As their retirement years approach, empty-nesters living in an ample single family home typically consider downsizing their residence.
At least, that’s been the conventional wisdom. But it may be wrong.
A recent survey conducted by Merrill Lynch and Age Wave found that 30 percent of retirees actually planned to move into larger homes, while half (51%) had opted to downsize.
The reasons for upsizing one’s home include accommodating boomerang children moving back in and/or grandchildren staying for extended periods.
Even among the Baby Boomers who opted to downsize, the average decrease in living space was just 100 square feet in 2016, compared to 500 square feet two years earlier, the National Association of Realtors reported.
There’s yet another segment of Boomers who intend to remain in their homes and renovate. Called rightsizing, the goal is to reconfigure the spaces to better suit the aging homeowners’ needs. Adding a home-office, updating the kitchen, creating a master bedroom and bath on the ground floor, or building a bonus bunkroom over the garage to accommodate grandchildren staying overnight are a few common manifestations.
What these data points indicate is that there is no single right answer for homeowners entering their retirement years. There are numerous factors influencing where a person will be happiest as he or she ages.
Over the years, I’ve helped several couples navigate these homesteading changes. A few clients downsized by choosing a condo over their single family home. There are many compelling arguments, including lower utility bills, less interior cleaning and maintenance, decreased property taxes and a release from landscaping chores. Plus, selling a home that’s built up equity over a long time span eases cash flow concerns. That said, a financial planning maxim cautions that you should not downsize unless you can reduce your housing expenses by at least 25 percent. That’s because moving, including real estate commissions and other relocation costs, can be significant in offsetting the savings.
Others selected right-sizing, remodeling their homes to better meet their evolving needs. One retired client had her 90-year-old mother move in with her, which necessitated a bathroom renovation and creating an open kitchen so the client could monitor and communicate with her diabetic parent while doing meal prep. Another client converted an upstairs guest bedroom into a den where three generations could more comfortably gather for watching sporting events.
Staying in the same neighborhood has advantages, including remaining close to a network of neighbors, friends, physicians, dentists and the like. There’s also an emotional attachment to a home. This strategy also recognizes that housing inventories are at record lows, making it harder to find an affordably-priced new home.
However, one of the advantages of moving, particularly into smaller quarters, is that it forces one to re-assess and purge one’s personal belongings. Homeowners who haven’t moved for 15 years or longer typically accumulate a lot of stuff: on their shelves, inside closets and cabinets, and in basements, attics and garages.
Earlier this year, a client contacted me about helping to convert her recently deceased parents’ 1890’s-era home into a vacation rental that could generate income for her and her 3 brothers. The interior was extremely dated, with peeling wallpaper adorning several rooms, ornate and sagging window treatments, and a peculiar floor plan. The windows were tiny, the deck and front porch were rotting and tchotchkes were crammed into every corner, with some even dangling from the ceiling rafters. I suggested she and her brothers, all of whom lived out of state and had inherited equal shares of the property, start with a large dumpster. The four siblings and their spouses could not agree on what to keep and what to toss. Moreover, they were overconfident in assuming that local consignment shops would accept their parents’ enormous maple dining hutch, piano and worn recliner chairs.
Save your heirs from this problem. With more free time on your hands, begin editing your furnishings and possessions now. Recycle what you can. Because you can’t take it with you.