Retirement should be about making the choices and living the life you want. For some retirees, this means upsizing their home rather than downsizing.
These retirees want more room for their grandkids and kids to visit, or they just want a nicer, bigger home to entertain in.
In fact, a study done by Merrill Lynch and Age Wave three years ago showed that 30 percent of people age 50 and older who had moved since retiring moved into a bigger home.
That compares to 51 percent that purchased a smaller home and 19 percent that bought a home the same size.
“One of the biggest surprises of the study was the whole idea of upsizing for retirees,” says Maddy Dychtwald, co-founder and senior vice president at Age Wave, a research and consulting firm in California.
“But the thing that really surprised us all was the people who are in the life stage of retirement said that they are living in their best home ever. But that makes sense. They have more money. They can buy what they want.”
She adds that there is a stereotype that people who retire are moving into retirement communities. But that’s just isn’t the case anymore until they are in their 70s or 80s.
“They aren’t moving to reduce price or expenses, or because of their health challenges. They are moving to improve their lifestyle. Some move near college towns or cities that have all kinds of stimulations going on,” she says. “Some move to be closer to kids and grandkids.”
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What is upsizing?
Retirees might be comfortable in the home they currently live in, but many find that their home is too big – or in this instance, too small.
To find a home better for them, they decide to “upsize,” or move into a bigger or better home.
“What that means is that whatever home they lived in during their working years, they decide to go larger instead of smaller as they retire,” Dychtwald says.
She adds that this usually means they are looking for homes with offices or room for grandkids.
“They want it to be a refuge for the entire family. Boomers really love the grandparenting experience,” she explains.
How do retirees upsizing change housing?
Right now, there are 10,000 Baby Boomers turning 65 every day, Dychtwald says.
“That’s completely changing the landscape of housing and transforming the entire housing market,” says Dychtwald. “That’s crazy.
Aside from buying new homes, some older homeowners are deciding to stay put and improve their current home.
The Joint Center of Housing Studies at Harvard University reports that older homeowners will continue to dominate the remodeling market, as they make investments to age in place safely and comfortably.
Some are even putting on additions or expanding the outdoor entertaining areas.
Expenditures by homeowners age 55 and over are expected to grow nearly 33 percent by 2025, accounting for more than three-quarters of total gains over the decade.
The share of market spending by homeowners age 55 and over is projected to reach 56 percent by 2025, up from only 31 percent in 2005.
But retirees often don’t reach into their pockets for renovation money. If they haven’t paid off their home yet, some retirees opt for a cash-out refinance to get a little extra money for their projects.
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Who are these upsizers?
One example is Tom, formerly of a northern Chicago suburb. He retired from teaching last May at age 56 and wanted to move away from the traffic and the close proximity to his neighbors.
Owning a bigger house with privacy out in the country has been his dream for a long time. Tom wanted land to plant a big garden, put down a horseshoe pit and let his grandkids run four-wheelers.
He upsized from a three-bedroom, two-bath ranch house to a four bedroom, three-bath home nearly three hours away from where his older children and only grandchildren live. But to get the land and house he wanted at the price he could afford, the move was necessary.
Now there’s is plenty of room for visits from his grown children and grandchildren.
Many upsizers are also spending their money on water-focused vacation homes, what they call a nurturing nest, Dychtwald adds.
“They want a place where they know their families will want to come and visit,” she says.
Some retirees want more space just for themselves to have a room just for quilting or a man cave or even to put a golfing green in the backyard.
What can be the downsides of upsizing for some retirees?
In the Age Wave study, retirees states that retirement is the best time of their lives since it comes with new freedoms and more choices. But sometimes upsizing will mean more maintenance, more cleaning, and higher utility costs and possibly property taxes.
Before plunging into upsizing, retirees should talk with their financial advisor and several real estate people go get a sense of the type of communities they are thinking about moving to, says Dychtwald