Retirees say they feel more freedom to live wherever they wish than they did when they were younger and obligations of family and work kept them tied to a place, according to a survey released Wednesday by Bank of America Merrill Lynch and Age Wave. The survey identified age 61 as the “freedom threshold,” the age when most respondents said they were free to choose where they wanted to live.
On a webinar discussing the survey results, Andy Sieg, head of global wealth and retirement solutions for Bank of America Merrill Lynch, cited data from the Joint Center for Housing Studies at Harvard showing that over the next 10 years, households over age 65 will account for nearly all household growth in the United States. Ken Dychtwald, founder and CEO of Age Wave, which partnered with BofA Merrill on the survey, said that while those 65-plus households make up 22% of all households, they account for 40% of home equity in the U.S., about $4 trillion.
“One stereotype that I hope we’re going to blow up here is that when many people think of housing for the age 65-plus population, they narrow their thinking to assisted living or nursing homes.” Sieg said.
The survey found two distinct phases of retirement living, according to Sieg. The first, which can span 15 years or more, he said, is defined by retirees’ aforementioned feeling of freedom. The second usually begins when retirees reach their mid-80s and their health begins to have a bigger impact on their lives and mobility.
“While many retirees move, more don’t,” Sieg said. Dychtwald added that for many people, retirement planning is all about practical planning. “There’s no question that from a practical point of view, downsizing is a sensible thing to do.” However, “retirement is not all about being practical.”
Instead of downsizing, the survey found, almost half of retirees moved to a similar sized or larger house. In fact, 30% of retirees who moved chose a larger home.
Reasons for downsizing were familiar: lower housing costs, easier to maintain, needing less space. The big reason retirees gave for upsizing was to make sure they had room for family and friends to stay when they came to visit. Dychtwald said he expects to see more of that. “More and more people are trying to turn their empty nest into a nurturing nest.”
So Where Are They Going?
Age Wave estimates 4.2 million retirees moved to a new home last year. The survey found 64% of retirees say they’ll probably move at least once during their retirement and 37% have already done it.
Of the retirees who moved last year, 83% stayed in the same state. The survey estimated more people will move when they retire in the coming years, as just 60% of pre-retirees said they expect to stay in the same state or region.
Retirees in the Rocky Mountain states, as well as Arizona and Nevada, were happiest with their climate and weather, with 70% saying they were highly satisfied. Retirees in the South Atlantic and Pacific coast, including Alaska and Hawaii, were also happy there, with over two-thirds in each region reporting being highly satisfied with the climate.
Almost 60% of retirees in the South Central region (from Oklahoma and Texas to Kentucky, Tennessee and Alabama) were highly satisfied with the weather there, but more retired residents reported the same level of satisfaction with the cost of living (63%) than in any other region.