Will your retirement home be smaller or larger than your current home?
The last of my generation—technically, I’m a Baby Boomer, although I often feel closer to Generation X—is approaching that magical time, retirement. It is a goal many of us have been planning and working a long time to achieve. Others of us never thought we would or planned to “work until I die.” I was in that last camp, so I found more work to do once I “retired.”
One constant throughout our lives, however, is the need for housing. Babies, teenagers, young adults, middle-agers, retirees, and elders all need a place to live. A traditional strategy of the nuclear family has been to downsize their homes at retirement, but a growing number of retirees are upsizing now instead. Del Webb of Sun City (which my naughty fingers always want to spell with two I’s) recently conducted a survey of people in their 50s and 60s who plan to move again sometime. Bucking recent trends, 43% said they plan to move into a house of similar size to their current one while 22% said they planned to upsize.
Before I go on, a couple of caveats. A single survey should never be used as a market indicator. I also suspect that Del Webb’s choice of a sample population may have significantly influenced their results. Del Webb markets to very affluent retirees. If their sample was exclusively from their target audience, it would be like using the population of Clute, Texas to predict the results of the next election cycle. There probably isn’t enough diversity to represent the general population.
That said, let’s look at some reasons why people might choose to up- or down-size.
Using the equity in your existing home
For many people, the equity accumulated in their homes is their retirement plan. That’s why home equity loans used for anything other than home improvement is a bad debt. When people look to downsize in retirement, they often use their home equity to pay cash for a smaller home and the rest to maintain their lifestyle in retirement.
Smaller homes are cheaper and easier to maintain than bigger ones. The costs of everything from painting to flooring to a new roof are proportional to the number of square feet in the home. And there is simply less to sweep, dust, and mop, giving you more time to enjoy your retirement—unless you look forward to those chores. Then maybe you should upsize.
Moving to a less expensive area
If you’re moving from NYC to Florida, LA to Houston, or Austin to Cameron, you can buy more house for the same price in your new city. While tax laws don’t currently encourage or discourage this behavior, having the ability to buy a bigger house can be its own excuse.
Room for visitors
Many retirees hope their children and friends will spend time with them. Some even move to resort areas to encourage visits. If so, you’ll need a place to put those folks, and a bigger home can be just the ticket.
Many boomers and Gen-X’ers have parents to take care of. This move toward a more traditional extended family is awesome. My mom and dad lived in their own house until they died. They refused any offer of cohabitation until near the end. But not all of our parents have the means or the health to maintain their independence so long. I firmly believe we should help our elders stay at home or move in with us—whatever they choose.
Helping elders stay independent at home is why Sue Ann, Kathleen, and I co-founded Hearts, Homes, and Hands to provide non-medical personal assistance. Suna and I will eventually be clients as well as principals of that company. Our goal is to provide the services and care our clients want and to uphold the inherent worth and dignity of all our elders.