Downsizing to a smaller house could make sense if you’re looking for a simpler lifestyle, and you might be able to use the proceeds from selling your home to pay for a new one, perhaps in an all-cash transaction. Still, says Rowe, “sinking most of your cash into a new home could limit your ability to cover unexpected expenses.”
Buying a larger place, Hutchins notes, could allow you to share a home with your adult children, perhaps helping them out financially now and calling on their support as you age. A larger home might also be the right choice if you’re interested in a “co-housing” arrangement (think The Golden Girls), in which a group of friends share a home for companionship as well as savings.
Another popular option is an age 55-plus community, which may offer amenities geared toward active, healthy lifestyles while also relieving you of the need to maintain your home and yard. Read “Choosing a retirement community: 7 questions to ask first” for more useful insights about everything from homeowners association restrictions to resale value before you buy.
Tip: “Whether you’re upsizing or downsizing, be sure to consider taxes and the cost of living in the new area,” Storey says. “Costs of goods and services can vary dramatically.”
Looking ahead to long-term care needs? Start planning now.
One option is a continuing care retirement community, where you can live independently, then progress to assisted living and finally to full, 24-hour skilled nursing care or memory care, if necessary. There’s a significant buy-in cost and depending on the facility and the contract you sign, you may be covered for everything you need, or you could be charged for increasing levels of care.
Selling your current home could help finance such a move in the later years of retirement, says Storey, but he cautions against overestimating how much your home’s sale might bring. “If you expect a dramatic appreciation and the house sells for less, that can really change the outcome of your plan,” he says.
Tip: If you decide to purchase long-term care insurance to help cover your needs as you age, think about getting a policy in your 50s, when premiums will be lower and you’re less likely to have disqualifying preexisting health conditions, says Storey. And talk with your advisor about other ways you might be able to cover added expenses for the care you may need to continue living more independently.
With so many housing options to consider, the decision often seems overwhelming, notes Hutchins, but it can be a positive, liberating experience, too. “Look at what you’ve always wanted to do, and then put the pieces in place to make that happen,” she says.