In a recent survey of 4,000 Baby Boomer households conducted by the non-profit Demand Institute, 63% of Boomers plan to stay in their current home once they retire. They do not plan to downsize to a smaller home. They do not plan to move to a condo and they do not plan to move in with one of their children. This is a surprising statistic given the expressed interest by many people that they want to sell their homes. They want to find something they can move into which gives them less work. They are looking for freedom to travel both financially and from work to maintain their homes.
Having gone through this same analysis personally, we have reached the same conclusion about staying in our home. We initially thought we would sell our family home. We would find an inexpensive condo, lock the door, and travel. No need to worry about upkeep and routine maintenance activities. Turns out that this dream was not practical from a financial perspective unless we were willing to lose a lot of money. Here is some more detail as to why many boomers are finding this to be the case.
Boomers Staying Home – Expensive to move
We found it to be very expensive to move as we are sure that many others have. Let’s assume that your home is worth $300,000, a nice round number. Real estate fees will cost $15,000 @5%, and legal fees will cost at least another $2000. Various city taxes and fees can vary a great deal from nothing to $10, or $20,000! Then there is the physical cost of moving, even with friends helping is going to cost $500 to $1000. Of course, not all of your furniture will fit in the new home. There are window treatments along with various adjustments and upgrades needed in the new home. The sky is the limit. Add your own number, but we will choose $10,000 to be on the safe side. It will probably be much more than this.
When you add all of this up the cost to move could end up between $30,000 and $50,000 depending on your assumptions. For our money, we would rather put that $30,000 into our own house. We enjoy and stay in the same neighborhood that we have been in for over 25 years. We can also use some of that money to pay someone to look after the house while we are away as well. Note, if you travel, your home insurance will require that you have someone looking after your home while away. They should be checking on it at least once per week or more often.
When you work through the numbers it is evident that we are going to stay right where we are along with 63% of the population.