Households 65 and older make up 22% of all households and 40% of home equity in the US, about $4 trillion.

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.

The Mountain and South Atlantic regions were also highly rated for cost of living (58% of retirees in each region were highly satisfied).

About 6% of retirees are “snowbirds,” with homes in two different regions. “It’s a meaningful number, but it’s not a quarter or a half,” Dychtwald said.

Among pre-retirees, 80% who currently live in the South Atlantic say they’ll probably stay there after they retire, and 39% of pre-retirees considering a move in the future say they’ll choose that area.

The Pacific region was also an area pre-retirees said they would likely stay in when they stopped working.

Home Is Where the Heart Is

Retirees who said they don’t plan to move gave a simple reason: They love their home. The survey asked respondents whether the emotional or financial value of their home was more important to them and by age 55, the value was split 50-50. As respondents got older, they assigned a greater emotional value to their home.

“That backyard is not just a backyard. It’s a place where people had fun and there were parties and they looked out at the stars with their kids,” Dychtwald said. “The memories have been baked into that home and for many people, are the reasons they want to stay.”

In the second phase of retirement, health is a more important factor in where people live, David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch, said. On average, people enter assisted living facilities around age 85, but because their homes have such a strong emotional value, retirees want to stay in them as long as possible. Retirees 55 and older account for about $90 billion annually in home renovations, the study found. Tyrie said most of those renovations are to make the house more “attractive, comfortable and versatile.”

Technology upgrades that make a home more convenient or secure are also popular. The study found 80% are adding smart thermostats or apps to control appliances and 76% are interested in technologies that can help them monitor their health, like sensors or medication reminders.

When retirees reach their 80s, health becomes a significant factor in home-related decisions, Tyrie said. Harvard’s Joint Center for Housing Studies found five key factors for an accessible home: no step entries, single floor living, extra wide halls and doorways, accessible remote controls and switches, and switching knobs out for levers. “We found that only 1% of homes today have all of these features,” Tyrie said. “Another dynamic to aging in place is 52% of people who are 75 or older live alone.”

“Advisors need to bring the home explicitly into the dialogue with their clients,” Sieg said. “Home is not a topic that should only be raised in the context of refinancing a mortgage. When you look at the emotional factors, the decisions that impact families, ties to help, this is at many levels the most important topic that advisors and clients should be speaking about.”

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