In a 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. This is a huge number and is driven by a number of financial and emotional issues that we will all face one day. With more retirees staying in their homes, what does this mean for families?
The real question is when is the right time to stay and the right time to find something smaller, perhaps less expensive, and easier to maintain? This is a tough question for many people since there is often a lot of emotional attachment to the home. After all, it may be the home where you raised your kids, you have lived in it all your life or you may just like the neighborhood and the people who are your close neighbors. it could also just be sentimental reasons that keep 63% of people who are retiring staying in their homes.
Retirees Staying in Their Homes – Considerations
The most obvious question is whether you can afford to stay where you are. There is a general day to expenses for utilities and care of the lawns etc. Then there are repairs that are needed from time to time and as we get older, we can usually do less and less which means that either it costs more to hire help or the house gets that run-down look, and the value of the home declines.
Health is another issue that affects your ability to continue with maintenance. Health costs may also dictate that the house needs to be sold to cover the cost of health treatment unless you have lots of savings to live on.
Moving is not inexpensive. There is the cost of legal and real estate fees. The actual cost of moving and doing upgrades the costs can add up very quickly. In some markets, that condo you are looking at just might be more expensive than the house you are selling.
For many seniors, it is just simpler to stay in place. Spend the money that would have gone to cover moving costs on maintaining your home. It becomes a very personal decision based on the situation, finances, emotional ties, and many other personal issues. Try to work through them one by one. Remember that no decision or delaying a decision is actually a decision to maintain the status quo!
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.