Rather than staying put or downsizing, a majority of retirees are likely to move at least once during retirement, and 30% move into larger homes, Merrill Lynch found in “Home in Retirement: More Freedom, New Choices.”
Two-thirds of retirees in the study, conducted with Age Wave, a research group on aging, said they live in the best homes of their lives. With newly found freedom from work and family restrictions, fewer home-related financial concerns, and unprecedented longevity, retirees are much freer to pursue a home that fits their desired lifestyle and changing priorities. The study also found that 64% of retirees are likely to move at least once during retirement, with 37% having already moved and 27% anticipating doing so.
How and where the nation’s aging population chooses to live will have widespread implications on the way homes are designed, the resources people will need, and how communities and businesses nationwide should prepare, according to Andy Sieg, head of global wealth and retirement solutions for Bank of America Merrill Lynch. “For most retirees, their home is more than just a financial consideration, it’s a place where family and community come together, and can represent treasured memories or independence,” Sieg said.
During the next decade, the number of age 65+ households in the U.S. will increase by nearly 11 million, while growth in the number of households across all other age groups will be less than 2 million. This tremendous growth among older households is driven by powerful demographic forces, including the massive Baby Boomer generation now moving into their retirement years and increasing longevity leading to longer retirements.
The new research explores priorities and concerns of retirees and pre-retirees when choosing the type of homes and communities they hope to live in during retirement.
The study also examined the powerful connections people have to where they live. Throughout most of people’s lives, where they reside is determined in large part by work and family responsibilities. However, as people enter their late-50s and 60s they approach and begin to cross what this study reveals as the Freedom Threshold, with retirement representing a gateway to unprecedented freedom to choose where to live. The study found that:
- By age 61, the majority of people feel free to choose where they most want to live.
- Retirees are more than twice as likely to say they are free to choose where they want to live when compared to pre-retirees (67% vs. 30%).
- Four out of five (81%) Americans age 65+ are homeowners, and among them, 72% have fully paid off their mortgage.
On the Move
With new freedom to decide where they want to live, many retirees move to a different home, community or part of the country, with an estimated 4.2 million retirees moving into new homes last year alone. The top motivations for moving include being closer to family (29%), reducing home expenses (26%), and changes in health (17%) or marital status (12%).
Many people assume they will downsize once retired. However, the study found that half (49%) of retirees didn’t downsize in their last move. In fact, 30% moved into larger homes.
Retirees’ top reasons for upsizing were to have a home large and comfortable enough for family members to visit (33%) or even live with them (20%). According to this study, today one out of six retirees (16%) has a “boomerang” child who has moved back in with them.
Retirees who did downsize (51%) cite greater freedom from the financial (64%) and maintenance (44%) burdens of a larger home among their top reasons.
Increasing longevity and greater freedom make it unsurprising that so many retirees are striving to make their homes even more fulfilling, pointed out David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch. “Achieving your dream home in retirement requires careful forethought and preparation,” Tyrie said. “Whether moving or staying put, it’s important to carefully consider expenses associated with current goals and future priorities, including potential challenges during later years.”
Among retirees who have not and do not plan to move during retirement, the top reasons include their deep emotional connection with their home (54%), close proximity to family (48%) and friends (31%), wanting to remain independent (44%), or because they simply can’t afford to move (28%). Prior to age 55, more homeowners say the financial value of their home outweighs its emotional value.
As people age, however, they become far more likely to say their home’s emotional value is more important, as cited by nearly two out of three people (63%) age 75 and older.
Among people age 65+ who moved last year, most (83%) chose to remain in the same state; however, roughly one out of six (17%) relocated to a different state or part of the country.Changing Landscape
Where pre-retirees say they want to live in retirement may provide a glimpse of how America may be reshaped in the coming years.
Sixty percent of pre-retirees anticipate staying in the same state or region, while the remaining 40% see retirement as a chance to try living in a new part of the country.
To a large degree, where pre-retirees say they want to stay or move to in retirement mirrors where today's retirees say they are the happiest. For instance, roughly four out of five pre-retirees living in both the South Atlantic (80%) and Pacific (77%) U.S. regions say they want to continue living there in retirement—two of the top three regions where current retirees give the highest marks among ideal places to live.
Among pre-retirees who want to move to a different region once retired, the South Atlantic is the clear winner, with 39% saying they would most want to move to that region, followed by the Mountain (25%) and Pacific (16%) regions.
With age and retirement often come more flexibility, time and financial resources for home improvements. In fact, age 55+ households account for nearly half (47%) of all spending on home renovations—about $90 billion annually. While some retirees modify their home to make it more age-friendly, many also renovate to make it more attractive or versatile.
For instance, renovations made by retiree homeowners age 50+ who plan to stay in their home throughout retirement include:
- Creating a home office (35%);
- Improving curb appeal (34%);
- Upgrading a kitchen (32%) or bathroom (29%);
- Adding safety features to accommodate aging (28%); and
- Modifying home to live on one floor should there be trouble with stairs (15%).
Many retirees are also interested in new technologies that can make their homes more convenient, connected, secure, and easier to maintain. For instance, 80% are interested in innovative ways of reducing home expenses, such as smart thermostats or apps to control appliances, while 58% are interested in technologies to help maintain their home, such as cleaning robots or heated driveways.
Though people enjoy many new freedoms during retirement, health and care can become significant factors when choosing where to live, particularly as people reach their 80s. Among people age 85+, three-quarters (74%) have difficulties with daily activities, including housework or getting around the home. And while the average age of people entering assisted living is 85, people overwhelmingly prefer to receive extended care, if needed, in their own home (85%).
“The good news is that there have been tremendous innovations in both technologies and home care services that enable retirees to live independently even if they face health challenges,” says Ken Dychtwald, founder and chief executive of Age Wave. “In fact, as more Boomers enter their retirement years with more freedom and new choices, we will see a growing number of homes, communities and technology innovations designed to meet people s needs and desires throughout every stage of retirement.”
“Home in Retirement: New Freedoms, More Choices” can be downloaded from Merrill Lynch’s website.