Vanguard: Where You Move in Retirement More a Lifestyle Than Investment Choice

April 30, 2018 — 3:23 PM EDT

Retirees have options in terms of where they live out their golden years. But it's more of a lifestyle choice than an investment one, and the decision should be framed like that when planning to exit the workforce. While many people consider moving when they retire, research has shown that most stay put, Vanguard said in a recent blog post, pointing to data from Freddie Mac in which 63% of homeowners aged 55 or older said they plan on aging in place.  

"Moving is a big step. It means saying good-bye to your home, sorting through your belongings, and deciding what to give away and what to keep. But it can also mean embracing a new, lower-maintenance lifestyle," wrote Tony Giordano, a senior financial advisor in Vanguard Personal Advisor Group, in the post. "Then there's the cost. Housing accounts for more than 33% of total expenses for many seniors, according to the Bureau of Labor Statistics. That's a big chunk of the budget. Even if you think you'll stay in your home after you retire, it's still worthwhile to consider your options."

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According to Giordano, for those who are planning on staying in their home, there are a lot of benefits for going that route. For starters, you won't lose your community and local support structure. Plus, you'll benefit from living mortgage free if you did your job and paid off your home loan during your working years. If there is no mortgage, staying could be the most affordable choice. That's not to mention that you may not want to downsize to a smaller home if your house is the place family and friends gather.

On the negative side, there could be hidden costs associated with remaining in your home. Giordano pointed to home maintenance and repairs each year, the need to take care of a home that has more space than your needs and the physical challenges of getting older. There could be a time when that flight of stairs to your bedroom is no longer an option.

For those looking to downsize into a small or cheaper home, there are benefits to that decision too. For starters, if the new home is cheaper and you make a profit on your home sale, you'll have more money to invest. That will boost your retirement savings. A smaller home also means lower utility bills each month as well as maintenance and repairs that cost less than if you owned a larger home. However, those planning for retirement have to keep in mind that smaller doesn't always mean cheaper. These days, there are apartments, townhomes and condos that have a lot of amenities for retirees, driving the cost of the property higher, not to mention homeowners association fees.

A third option is to move into a retirement community, which could be particularly attractive to those who want to stay social or don't want to feel isolated during their golden years. But those social activities come at a cost that may be too pricey for retirees and have to be considered. "Deciding where to live in retirement is more of a lifestyle choice than an investment choice," said Giordano. "Taking the time to think through your options now can help you envision your retirement. That's the first step to building the life you want."