ve wanted to buy? A sailboat, perhaps? If so, selling your home can be a way to free up money and create a new lifestyle that will cost you less.

Your Cost of Living in Retirement

The first step is to figure your likely cost of living in retirement. Finding ways to spend less on housing can be your single best strategy.

(MORE: What to Know Before You Trade Down)

First, evaluate how much your current home is worth by obtaining a professional appraisal and decide whether you’d be willing to downsize locally, downsize and relocate or relocate to a bigger place that would cost less. In a recent Merrill Lynch/Age Wave survey, 51% of people who’ve relocated in retirement said their most recent move was to a smaller home.

A growing number of older Americans are carrying mortgages, an expense that might shrink for some who sell their homes and rent. More than 30% of homeowners 65 and older are still making mortgage payments, according to a May 2014 Consumer Financial Protection Bureau report, up from 22% a decade earlier. And among those age 75 and older, the percentage carrying a mortgage nearly tripled during that period: from 8.4% to 21.2%.