Pros & Cons of Relocation & Downsizing In Retirement

Transitioning from career life to retirement brings significant change and opportunity.  New retirees can decide how they want to spend their days, as well as where, which may mean staying in their existing home or making a fresh start somewhere else.  Often, when retirees relocate to a new residence, they downsize for less maintenance.  The drivers between the decision to “age in place” or relocate and downsize usually include the following:

• A longing for community or to be near family
• A desire for simpler living
• A need to reduce costs and manage finances
• A quest to improve quality of life

The Benefits of Downsizing

There are many reasons retirees relocate and downsize, but understanding the advantages of a move can help with decision-making.  Here are some of the benefits of relocating.

• Simplified living: Culling excess furniture and belongings makes moving less complicated and allows retirees to furnish a new, smaller home appropriately.  Getting organized, with a smaller place and fewer things, can foster a sense of control. Smaller properties are also easier to maintain, and many homeowners’ association (HOA) communities provide lawn and snow removal services. Other low-maintenance options include townhomes, apartments, and condominiums.
• Reduced housing costs: Moving to a more affordable home can improve quality of life and finances, potentially eliminating or reducing mortgage expenses. 
• Lower utility expenses: This Old House reported that Americans spend a monthly average of $590 on utilities (heating, cooling, water, internet, phone, cable, electricity, waste, and sewer services).  Not only are utilities more affordable in smaller spaces, but these expenses vary by state.  States like Massachusetts, Connecticut, and Maryland cost more than $700 per month, while Idaho, Utah, and New Mexico are among the least expensive, coming in under $520.
• Tax advantages: Each state has its tax code, and some are more favorable to retirees than others, offering little or no tax on retirement income or substantial deductions.  Florida, New Hampshire, Montana, South Dakota, Wyoming, and Alaska are among the most tax-advantaged states.  Sales, property, and estate taxes are also lower in these states.
• Increased accessibility: A home with few or no stairs, an open floor plan, a walk-in shower, and other accessible features may be particularly appealing to retirees with limited mobility or those planning for future life stages.
• Added convenience: Retirees may prefer to stay close to town centers or areas that can meet daily needs with less travel. Living near a grocery store, medical facility, post office, library, and public transportation makes daily life more manageable. Proximity to recreational and cultural attractions can also enrich retirement and help retirees build community.
• Improved quality of life: Relocating provides an opportunity for retirees to start new, and can offer the bonuses of a better climate or family support, in addition to financial advantages.

Considerations for Relocating

Deciding where to spend retirement isn’t easy, and while there are benefits, there are also considerations.

• Cost of relocation: Moving expenses can be significant, especially if the move is long-distance or the new home is not ready once the sellers leave their current residence. Many retirees require movers or assistance, and there are also the costs of establishing a home in a new area.
• Stress: Relocation also takes an emotional toll. Research consistently lists moving among the most stressful life events. A move itself can cause anxiety, amplified by retirees who may be leaving behind the home and community where they raised a family. It takes time and effort to adjust to an unfamiliar area with potentially different cultural norms, pace, and politics.
• Space and privacy: A simpler life in a smaller home comes with tradeoffs, including less space. Retirees must adapt to a leaner life with less accumulation. Downsizing can also mean less privacy, especially in condominium and retirement community scenarios, where social interaction and space efficiency are the fabric.
• Healthcare: Quality, accessible healthcare is a top priority for many retirees.  Those who relocate may encounter complications finding the right doctor, transferring records, and maintaining healthcare continuity after leaving a long-established provider relationship.
• Support: While many retirees relocate to be closer to family, others leave their support network for a better quality of life or climate.  As retirees age and require more assistance with daily activities, distance from a support system can present challenges as they seek alternative ways to cope with their daily needs.

An American Association of Retired Persons (AARP) survey found that while 75% of retirees preferred to stay in their homes, 44% felt a move was inevitable, citing the cost of housing as the driving factor.  Retirees have much to consider, whether they hope to stay in their existing home or seek greener pastures. A financial advisor can help bring clarity with valuable insights about a client’s portfolio and its alignment with their long-term goals.  If you are nearing retirement and are deciding on your next move, contact an SHP Financial advisor for a complimentary review of your finances.