If you are thinking of retiring soon, a sometimes-overlooked strategy might boost your finances.
About 60% of people who move to a new location upon retirement choose a housing market where homes are less expensive than in the old neighborhood they are migrating from, according to new research by Vanguard.
This move can pay off in a big way. Vanguard estimates that retirees who move to a less expensive market typically arrive with about $100,000 in home equity from the sale of their old home.
Using the strategy of moving to a less expensive market means up to one-quarter of retirees have the potential to boost their retirement funding simply by relocating, Vanguard says.
Vanguard cites the example of a homeowner who was in her early 30s in 1990 and purchased a primary residence in Boston for $170,000. The home would have enjoyed rapid appreciation in that market and now be valued at $500,000. According to Vanguard:
“As she starts her retirement in Florida in her 60s in the early 2020s, the investor will be able to unlock $200,000 of the capital gains in her Boston home, which she can add to her retirement funding.”
As the investment company notes, retiring from a job and relocating for your golden years “could be useful for many retirees.”
Around 80% of Americans 60 and older are homeowners, and the wealth locked up in their home represents about 48% of their median net worth, according to Vanguard.
Should you relocate during retirement?
If you are considering relocating to a cheaper housing market during retirement, it’s important to weigh all your options so you choose a place that is a good fit for your desires and lifestyle.
You can get a head start on the process by checking out “16 Great Small Towns to Retire In.”
Downsizing comes with many different benefits, as we note in “7 Surprising Upsides of Downsizing as a Retiree.” However, that doesn’t mean moving to a smaller home in a new city or state is the right move for everyone.
No matter how excited you might be at the prospect of a new start, it’s a good idea to think about the “7 Reasons You Should Not Move for Retirement” before deciding whether to pull up stakes and relocate.
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