Retirement housing decisions should form part of your financial plan.
Your home is an emotional anchor, provides daily comfort and shelter, memories, and nearness to friends and community.
Homes are also a significant source of wealth for retirees.
The value of many retirees’ homes is often as much or more than their combined pension and investment portfolios.
But expenditure related to your home (council tax, utility bills, insurance, parking maintenance, service charges) also usually make up a significant portion of the overall household budget.
The most recent ONS survey suggests that housing costs (excluding mortgage payments and other expenses of house purchase) make up 29% of total average expenditure in the UK, making it the largest spending category for most people.
Housing needs change
Joseph Coughlin, of the MIT Agelab, has identified how our housing needs change as our bodies slow down and health issues or other aspects of ageing make us less mobile.
He states that, when considering retirement housing decisions, we should be asking ourselves:
-whether we can continue to live in and properly maintain the same home
-whether we can continue to enjoy necessary conveniences even if we stop driving our cars, and
-what will happen to our social lives and our opportunities to remain active as old friends also become less mobile or move away?
For new retirees, it shouldn’t be necessary to answer these questions for some years.
However, the significant life changes associated with retirement provide an excellent opportunity to reflect and to develop a set of contingency plans.
Where to live
In the early retirement years, it’s important to think about where to live, how long to stay there, and whether to move later in retirement.
As time moves forward, it is essential to live somewhere with social connections, transportation options, quality health care and, possibly, long-term care services.
And there are plenty of other reasons why moving home might make sense in early retirement:
-Retirees are no longer constrained to live close to their employers.
-Empty nesters may decide that they no longer require a home as large as when it was full of children.
-Children may have moved to other parts of the country, and new retirees may wish to be closer to their grandchildren.
The reduced need to remain settled in one location for children and work may create unprecedented freedom to move elsewhere.
This newfound freedom can create a whole new set of options about where to live that may not have been realistic before.
Big home drawbacks
Large homes require more cleaning, heating and cooling, and come with higher council tax bills. A house move can make a lot of sense from a financial perspective.
Despite all of this, most retirees still decide to stay put in retirement.
The propensity to move peaks in an individual’s 20s and then declines until about 50, where it subsequently stays put at the lowest relative levels.
Older individuals are not more likely to move, and there no increase in the rate of moving at typical retirement ages.
Retirees have developed family and community ties and friendships they do not wish to leave behind. Many also have significant memories and good feelings about their homes and want to maintain the stability and familiarity those represent.
The home can be a hugely important part of our emotional identities, and we often feel anchored to it.
It is vital for your home to be included as part of your retirement plan and to make informed choices about where you might live and when you might move. Your financial plan will help you to make these decisions.Retirement housing decisions should form part of your financial plan Click To Tweet