Are baby boomers ready to move?

Many boomers are thinking about how they will spend the next chapter of their lives. With a mindset that they are healthier than their parents and have adequate nest eggs, they are often emotionally attached to their neighbors and belongings.

But retirement, including pending retirement, is a potential trigger for boomers, pushing them to move to other places, often to be close to family and friends. If they move, it may be to a different type of home, often smaller and newer but sometimes bigger to account for their kids and grandchildren. And with growing housing wealth and historic levels of equity, more boomers are using their equity to fund their retirement.

Baby boomers, 68.6 million Americans born between 1946 and 1964, aren’t rushing to relocate and home sales reflect this trend. Homes sales have fallen to their lowest levels in nearly 30 years, although there continues to be a small uptick in new listings. Boomers are said to be one big reason the housing market has been frozen.

Lower interest rates should bring more listings, reducing the spread between current mortgage rates and the super low rates homeowners locked in (if they have a mortgage at all). Typically, boomers have more than 50% equity in their homes, so when they sell they often pay cash or have a small mortgage on their new homes.

We consider downsizing but no single solution works for all. This might be perfect for some, but seniors have several options depending on their wants and needs. Downsizing is a major life move for many boomers and requires a lot of thought-provoking questions such as, what they like to do? Where might they like to live and why? What they want their life to be like in the next 10, 20, 30 years?

Many who are moving want to stay near where they know. Others want to be with the grandkids, maybe in another state. Some seek a warmer climate or an active 55+ community. Many say proximity to a medical center and other services is a priority. Another option, multigenerational living, has grown in popularity in the past few decades.

If you are thinking about moving: The first step is to talk to a realtor to discuss your thoughts, and learn the value of your home, what’s available on the market both in your area and where you might be looking to move, and what options there are for homes and communities that might suit your needs.

How much equity has been built up in your home and how much you’ve saved is critical information in evaluating if a move will help meet your financial and lifestyle goals. It’s important to take a holistic view of your situation, often working along with your realtor, accountant and financial planner. You may also want to consult an attorney to discuss including your real estate into a trust, which may offer creditor protection and tax benefits.

Right-sizing to a smaller condo might be a better fit to some folks’ finances, but it’s important to consider all potential expenses, including monthly condo or HOA fees.

Another financial issue to consider is the possibly of capital gains tax. This is determined by what you paid, how long you lived there, if it is your primary residence, the amount spent on capital improvements, your marriage status and tax bracket. Oftentimes, this tax is less than you imagine but meet with a tax advisor to discuss how this will affect you.

There are always debates about whether homeowners should sell or buy first. There is a new loan program which, providing there is sufficient equity in your home, allows you to buy a new home first, then sell your current home while carrying just the new mortgage (talk to a mortgage broker for details). Alternatively, a great idea is to sell first then temporarily rent (especially if you’re moving to a new area) to give yourself time to not make a hasty purchase.

Lastly, accept that moving is never easy and the longer you have lived in a house, the harder it is to part with what is in it. The key is often to give yourself the time and space to unpack the emotions that come with the move and ask for help (physically and emotionally) when you need it. Two things to keep in mind: the stuff in the house is just that—stuff… it’s the memories that are most important and they go with you; AND this is a transition to an exciting new phase of life.