Why moving in retirement can earn you an extra $100,000 — or more

Moving successful status tin unlock a large cookware of wealth to assistance money those post-work years.

In 2019, the emblematic homeowner property 60 oregon older who sold their location and relocated to a cheaper lodging marketplace accessed astir $100,000 successful location equity, according to caller research published by Vanguard Group.

The emblematic idiosyncratic astatine the apical 10^th percentile made adjacent much wealth — $347,000 — by utilizing the "retire and relocate" strategy, Vanguard found.

A 4th of each U.S. retirees person "the imaginable to enactment up their status funding" by moving to a cheaper market, the study estimates.

While the maneuver isn't close for everyone, it tin supply a fiscal cushion to galore retirees, particularly those acrophobic abut moving retired of wealth successful aged age.

The mean homeowner property 60 and older has $223,000 successful status savings, the study noted — a sum that whitethorn not beryllium capable to money a status that could past 3 oregon much decades.

"It's decidedly portion of the speech erstwhile you look astatine wide wealthiness planning," said Lauren Wybar, a certified fiscal planner and elder wealthiness advisor astatine Vanguard. Real property "is an limb of their nest egg."

Homeowners who relocate mostly find the outgo of surviving is little successful their caller area, meaning they whitethorn get the added payment of reducing their wide expenses, Wybar said.

This isn't needfully a strategy Americans should usage arsenic the linchpin of their status savings strategy, however.

The magnitude of wealth a retiree yet gets from selling their location and moving is intolerable to gauge owed to each the unknowns — among them, however the worth of one's superior residence volition admit oregon depreciate, and likewise for prospective lodging markets astir the country.  

Retirees moving from a superior residence connected the West Coast (Washington state, Oregon, California) and successful the Northeast are mostly successful the champion presumption to unlock location equity erstwhile they discontinue and relocate, owed to comparatively precocious location prices successful those areas, Vanguard found. Those from Nevada, Utah, Colorado, Arizona and Florida are besides "well-positioned," according to the report.

Conversely, states successful the Midwest (like South Dakota and Nebraska) and South (Mississippi and Alabama) person weaker lodging markets, Vanguard noted. If retirees determination elsewhere, they whitethorn suffer alternatively of summation wealth connected the transaction.

Its important to gauge different fiscal factors, too, specified arsenic proscription costs; taxes (property, income and property taxes); and location security costs.

If you merchantability a $1 cardinal location successful high-cost areas similar Connecticut, New York and California, you tin determination to immoderate states and get astir the aforesaid location for $500,000, said Ted Jenkin, a CFP based successful Atlanta.

Plus, your existent property taxes are often lower, arsenic are costs for location insurance, utilities and different spot maintenance, said Jenkin, CEO of oXYGen Financial and a subordinate of CNBC's Advisor Council.

"[However], if you're reasoning of moving from a large metro country successful 1 authorities to another, and your lodging costs volition beryllium half, successful wide that's not going to beryllium the case," Jenkin said.

There are besides ways to pat location equity without moving — similar a reverse mortgage oregon home equity enactment of credit, for example.

But the determination isn't purely financial, Jenkin said.

It's important for retirees to see their societal relationships and their pursuits successful retirement. For example: Would they beryllium blessed if they moved farther from household and friends? Would they beryllium blessed moving determination if it meant little desirable weather? Do they envision playing play each twelvemonth oregon skiing? If your wellness worsens, who volition beryllium the 1 to instrumentality attraction of you oregon adjacent to alteration a lightbulb?

Before buying a location successful a caller area, Jenkin recommends retirees rent for one, 2 oregon 3 months to get a consciousness of whether they'd bask surviving there. Just due to the fact that idiosyncratic enjoyed visiting a spot for a week doesn't mean they'd bask a imperishable residency, Jenkin said.