Retirement often creates the freedom to decide where to live, and many retirees make the decision to move to a different home, community or part of the country. An estimated 4.2 million retirees moved into a new home last year alone.
Sixty-four percent of seniors say they are likely to move at least once during retirement, with 37% having already done so and 27% anticipating doing so.
Among other items, the desire to lower home expenses, encountering health challenges, facing divorce or widowhood and empty nesting can all be triggers for moving during the retirement years. However, retirees cite “wanting to be closer to family” as a top reason for making this transition.
Making the decision to downsize a home is one of the toughest decisions baby boomers and seniors in retirement grapple with.
Start by asking the following five questions.
- Is maintaining your house starting to wear you down?
- Are you comfortable managing your daily routines?
- Can you get around to stores, restaurants and social activities?
- How much support would you have in an emergency?
- Will loved ones worry about you and do your children need peace of mind that you’re safe?
The Upside to Downsizing
A little more than half of retirees who downsized during their last move cite freedom from the financial and maintenance burdens of a larger home as the top reasons to simplify. By reducing expenses and releasing equity tied up in a larger home, downsizing helps make retirement more financially secure.
Here’s a surprise! Most people assume the bulk of retirees move so the can downsize. In fact, 49% actually go bigger. Some do it to comfortably accommodate visitors, including children and grandchildren, from out-of-town.
Others retirees find themselves in a boomerang situation (16%) with adult children returning to live with them. Between 1980 and 2010 the number of multigenerational households doubled from 11% to 22%.
Preparing for the future
A few topics to consider when thinking about the future and making housing decisions.
Future Life Stages
When deciding where to live in retirement, think of future life stages and priorities regarding factors such as affordability, climate, proximity to family and friends, recreational or cultural activities, and opportunities for continued work. Test-drive potential relocation areas by making long visits or doing short-term rentals.
Analyze expenses associated with all your options. These might include expected income, mortgage or rent payments, property taxes or relocation expenses along with any renovations needed to improve the aesthetics or the property or for aging-in-place purposes.
Pay Off Your Mortgage
Determine whether paying off your mortgage before retirement is a financially beneficial to your long-term plan.