Retirement Real Estate: Should You Downsize or Age in Place? As retirement approaches, you may find yourself wondering how and where you'll live during your golden years. There aren't many choices facing you in your retirement that will impact your...

As retirement approaches, you may find yourself wondering how and where you'll live during your golden years. There aren't many choices facing you in your retirement that will impact your lifestyle and well-being more than the question of what type of housing is best for you and your family. The two main choices are:

• Downsizing and selling your current home, either to move to a smaller home elsewhere, a retirement or assisted living facility, or a relative's home (for example, moving in with an adult child); and

• Aging in place—that is, hanging on to your existing home and remaining where you are, perhaps with some modifications for safety and ease of mobility.

Which option is best for you? That's a decision you should make after careful analysis of both the drawbacks and benefits each can offer, in light of your personal needs.

Downsizing: Lightening Your Load and Starting Fresh

Downsizing involves whittling down your belongings and choosing a smaller residence for your retirement years.

The act of downsizing can be overwhelming given the need to sort through the accumulated property and memories of a lifetime. That's to say nothing of the actual move itself, which can be hard on older adults. You'll also need to evaluate new potential locations and homes (or facilities) and choose a place that appeals to you and meets your needs as you age.

However, downsizing offers a number of attractive potential benefits, including:

• Lower expenses: If you choose to sell your home and buy a smaller one, either in your current town or elsewhere, you may well enjoy lower carrying costs and housing expenses. You may also minimize the need for future modifications with a new home that's already well-configured for aging residents.
• Reduced maintenance needs: Downsizing into a smaller residence usually means that you'll be able to spend more of your retirement enjoying life, rather than performing home maintenance and upgrades.
• Greater convenience and accessibility: As we age, we all need to consider how our changing physical realities might necessitate some adjustments in order to keep our living spaces accessible and convenient to use. A set of stairs in a two-story home might be no big deal in our 30s, but can pose a significant safety and health risk as we age. You may also want to pick a place with more walkability, or a greater concentration of medical facilities that cater to aging adults.

Aging in Place: The Comfort of the Familiar

Alternatively, you may decide to stay put in your current home, making modifications as necessary to provide support and functional assistance. While you may be saddled with the maintenance and upkeep of more space than you actually need, aging in place also offers a number of potential benefits:

• Maintaining independence: Staying put in your current home can help you feel more in control of your life and maintain your sense of independence as you transition from full-time work to retirement living.
• Familiar surroundings: Aging in place means that you can maintain the relationships with neighbors, friends, religious communities, and service providers that you've worked hard for so long to build and nurture.
• Freedom to modify home to your preferences: Aging in place may require home modifications, such as installing safety rails and ramps. Staying put means you get the freedom to make these modifications according to your own preferences.

As with downsizing, choosing to age in place will have a number of wide-ranging effects on all aspects of your retirement lifestyle. Make sure you consider these benefits in light of potential costs, as well as examining how closely these effects align with the way you want to live now.

Financial Considerations

Your ultimate choice will depend to a large degree on your financial assets and constraints. Downsizing means you'll incur the substantial costs involved in moving, such as a moving company, storage space, and possibly new furniture. If you'll need an assisted living facility, you'll face ongoing housing costs that can quickly deplete a retirement fund.

However, you'll also incur some costs if you decide to age in place and retrofit your home to make it safe and accessible as you age. Sometimes, these modifications can be expensive, depending on the modifications you'll need to make. Adding a safety bar in a shower isn't a terribly pricey project, for example, but installing a chair lift or widening all your doorways to accommodate a wheelchair may put a big dent in your retirement savings.

Lifestyle Considerations

You should also consider your lifestyle needs and preferences before you choose between downsizing and aging in place. Both of these choices can impact the way you spend your retirement years.

For example, if you move to a new home, whether it's in a new neighborhood or an entirely new area of the country, you'll enjoy the opportunity to make new friends and become part of an active community. However, you'll also be leaving behind your existing social connections. Aging in place means you enjoy what's familiar to you, but you also miss out on forging new relationships that might be even more beneficial and supportive.

As a retiree, you'll also want to make sure that wherever you live, you'll have adequate access to medical providers and healthcare. If you move to a new area, you'll need to establish a care relationship with new providers. On the other hand, your current city of residence might not be able to meet your medical needs.

Health Considerations

In fact, healthcare and well-being is one of the most critical considerations when choosing between downsizing and aging in place. Even if you're in great health right now, there's no guarantee that will continue to be the case throughout your retirement years. According to one 2006 study, within the first six years of retirement, you can expect on average a 5-16% decrease in mobility and a 5-6% increase in illness or disease. And healthcare costs can be a major expense in retirement.

For most new retirees, the biggest and most immediate health concern is mobility. If you don't need an accessible home right now, you can reasonably expect for this to be a concern at some point over the next decade or two. You might require a home with an elevator, or at least without steep stairs. Ultimately, you may need a home that can accommodate a mobility scooter or wheelchair.

Additionally, if you retire with a chronic health condition, you might need some specialized equipment or living arrangements. You may also need regular access to adequately trained and experienced specialists for your medical care. And while no one wants to think about this, many retirees experience memory deficits or more serious cognitive problems as they age. You may want to invest in a home with additional security or a facility that offers access to specialized care as your condition progresses.

How to Make the Right Decision for You and Your Family

If you're struggling to choose between aging in place and downsizing to a smaller residence, but want to ensure your ultimate decision is the right one for you and your family, try this simple four-step process that's designed to help you stay focused on your key needs and constraints.

1: Evaluate Your Current Residence

Take full and objective stock of your current living situation, specifically for the following features and needs:

• Navigability—can you get around your home easily? What if you needed a walker or wheelchair? Identify potential trouble spots.
• Access to necessary services—how close are you to your doctors, grocery stores, public transportation, and favorite activities?
• Maintenance needs—does your current home require a lot of upkeep?
• Available space—does your current home feel cramped or too big, or somewhere in between?

Try scoring your current location on a scale from one to ten for each factor, then you'll have a measurable data point to compare to alternative locations you're considering.

2: Consider Your Future Needs

You'll next want to think about your future needs, plans, and preferences. How is life likely to change for you after you retire? Think about the following factors:

• Will you need help with daily life activities? Is that likely to change over the next year or two?
• Are any current acute or chronic health issues likely to increase your need for hands-on help?
• Will you have close friends or relatives nearby who can lend a hand if required?
• What are your plans for travel? How close to home do you plan to stay?

This is the part of the analysis that implicates your plans for your retirement lifestyle. Think about the ways in which you want to spend your time and what kind and level of support you anticipate needing.

3: Think About the Pros and Cons

As we noted above, both aging in place and downsizing have benefits and drawbacks. Aging in place means that you can:

• Stay in a familiar environment with familiar belongings
• Maintain your current routines and social connections
• Stay in the neighborhood you love
• Save money and energy on the process of moving

On the other hand, aging in place carries a few drawbacks:

• Potential for extensive and costly renovations, if not now then over time
• Increasing isolation if you can't travel or if social connections break
• Need for external assistance to keep things orderly and well-maintained

Downsizing also offers some advantages. In general, it means you can:

• Select a home that's already aligned with your mobility and access needs
• Free up the equity in your current home
• Reduce carrying costs such as taxes, insurance, and utilities
• Find a new community that might better support your retirement lifestyle, with greater access to social networks and activities
• Simplify your life and free up time and mental energy to spend on more enjoyable pursuits

However, you'll need to be prepared to part with belongings that you love or make some tough choices about what to sell, give away, or toss, since you won't have as much space to work with. You might also feel homesick in a brand new community, miss your previous familiar routines and friends, and experience unanticipated difficulties in adjusting to a new place.

4: Ask Your Trusted Advisors for Their Input

Whether you turn to professionals, such as tax consultants and lawyers, or your family and friends—or a mix of the professional and personal—it's important to seek counsel from others as you compare the pros and cons of each choice. The people who know you best can give you invaluable insights that'll help you pick the alternative most closely aligned with your needs.

Making the Right Retirement Real Estate Choice

Deciding between aging in place and downsizing your home in retirement can be a complex decision. It's a process made even more fraught sometimes by the interplay of complicated emotional realities. Whether you're saying goodbye to a well-loved home that's sheltered your family for years or trying to fit in and make friends in an entirely new place, it's important to acknowledge and process your feelings about the transition.

By following a step-by-step decision-making process and considering the factors outlined above, you can make an informed decision that meets your needs and preferences. Remember, the choice is ultimately yours, and there is no one-size-fits-all solution.

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